Rent Controls and Horror Stories
Rent controls are another seemingly virtuous application of the social engineering mindset. Such controls are intended to protect the less affluent against greedy landlords. Who would not favour that?
It may be hard to raise much sympathy for large apartment owners, but the experiences of some small rental building owners are simply terrible. The following are a few examples.
Toronto Sun columnist, Diane Francis, owns a $300,000 apartment in the Toronto Cabbagetown area. Faced with a nonpaying tenant (at $600.00 a month), a lawyer friend advised her to pay him a month's rent to get rid of him instead of trying to have him evicted. She now wishes she had followed that advice—it took seven months to evict the tenant, and Francis never did collect any rent money. Through previous experience, she knew that it would cost her more in court and sheriff fees (not to mention the time) than she had lost to go through the "justice" system to collect. In an open letter to the Ontario government, she writes: "The apartment stays vacant even though people in this province are homeless, thanks to your policies. I'm just going to hold my property like a speculator because it's going up in value quickly no matter whether it's rented or not, also thanks to your policies which have driven away development except stuff heavily subsidized by taxpayers like me" (Toronto Sun, July l2, 1987).
Francis's column evoked a number of responses, including one by a landlord with a similar horror story. After his tenant informed him of plans to move, the owner sold his building and set the closing date to coincide with the tenant's moving plans (the tenant signed an agreement to that effect). At the agreed upon time, the tenant refused to move and dared the owner to throw him out, knowing the Landlord and Tenant Act was on his side. The owner eventually paid $1,000.00 "blackmail" to get the tenant out. His conclusion: "Justice in Ontario? Bah, humbug!" (Toronto Sun, July 19, 1987).
Several two-bedroom units in two six-unit buildings in a nice Toronto neighbourhood are now vacant in protest against the low rents prescribed under provincial rent controls. These apartment rents are frozen at the monthly rate of $330.00. The owner has offered to rent them for $425.00 per month if the prospective tenants can persuade the housing ministry to approve that rate. About 50 people call each day to ask to rent at $425.00 a month—a bargain price for Toronto. Nonetheless, the bureaucrats at Queen's Park say that it cannot be done as the rate is unfair (it represents an increase in excess of the allowed 5.2%). You may disagree with the owner's extreme method to protest the existing law, but it is hard not to have some sympathy for him.
Toronto's City Council was recently told that the city's housing company, Cityhome, had evicted a tenant from one of their houses for not paying rent. They discovered that he was not the tenant, but the son of the tenant who had died two years earlier. Not only does the deceased tenant owe $1200.00 in damages, but the city now discovers that the house is in such bad shape that it needs $40,000.00 worth of repairs. Councillors wanted to know how this could happen, and were told that the Landlord and Tenant Act is heavily weighted in favour of tenants. "Why would anyone in their right mind want to own and rent out property?" one councillor asked. Columnist John Downing concludes: "As long as landlords are faced with the reality that their homes are now the tenant's castle, no sane businessman will build one unit of rental housing" (Toronto Sun, September 23, 1987).
Downing thus diagnosed precisely what's wrong with rent controls and related legislation, and why they produce the very opposite results to their intention—less rental units and higher prices. You don't have to be a gouging landlord to recognize the utter folly of the current Ontario rent control measures. But don't look for common sense to prevail. It just isn't fashionable to be a landlord, and our policy makers are determined to cater to trendy ideology. The worst of it is that those who need affordable housing are the victims, not beneficiaries, of this system.