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Liberal MPP’s Rent-Cap Proposal<br />
Would Hurt Tenants<br />
The recent provincial by-election<br />
in the riding of St. Paul’s<br />
resulted in the election of<br />
Eric Hoskins as the new<br />
Member of Provincial Parliament<br />
(MPP). <strong>FRPO</strong> members should be<br />
interested to know that his very first<br />
question in the Legislature was on the<br />
topic of tenant protection, and his<br />
question was to the Minister of<br />
Municipal Affairs and Housing.<br />
HST will increase<br />
rental costs<br />
tax (PST) on July 1, 2010, these costs<br />
will all increase by 8%.<br />
The HST will increase rental housing<br />
costs in Ontario by an average 3.3%<br />
to 3.8%, or a new cost of $274 to $320<br />
per unit annually. New tenants and<br />
tenants who move will bear these<br />
higher costs immediately, as will<br />
tenants who live in buildings exempt<br />
from rent controls.<br />
HST Impact: Higher rent<br />
or reduced repairs<br />
impact of the 13% HST on rental<br />
housing providers and tenants.<br />
The harmful effect<br />
of rent controls<br />
Mr. Hoskins then goes on to convey<br />
his concern that “rents are going up”<br />
and “is a rent cap the best way to<br />
ensure affordable rents”. The<br />
Minister of Housing correctly<br />
answers that “Clearly a rent cap<br />
would have a negative impact on the<br />
supply of rental properties.”<br />
Fair Exchange • <strong>Sep</strong>tember / <strong>Oct</strong>ober <strong>2009</strong><br />
In Mr. Hoskins’ two part question,<br />
he first asks about the impact of<br />
HST on rent. The answer from the<br />
Hon. Jim Watson, the housing minister<br />
is technically correct. The HST<br />
will not directly apply to rent. This<br />
is no surprise, as sales tax is never<br />
applied to rent.<br />
What the Minister fails to explain is<br />
that the Goods and Services Tax<br />
(GST) is currently applied to many<br />
items that are necessary for operating<br />
and maintaining an apartment building.<br />
Heat, hydro, property management,<br />
maintenance and repair<br />
contracts, and even legal and accounting<br />
costs, are currently subject to only<br />
the 5% GST. When the 5% GST is harmonized<br />
with the 8% provincial sales<br />
Other tenants will see HST-related<br />
rent increases in future years when<br />
the inflationary effect of the tax<br />
increase is partially factored into<br />
the CPI-based rent control guideline.<br />
Landlords who cannot afford<br />
to increase rents due to competitive<br />
market conditions and high<br />
vacancy rates will have to cut back<br />
on expenditures such as maintenance<br />
and capital repairs in order to<br />
afford the 8% increase in HSTimpacted<br />
costs.<br />
The HST will have a harmful impact<br />
on the affordability and quality of<br />
rental housing in Ontario. <strong>FRPO</strong><br />
would be more interested to see Liberal<br />
MPPs advocating for their government<br />
to act quickly to eliminate the negative<br />
The harmful effect of rent controls on<br />
rental housing supply and choice is<br />
very well documented. It should also be<br />
noted that rents in Ontario, and in Mr.<br />
Hoskins hometown of Toronto, are not<br />
going up when adjusted for inflation.<br />
“Clearly a rent cap<br />
would have a negative<br />
impact on the supply of<br />
rental properties.”<br />
The Hon. Jim Watson,<br />
Minister of Municipal<br />
Affairs and Housing,<br />
<strong>Sep</strong>tember 30, <strong>2009</strong><br />
Real rents are dropping<br />
From <strong>Oct</strong>ober 2002 to 2008, inflation-adjusted<br />
average 2-bedroom<br />
28
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