Rent Controls Hurt Housing
Housing experts know rent controls hurt affordable housing choice and availability. So do our governments. Yet these harmful policies continue because they're popular with voters. Here's some insights on what rent controls are (government laws that cap annual rent increases despite actual homeowner costs) and their harmful impacts on both new and existing housing.
Rent controls (where government limits the amount a tenant's rent may be raised each year) may sound good to existing tenants, who enjoy a discounted rent for as long as they live there. But they also get stuck--if their family expands or they change jobs--moving means they'll likely face a major increase in rent.  These rental caps also punish future tenants who will pay more to make up that difference. Rental property owners and homebuilders are not able to keep up with rising property repair costs, insurance premiums, fees & taxes unless a rent-controlled tenant leaves and a new one moves in at a much higher rate. Many rental homes just won't even get built because rents collected will be less than actual costs each year.
Builders of new rental housing need at least 60 years to recover construction costs through rent, while condo builders typically get their investment back through presales (initial 10 to 20% deposits buyers pay) and on apartment completion when the remaining balance is paid several years later.
Annual costs of managing rental buildings are going up by as much as double digits (property taxes, repairs, insurance etc.) yet rent increases are artificially capped by government at anywhere from zero per cent (during pandemic) to approximately 2 or 3 per cent via "rent controls".
This isn't complex math. Business don't usually open and operate a money-losing venture where revenues never keep up with costs. ​
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Canada Mortgage & Housing Corp. on Rent Controls
​The federal Canada Mortgage & Housing Corporation (CMHC) recently analyzed rent control impacts:
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Reduction in new rentals available
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Decreased tenant mobility (tenants stay in units longer)
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Higher rent growth for new and vacant units
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Research confirmed cities with abundant rental supply like Calgary with no rent controls, offer healthy competition for apartment choice, pricing and features.
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"Toronto, Vancouver, and Halifax saw some of the highest rent increases among major CMAs for turnover units. In these rent-controlled markets, persistently low tenant turnover meant that when units became available, landlords had room to adjust rents to match current market levels. Higher rents made it harder for new renters to enter the market and further limited mobility for existing tenants."
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Another recent CMHC study found: renters may increasingly be incentivized to avoid moving, which can hinder residential and labour mobility.
QUESTION: Why are rent controls enforced on non-Indigenous housing developments when governments know
they don't work? Because they buy votes.
The BCNDP government extensively studied rent controls through an expert panel led by former BCNDP Finance Minister Joy MacPhail.
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She said during a housing affordability video discussion where then-Housing Minister David Eby attended, that the big brains, including many academics, who studied this issue advised her that "rent controls don't work to help...the person actually renting. You don't cap the market with rent controls." A rental subsidy was a better approach, concluded the 2021 Final Report of the Canada British Columbia Expert Panel on the Future of Housing Supply and Affordability.
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During that same discussion, the CEO of Squamish Nation's Nch'ḵayÌ“ Development Corporation, Bernd Christmas, admitted they have no rent control "cap" on their planned 6,000 rental units called SenÌ“ákw (in Vancouver by Burrard Bridge)
Recommendation
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Remove rent controls for new apartment construction.
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That will spur new market rentals to address a housing shortage that follows the same proven, disastrous policies.
Avoid "Vacancy Control"
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Governments should avoid "vacancy control", which forbids rental increases on apartments between tenant departures!
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This policy would kill off any new rental building indefinitely, worsening our rental crisis.
Rent Control Research
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Global studies prove rent controls add to lengthy wait lists for social housing and are the most destructive housing policy for current and future tenants.
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See historical research on the impacts of Rent Controls in Canada & beyond.​
Is Rent Control Hurting the People it's Supposed to Help?
Watch this interview with Michael Moffatt, a Canadian economist, Founding Director of the University of Ottawa's Missing Middle Initiative*, and a professor of Business, Economics, and Public Policy at Ivey Business School.
Journalist Cara Stern and Michael explore "one of the most debated topics in housing policy — rent control. Inspired by (New York City Mayor) Zohran Mamdani’s campaign rent freeze proposal, they dig into how these rules shape the housing market, not just for landlords and tenants, but for entire cities. While rent control offers stability and predictability for those lucky enough to have it, it can also quietly freeze people in place — making it harder to move for a new job, grow a family, or even downsize later in life."
*Missing Middle is a term that includes all those housing choices between the costly single-family home and a high-rise apartment that can offer many more affordable styles. These include duplexes, townhomes, non-strata row homes, multiplexes, laneway homes, and small walk-up apartments. Government zoning rules, taxes, fees and red tape prevent many of these from being built.
Rent Control Reality in Cuba
