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Calgary rent control: Experts say it’s not a long-term solution

With many Calgary tenants feeling the squeeze of rising rents, some have suggested rent control as a way to drive affordability.

Protesters had gathered outside the Residential Tenancy Dispute Resolution Service (RTDRS) building in downtown Calgary earlier this week to lobby for a two per cent cap on Calgary rent.

At the same time, Minister of Seniors, Community and Social Services Jeremy Nixon spoke at a news conference about the help the province was prepared to offer.

Year-over-year rent increases are pegged around 25 per cent for a two-bedroom accommodation in Calgary. That’s left some questioning where the limit is.  Alberta doesn’t have a rent cap, while there is some form of rent protection in BC, Manitoba, Quebec, Ontario and Prince Edward Island.

In Prince Edward Island, rent was frozen for 2023.  The Ontario rent increase guideline is 2.5 per cent.

There’s a conflict here with no easy, quick-fix.

With no existing regulations moderating rent prices, tenants are growing concerned about securing housing and simultaneously meeting other essential needs.

“Some days, I don’t even eat so my son can eat,” said Vanessa Badger, Chair at the East Calgary ACORN chapter. They were the group that organized the Calgary protest this week.

Uncontrolled rent could result in the displacement and eviction of tenants who get priced out of their homes due to the rising costs, this generates stress and incurs more costs due to moving around. 

On the flip side, caps pose a financial loss to landlords. Once they see the limitations to the revenue they’re able to generate, sell their properties to be turned into condos.

A 2018 study by Stanford economists showed that many landlords turned to condo conversions instead of staying in the rental markets. If rent caps were driving them to lose money, then they’d just recoup it on condos, the study showed.  

The authors concluded that this drives up city-wide rents, damaging housing affordability for future renters.

Short term gain, long term pain

According to Sherena Hussain, lawyer, and academic advisor at the University of Toronto, the evidence on rent caps shows that short-term, rent caps can help keep prices affordable for existing tenants. Long term, its efficacy diminishes.

“In the long-term, it can decrease affordability and affect neighbourhood composition. As a result, it is not an easy-to-use tool to address housing affordability,” said Hussain.

Rebecca Diamond, professor of Economics at the Stanford Institute of Economic Policy Research, said that if the government wants to provide social insurance against rent increases, giving out a subsidy instead of putting a rent cap on houses may be less distortionary for housing prices. 

“This would remove landlords’ incentives to decrease the housing supply and could provide households with the insurance they desire,” said Diamond.

Placing a rent cap over the housing market benefits low-income and marginalized people while supply is satisfied for more affordable housing options. Short-term, it helps citizens keep afloat, while they for the long-term solution: more houses, for attainable prices, said Diamond.

According to Dr. Sharon Batt, professor of Bioethics and Political Science at the University of Dalhousie, and an independent researcher and writer, considering the accommodation for immigrants should be an important part of the conversation.

“It seems to me like a good thing as I believe we [Halifax] have the fastest rising rents in the country and lots of students and newcomers can’t find affordable rental accommodation,” she said.

With people in Halifax just recently lobbying successfully for the rent cap to be extended, Dr. Batt says this should be implemented throughout the country’s provinces that remain without one.

Rent control not coming to Alberta, said Minister Nixon

At the news conference on Wednesday, March 22, Minister Nixon announced a ramp-up in funding for affordable housing. 

With the addition of $66 million to the previously allocated $54 million for the construction of 25,000 units of housing in Alberta through 2031, MLA Nixon said the government is focusing on increasing the supply of affordable housing to make sure that Albertans have options to address the increasing rent prices.

“I agree that rent is something that should be affordable. I think the challenge will be seen with rent caps and other jurisdictions, it [rent cap] can have an immediate impact but longer term, it creates long-term challenges,” said Nixon.

An increase in the Rent Supplement Program was mentioned by Nixon, who said the subsidy was also included in the government’s budget to assure low-income people a place in Alberta’s communities. 

“Our efforts and our initiatives today are about increasing the supply of affordable housing, as well as the Rent Supplemental Program to help to address the growing rent for low-income Albertans,” said Nixon.

In the case of the provincial government’s Rent Supplement Program for short-term housing, tenants are only eligible for this benefit if the applicant is employed or has been employed in the last 24 months, despite the fact that the site mentions the program is destined to help people in between jobs to pay rent while they secure a steady income.

Aside from this, the long-term Rent Supplement Program limits the eligibility to Canadian citizens or residents, leaving immigrants out of the question.

When asked about the call for a rent cap, Nixon said it’s not happening.

“No, rent control is not on the government’s radar,” he said.

“We understand that rent prices are going up. [We] believe this is a supply-demand challenge that we’re facing in our community and that’s why we’re focused right now on increasing the supply of affordable housing to make sure that we have options for Albertans to address the increasing rent prices.”