Decades of leaving renters behind in policy considerations, paired with rising housing costs and stagnant wages, has made Ontario into a province of the haves vs. the have-nots. Housing in the province is mostly supplied by the private market, and this even applies to many lower-income households (only 25% of households with incomes of 40,000 or less live in housing where their rent is geared to income). As Ontario is home to one-third of all renters in Canada, this means thousands of people are at risk of being pushed out of their homes as the affordable housing crisis goes from bad to worse.
What is vacancy decontrol?
For sitting tenants, Ontario’s rent control system permits annual rent increases based on Ontario Consumer Price Index (CPI). Any other rent increases must be justified and approved by the Landlord and Tenant Board.
However, when a unit is vacated there are no limits and the landlord is allowed to charge any new rent that the market will bear. That recently vacated unit can cost the new tenant hundreds of dollars more in rent per month. This is what we mean when we use the term vacancy decontrol – it is a lack of the regulations that would limit how much landlords are legally allowed to charge for unoccupied units. It is also commonly referred to as “rent gouging”.
Vacancy decontrol was not always the case in Ontario. There were existing rent regulations in the province that were eliminated by the provincial government in 1996. The rationale at the time was that this would incentivize developers to build many more purpose built rental units. However, this has not been the case. On average since 1996 (until 2016), Ontario has only built 3,452 new rental units yearly, when Ontario should be building approximately 10,000 new units yearly to meet demand. Meanwhile, rents increased significantly between 1997 to 2000 across Ontario. Cities like Ottawa and Toronto saw a 20% increase in the average rent for two bedroom apartments and a 23.5% increase in Toronto for bachelor apartments.
Changes to the Residential Tenancies Act in 2018 also weakened rent control regulation across the province. A new exemption was created in situations where a tenant is moving into an apartment, a condo unit, or a basement unit that was first occupied as a residential space after November 15, 2018. In these situations, there is no legal limit set on how much landlords could raise a tenants rent annually.
Why does it matter?
Vacancy decontrol means there is a continued financial incentive for landlords to frequently evict tenants, especially tenants who have been occupying a unit long-term, so that landlords can charge as much as possible for their units. This hurts lower-income renters the most, as they struggle to find suitable housing that they can reasonably afford.
For all of these reasons, vacancy decontrol is consistently cited as one of the driving factors behind rising rents in Ontario. If there is one single measure the Ontario provincial government could take to tangibly address the worsening housing crisis in the province, it would be to eliminate vacancy decontrol. Rent regulations should be part of an ongoing, comprehensive program in Ontario to stabilize prices and provide tenants with security of tenure. Robust rent regulation is a vital part of creating stable communities and ensuring everyone has access to a safe, secure, and affordable home.