Canada needs to reduce rent control measures that make life difficult for landlords to help solve the housing crisis, according to a new report by the Desjardins Group financial services cooperative.
The suggestion was one of over a dozen in the report and could end up as the most contentious, as indicated by a new Leger Marketing poll showing that 77% of Canadians support rent control as a method of keeping apartment costs down.
The Desjardins Group's report states that "rent controls — often introduced in the hope of keeping housing affordable — should be avoided as they tend to disincentivize investors and lead to underinvestment in new and existing housing. Perversely, rent control (measures) protect long‑term tenants regardless of their socioeconomic status rather than supporting youth, new low‑income tenants, immigrants and other vulnerable groups.”
The newly issued 10-page report urges every level of government to take action to help with the current housing shortage that has seen rents and home prices skyrocket. The Quebec-based Desjardins Group is billed as the largest financial institution in Canada's second-largest province with 7.5 million members and clients and almost 60,000 employees.
Other suggestions from the Desjardins Group's report include:
- Provide tax incentives for apartment building construction: The study recommends deferring or foregoing the Goods and Services Tax or Harmonized Sales Tax on purpose‑built rental housing projects. "Condo developers get paid at least in part in pre‑construction sales. In contrast, rental apartment developers pay the HST and other construction costs up front and then only make their money back slowly over many years through rents.”
- Increase by-right zoning: The measure would give developers the automatic right to create more density to allow for “unlimited height and density in the immediate proximity of individual major transit stations and six to 11 storeys on any streets with public transit, including bus and streetcar routes.
- Encourage office conversions: About 10% to 20% of commercial buildings in Canada can be converted into residential. The study also recommends building on underused spaces in shopping centres for residential projects.
- Federal government land donations: The study cites a 2018 federal initiative that gave $200 million to transfer land it owns at low costs to use for affordable housing.
- Make construction permits easier to acquire.
- Encourage universities to build more housing on campus.
- Increase taxes on vacant properties.
- Ease credential recognition for immigrants with skilled trade experience who can help build housing.
- Encourage more prefabricated housing.
- Abolish parking minimums.
- Restrict short-term rentals of non-principal residences.
The Desjardins Group's report was authored by economists Jimmy Jean, Randall Bartlett and Kari Norman.