Winnipeg Free Press
July 2, 2001
It costs about $4 million a year for the government to control rents in
Manitoba.
Or, at least, that's the usual cost to maintain the small army of bureaucrats
toiling
in the residential tenancies branch and the separate residential tenancies
commission. This year, however, the $4-million payroll may prove inadequate.
Huge increases in gas prices last winter have, understandably, prompted some
landlords to attempt to recover those costs through rent increases above the
1.5-per-cent guideline. In fact, the number of applications has jumped to 197
this
year from 66 last year. That increase is leading to calls for more staff.
Some might think that a payroll of $4 million would be enough to support
sufficient
staff to handle 197 rent increase applications, and some would be wrong. You
see, these applications are not simple things. A landlord cannot simply show
that
his heating bill increased by, say, $100,000. Oh, no. The landlord must present
a
full accounting of all his expenses and revenues last year, and another full
accounting of all expenses and revenues this year. These documents must then
be studied and amounts must be tabulated and lists must be made and numbers
must be challenged and formulas must be applied. After that, a determination
must be made as to what a fair rent increase would be -- not simply what incease
would recover $100,000, but what increase would address the $100,000 in the
larger context of all utility charges, rates of inflation, depreciation and so
on. At
some point, however, a determination will be made. At that point, letters must
be
sent to all affected tenants. Should even one tenant object, well then, the
matter
is sent to the tenancies commission which creates a "tribunal" which
then
examines again all the documents that have been examined before. It hears
presentations from both the landlord and the tenants and then it comes to a
final-final determination as to what, if anything, will be the allowable
increase in
rent.
This process is so byzantine that most landlords avoid it -- the 197
applications
represent only about 20 per cent of properties. What they do instead when huge
increases occur in costs is simply cut maintenance or renovations to the
detriment
of tenants.
In most of the rest of Canada, all this careful tedious, and taxing work does
not
exist. In the rest of Canada, landlords look at their costs and revenues and
determine what revenue they need or want from their properties. If they
calculate
too high, they risk losing tenants and if they calculate too low they risk
losing their
investment.
But not in Manitoba. Here government maintains rent controls rather than risk
the
ire of some 300,000 renters. It maintains these controls and the ridiculous
$4-million bureaucracy required to administer them in the face of evidence that
shows that the net result of rent controls is that rental properties are
deteriorating to the detriment of tenants, while causing a tax shift from rental
properties to single-family properties.
In Manitoba, the government insists that the market must not rule so that
tenants
get exactly what they pay for -- a $4-million bureaucracy and steadily
deteriorating apartments in a market where low vacancy rates should long ago
have been spurring new apartment construction, none of which is planned.