Re: Rent increases set at 1 per cent for 2003, (Sept. 4). There is a housing crisis in Winnipeg. There are simply no vacant apartments. Further, there is no meaningful apartment construction planned.

This is a tragedy for our city. While we encourage immigration and business expansion, we have no place for our new immigrants or out-of-province job seekers to live.

How did this happen? While the reasons are varied and complicated (including federal tax treatment of apartment buildings) what sets Manitoba apart from other provinces is its rent control legislation. In Alberta and Ontario, which also have low vacancy rates, there are presently thousands of apartment units under construction. Both of these provinces have either modified or abolished their rent control acts.

There are other problems. In Manitoba there is a large maintenance deficit. That is, after over 20 years of rent control the economics are not in place to justify needed capital improvements. As a result, living conditions are not what they should be, employment and economic activity are lower, and less income and sales taxes are collected. Additionally, as a result of rent control, the market value of apartment properties is artificially suppressed, which means assessments are also lower. Consequently, property taxes are lower than they would be on apartment properties and the burden falls to the single family homeowner. As a result, it is not surprising that Winnipeg homeowners pay among the highest property taxes in the country. Since value is a function of taxes, the reason for our low property values can also be attributed in large part to rent control.

While it is true that the rent control holiday was increased by the present government from five to 15 years on new construction, this was simply an acknowledgment that a problem exists. There has not been one traditional, unsubsidized apartment unit constructed in the province since this change.

Given the present market conditions, the decision to cut the allowable increases in half from two per cent to one per cent will certainly not encourage any apartment investment. It is unfortunate that the problems are likely to become more acute.