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June 28, 2021

Despite landlords' objections, Ontario caps rent increases at 2.5%

To ease the squeeze on tenants facing big rent hikes, residential rent increases are now capped at 2.5 per cent starting in 2013 under legislation passed last week by the Ontario government.

Click here for a historical view of previous rent increase guidelines. The average from 2004 to 2012 was 2 per cent whereas it was 3.1 per cent from 1993 to 2003.

Landlords started to howl about this ceiling months ago, of course: “The government is unilaterally imposing a cap without any discussion with an entire industry and is initiating a policy that will be particularly devastating for small landlords," according to Vince Brescia, president of the Federation of Rental-housing Providers of Ontario.

Landlords are concerned that such price caps could replicate the devastating housing market conditions seen in Ontario 25 years ago, when fixed rent controls were out of whack when compared with rising housing costs. 

Tenant groups, of course, don't see it that way at all and have been slamming the government for not doing enough to help renters.

“In the real world, tenants are losing their jobs, facing demands for wage freezes and rollbacks or living with a 1 percent increase in their social assistance cheques, Kenn Hale, spokesman for the Advocacy Centre for Tenants Ontario said when the guidlines were first proposed.

Nor is there adequate protection in place for those who move around a lot, maintains Ottawa Sun columnist Anthony Furey, since the guidelines only apply to occupied units.

"Once a unit becomes vacant, a landlord could up the amount they’re listing the property for by a considerable amount. Knowing that they might be caught facing cost increases that greatly exceed 2.5 per cent, they may want to factor that into the initial rent."

"So instead of passing on the real cost of increases to the renter year-by-year — which is more like what happens now — they will pre-emptively pass on their exaggerated fears of what the increases will be," he maintains.

Is this recent ceiling reasonable? Or do such caps keep properties off the market and deter new construction?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...