Where’s housing plan?

TheStar.com – Opinion/Editorial
Published On Sun Jul 04 2010.

Just as homeowners are attuned to mortgage rate hikes, tenants anxiously await news on how much their rent will rise each year. And last month, the provincial government gave them some good news: rent increases in 2011 will be limited to a microscopic 0.7 per cent.

The government congratulated itself for protecting tenants from “excessive rent increases” by delivering the lowest guideline in the 35-year history of rent controls. In fact, however, the rent guideline is not subject to government whim. Rather, it is tied to the Ontario Consumer Price Index.

No matter how low the increase allowed under the guideline, it will do nothing to help the hundreds of thousands of Ontario tenants who already cannot afford their rent. Yet the government continues to dither on the one policy that could make a real difference: an affordable housing strategy. Just one week before announcing the rent increase guideline, the government again postponed its long-awaited strategy.

While the government was patting itself on the back over the 0.7 per cent guideline, the landlords were sounding the alarm. “A 0.7 per cent guideline is unfair and devastating to an aging rental stock,” said Vince Brescia, president of the Federation of Rental-housing Providers of Ontario.

The landlords say they won’t be able to maintain buildings because the guideline is too low to recoup the increased costs related to the harmonized sales tax (HST), which came into effect July 1.

The problem with this argument is that the rent guideline is always based on the average CPI from the previous year. Invariably, that means it lags a year behind events. If the HST causes utilities, repairs and other costs to rise significantly, that will presumably result in higher allowable rent increases in the future.

To be sure, these are difficult times for landlords, given the combination of a slow-growing economy, high vacancy rates, and the HST. But the rent guideline is not the cause of all these problems any more than it is the solution to Ontario’s affordable housing crisis.

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