Saskatchewan, one of Canada's last remaining provinces without rent control, has emerged as a battleground over the issue ahead of this month's election.
The opposition New Democrat Party in Saskatchewan has promised to institute a rental protection act to address affordability in the province if it wins the election against the Saskatchewan Party. NDP leader Carla Beck said rent control regulations would protect tenants from "excessive and unreasonable" rent increases. The final day of voting for the 2024 provincial general election is Oct. 28.
Saskatchewan, with a population of just over 1 million people, has seen massive increases in rental rates as people from across the country move to its biggest cities, Regina and Saskatoon, in search of affordable housing.
The average asking rent for September in the province's two most populous cities was up 18% from a year earlier, according to Rentals.ca. That's the largest percentage increase among the 25 cities surveyed by the company.
However, with an average monthly rent of $1,418 in Regina and $1,352 in Saskatoon, both cities are still well below the national monthly average of $2,187, up just 3.3% year over year.
Derek Lobo, president and broker of record at SVN Rock Advisors, called rent control legislation "the third rail" across the country during a panel discussion at the Canadian Apartment Investment Conference in Toronto, where government legislation was top of the agenda in many discussions.
Sam Kolias, chief executive and chairman of Calgary-based Boardwalk REIT, the largest publicly traded residential landlord in Western Canada, doesn't believe restricting rents will achieve affordability.
Best multifamily fundamentals
"The best place we see for the best apartment fundamentals are Alberta and Saskatchewan," Kolias said. He was referring to the last two provinces in Canada with no rental control regulations during a recent roundtable centered on the outlook for the multifamily sector in 2025.
Boardwalk has about 33,500 units, with almost 21,000 in Alberta and another 3,500 in Saskatchewan.
"One of the best policies to create the most affordable housing is no rent control," said Kolias. "Our premiers in both Alberta and Saskatchewan understand the law of supply and demand is not a theory; it is a law. When we create competition, we create affordable housing.
"It's no accident the most affordable housing, the most competition and the most investment per capita, is in Alberta and Saskatchewan."
Kolias went on to say that deregulating Ontario, Quebec, and British Columbia would create a rental construction boom.
"The big bad reason rents are so expensive is not a person, it is a public policy called rent control," Kolias said. "It is public enemy No. 1."
Ontario does not restrict rental rates for buildings constructed after November 2018, and the executive said that the segment has seen rent fall as supply is added. "Asking prices are dropping in Toronto, and they are dropping in Vancouver," said Kolias, adding that his REIT self-controls its own increases.
He said Saskatchewan's lower rents are living proof of the market's power.
"It's not a coincidence it has the most affordable rent," said Kolias in an interview with CoStar News. He also said the market will adjust to those 18% price increases.
Building permits soar
"We are seeing a record response of new housing supply in Alberta and Saskatchewan," Kolias said. "The competitive market is not perfect. It takes time. We have to be patient for the market to rebalance."
In July, the value of residential building permits issued, an indicator of construction intentions, soared by almost 116.8% from a year earlier in the province, according to statistics from the Saskatchewan government.
The Saskatchewan Party is not a proponent of rent controls and is leading in the polls. So, the likelihood of changes in the province seems low, but tighter regulations are still being eyed across the country.
Tony Irwin, interim president of the Canadian Federation of Apartment Associations, said the key to the sector has been the general regulation that allows landlords to reset rent once a tenant vacates a unit.
"The one thing about everything else that has allowed this industry to operate and thrive is the existence of vacancy decontrol," Irwin said about the rule in place even in rent-controlled provinces such as Ontario and British Columbia.
In-place rents for units that have not turned over in years tend to be well below market, driving a lot of purchases for landlords who see embedded rent growth once a tenant moves out.
The flip side is vacancy control. That's when the price of an apartment stays with the unit, something people in the real estate industry fear the federal government is moving toward with its Canadian Renters' Bill of Rights announced in the spring budget.
One policy measure in the budget calls for a nationwide standard lease agreement, requiring landlords to disclose historical rent prices of apartments.
"We are concerned if that were to happen," said Irwin. He expects an announcement about the Renters' Bill of Rights in the next few weeks. "The federal government can't legislate it. They would have to get provinces to sign on to it."
Irwin's concern is that provinces could be forced to agree to certain terms to get infrastructure funding from Ottawa, and one of the conditions could be recording historical rent.
"They can't impose this, but they will say we would like you to consider this, and there is an opportunity to receive federal funding," he said. "We need protections for tenants, but we need a framework to understand the state of the industry."