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FRPO survey predicts negative impacts of rent control

Tuesday, April 18, 2017

The Federation of Rental-housing Providers of Ontario (FRPO) released the results of a survey it conducted on the impacts of rent control using a focus group representing the province’s largest rental housing providers.

Through a sampling of its biggest members, FRPO has sought to understand and highlight the potential impacts of rent control given the rumored legislative changes to  legislation and the so-called “1991 Exemption.” Albeit a small sampling of the membership and only a snapshot of the purpose-built rental developments currently being proposed in Ontario, the results of this qualitative survey demonstrate that thousands of planned new rental units and billions of dollars in gross investment are at risk.

“This outreach to a subset of our membership shows not only a significant intention to create new, badly needed purpose built rental housing developments in Ontario, but also the vulnerability of the projects should the current environment suddenly change without consultation or consideration,” says Jim Murphy, President and CEO, Federation of Rental-housing Providers of Ontario.  “The results of our survey are clear, and they are clearly concerning.”

While the majority of members surveyed indicated plans to develop new, purpose-built rental projects, respondents also indicated that the majority of these projects would be at risk of proceeding if the government moved to make significant changes to the industry’s current legislative environment.

Of the fifteen members surveyed, fourteen indicated current plans to develop new purpose-built rental projects, representing the addition of more than 9000 units to Ontario’s portfolio of purpose built rental suites.  This represents $2.7 billion in gross investment that would be put at risk if changes to the current legislation were made.

FRPO’s focus group results support the existing data provided by analysts like Urbanation, which proves that the current legislation is having the intended impact on the market.  A recent report from Urbanation reported a 50% increase in planned rental projects in 2016 over 2015, and their analysis shows 27,000 new purpose built rentals currently in the planning pipeline.

“The data shows that the current legislation is working as intended,” says Murphy.  “Successive governments, for many years, have recognized that the best approach to limited rental supply was to encourage new rental development, and the results are now proving the efficacy of this policy decision.  But the data is also showing that any sudden changes to the current rent control environment will chill the creation of new rental developments.  While we support the government’s interest in ensuring viable rental options for Ontarians, well intentioned yet dramatic changes to rental policies intended to improve options for renters will have unintended consequences, resulting in a stagnant rental industry, declining rental assets, and less choice for today’s tenants.”

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