Winnipeg Free Press
September 7, 2004
FINANCE Minister Greg Selinger has revealed that a committee is looking at revisions to Manitoba's rent control regime. Now that the secret is out, he should out the committee as well. He should ensure that a full review of Manitoba's rent control regime is done in public so that everyone can see what a mess has been created by the wrong-headed belief that government can better regulate rents at 56,000 properties than can the market.
Mr. Selinger should bring it into the open because 300,000 Manitoba renters deserve no less. In recent years, and despite annual announcements that rents will be held below the rate of inflation, thousands of tenants have seen their rents soar. The reasons are many but essentially what is happening is this: For decades, allowed rent increases have been insufficient to pay for renovation, on the one hand, and to encourage new construction on the other, with the result that the vacancy rate in deficiently maintained rental stock has fallen below one per cent. Because landlords are now assured full occupancy for lack of competition and because interest rates are low, landlords have begun to address their maintenance backlogs and are passing on the costs with rents above guidelines as is allowed. Five years ago, the Professional Property Managers Association estimated the "renovation deficit" had reached several hundreds of millions of dollars. Landlords now are beginning to play catch-up, which is a positive development for everyone except, perhaps, renters who are encouraged by government policy to expect they can get something for nothing in perpetuity. Had the controls not been in place, the backlogs would have been addressed piecemeal as they arose. But they were not, with the result that many renters are experiencing unexpected rate shocks, which they have little choice but to absorb because there are no vacant, less expensive apartments available.
Manitoba's 300,000 renters deserve to be shown in public where this trend is leading, what role the government has had in creating it and what it intends to do about it. Certainly, the days of pretending that rent increases can be held to one per cent or 1.5 per cent in perpetuity are over.
Mr. Selinger should review in public why it is that his decision three years ago to exempt new apartment construction from rent controls for 15 years, up from five years, has failed. Only one developer has entered the market since that change, and at that, the new apartments rent for about $200 more than the average in the market today. Developers believe the policy change has failed because the cost of construction requires rents in excess of the rents charged by all other controlled renters. In the first year, new construction can compete with old, but after that, the gloss steadily goes off the new units but the higher rents do not.
Mr. Selinger should review in public Manitoba's regressive rent regime, the only one remaining in Canada, because all other Manitobans who pay property taxes deserve to know whether their burden is artificially high because rent controls have kept apartment assessments artificially low. Again, five years ago the property managers association warned that rent controls were having the effect of depressing the value of rental properties with the result that one third of the property tax burden borne by rental properties had been shifted from apartments to houses. And yet, renters -- or rather hundreds of thousands of voters -- continue to enjoy the same property tax relief as homeowners. All Manitobans need to know how much worse this equation has become in the past five years and what is to be done about it.
Manitoba's rent control regime should be reviewed in public so that it can be determined what impact neighborhood revitalization programs are having on the poor. It is all well and good that run-down housing stocks in old and neglected neighourhoods are being renewed. But renewal costs money and that expense must be recaptured in higher rents. What has become of the former residents of neighourhoods that are now being gentrified? The Social Planning Council of Winnipeg says there are 3,000 families now on waiting lists for subsidized housing, the condition of which is not good, only better than the condition of slum properties that rent for rates that are "affordable." Again, even slum housing rents are controlled, with the result that they remain substandard and contribute little to property tax rolls.
And finally, Mr. Selinger should examine in public the relationship between slum housing and government housing allowances for people on welfare. Welfare rent allowances today range from $243 a month for a single person to $310 for a family of three. Decent housing is not available at those prices, but slum housing is. Rent controls keep welfare costs low for government, but they are having the effect of creating ghettoes. This ghettoization of the poor is being exacerbated by a policy that brings refugees to Manitoba where they are supported by inadequate housing allowances in inadequate neighbourhoods with predictable results.
For reasons political, it is clear why Mr. Selinger seeks to review rent control in private. For the good of Manitoba, however, these issues should be examined in detail and in public.