TORONTO—At least 1,000 planned rental units in Ontario have been cancelled or converted to condominiums since the province introduced new rent control rules, a report released by a group representing rental-housing providers said as it warned of a supply crunch if the issue isn't addressed.
The report, commissioned by the Federation of Rental-Housing Providers of Ontario and released yesterday, said the Liberal government's Fair Housing Plan has negatively impacted the province's rental housing supply.
Before the introduction of the government legislation, 28,000 rental units were in the planning pipeline. But since the new rules were introduced, 1,000 of those units have been cancelled or converted to condominiums, the report said.
The federation's president, Jim Murphy, said Ontario needs 34,000 rental units built a year to keep pace with demand and it currently is falling 6,250 short each year.
“We need more supply, full stop," Murphy stressed. "And we've got to encourage everyone, the industry included but also governments, to come to the table with policies that will create the environment for new rental units”
In April, the Ontario government announced what it called a comprehensive housing package aimed at cooling a red-hot real estate market.
Among the 16 measures was a 15 percent non-resident speculation tax to be imposed on buyers in the Greater Golden Horseshoe area who are not citizens, permanent residents, or Canadian corporations.
Another was expanded rent control that applied to all private rental units, including those built after 1991, which previously were excluded.
According to Canada Mortgage and Housing Corp. data in the report, vacancy rates in the province already have fallen to 2.1 percent across the province.
Murphy said both provincial and municipal governments could make policy and tax changes to help encourage developers to deliver more purpose-built rentals.
“The problem right now is that there has been uncertainty created because of that change and we're starting to see cancellations of projects at a time when we need more supply,” he noted.
Housing minister Peter Milczyn said the province does not plan to change rules which cap annual rent increases.