Recently I was reading an article in which the author rhetorically
asked "Why of all the businesses in Canada, are residential
rentals the only transactions that are subjected to price controls?".
Why indeed!
As every property manager in Winnipeg knows all too well, rent levels in Manitoba are controlled by provincial government fiat, the annual rent guideline. The amount of this guideline, which for the past seven years has restricted rent increases to 1% annually, is determined politically within the secret environment of the provincial cabinet. There is no public input, nor is there any public scrutiny. Requests for information as to the rationale for these increases are refused on the basis of cabinet confidentiality.
Not only is the rationale for the amount of the increases lacking, but there no longer appears to be any reasonable explanation for the very existence of the program.
Now some may argue that housing, being of such primary importance to our well being, must be the subject to government intervention and control. If this were true, - which it surely is not - then why is there no government control over the price of houses.
Over 75% of Winnipeg's population live in single family dwellings, but I have yet to hear anyone in the provincial government, or in the opposition for that matter, state that members of the Manitoba Home Builders should be restricted to a 1% increase in the sale price of their homes.
And if shelter is of such paramount importance, what about the automobile? In today's environment access to an automobile borders upon necessity. Why then hasn't the government intervened to regulate the prices at which members of the Manitoba Motor Dealers sell their products?
And for those who for reasons of their own choose to opt for public transportation, does the benevolent hand of the provincial government intervene on their behalf to protect them from annual increases in transit fares?
Never!
And what has been the result of this government interference in the marketplace?
To begin both the quality and quantity of good rental accommodation has been reduced. Reduced cash flows have caused many owners to reduce or defer maintenance resulting in substandard accommodation for tenants and a loss of equity for owners. It has also resulted in lower property values and less money raised in property taxes for the city.
And new construction? Well of course it is non existent. Since rent controls do not allow landlords to make a fair return on their investment, not a single privately financed rental unit has been constructed in Winnipeg since 1990.
From every perspective rent controls have proven to be a harmful and unnecessary intrusion into our free enterprise economy.
The results can be seen every day in the deterioration of the core area. As the Swedish economist Assar Lindbeck once said "Next to bombing, rent control seems in many cases to be the most efficient technique so far known for destroying cities".
The Premier recently appointed the Honourable Shirley Render to be responsible for the Residential Tenancies Act. Do we dare to hope that the new Minister will recognize the deleterious effects rent controls have had on our industry and city and move quickly to amend the legislation to provide that whenever a suite is voluntarily vacated, that the landlord be free to negotiate a new rent with the new tenant.
Why is it that of all the business in Manitoba, residential rentals are the only transactions subject to price controls?
Why indeed!