Maria Chubulu thought she had hit the jackpot for renting in Toronto.
A brand new “incredible” one bedroom condo, never occupied by another tenant, walking distance to the waterfront. Through the window, she could see the CN Tower. And icing on the cake, she signed the lease in January 2021, when downtown asking rents were lower than normal.
But his monthly rent bill – originally set at $1,950 – is now expected to rise.
The exact amount is still up in the air, Chubulu said, but its landlord has suggested raising the rate to between $2,350 and $2,650 this spring — a jump from 20.5 to 35.9%.
This would be allowed under a three-year exemption from Ontario’s rent control rules, for units first occupied after Nov. 15, 2018, introduced by Doug Ford’s Progressive Conservatives shortly after. government formation.
“I had absolutely no idea,” Chubulu said of the exemption.
More than 7,500 purpose-built rental units have been built in Toronto alone since the policy was passed, according to market research firm Urbanation, along with countless condos and other homes rented by investors.
And as the years pass, more and more tenants end up in units with no rent control and face the prospect of steep rent increases.
The provincial government, backed by some academics and industry players, says the rent control exemption is a way to encourage the development of much-needed rental supply in hopes of lowering rents.
But other academics and advocates argue that the trade-off for tenants facing a lack of stability is too high, and that the number of units actually built since the policy took effect has not been enough to meet Requirement.
And with a pandemic-era rent freeze ending last month, Urbanization Chairman Shaun Hildebrand expects some tenants who signed leases in mid-COVID-19 – when some landlords have offered lower rents or incentives amid falling demand – could see jumps higher than expected.
“I think some tenants are going to be a little shocked,” he said.
Among them is Rasool Moradi Dastjerdi. At the start of the pandemic, he also saw an opportunity to find a better home, for himself, his wife and their then three-year-old daughter. The family had previously moved into a one-bedroom unit in an older building in Toronto.
For just a few hundred dollars more, Dastjerdi found a new one-plus-den condo fairly close to the University of Toronto, where he works as a postdoctoral fellow. But this fall, he says his landlord suggested the $1,760 rent they had agreed could be increased to $2,150 for 2022.
Shocked Moradi Dastjerdi insisted that this could not be allowed, pointing to the maximum annual increase set by the province – 1.2% for 2022. Its owner responded, Moradi Dastjerdi told The Star, pointing out the 2018 exemption for newly occupied dwellings. .
“They’re offering this (exemption) to help, I don’t know who,” he said. It’s a rule he says adds financial pressure on tenants, increases the risk of landlord-tenant disputes and helps investors rather than residents.
Hildebrand says her company has seen an increase in purpose-built rental development in Toronto over the past three years. He believes the change in policy contributed to the rise, but said it was probably not the only factor.
Where Urbanation had between 1,000 and 1,300 new purpose-built rental units completed per year between 2016 and 2018, Hildebrand said it expects 4,805 new units this year and 4,246 next year.
However, more than 3,000 rental units were completed in 2019 and would have been in development long before the policy change, he said. And he has seen in recent years increased interest from institutional investors such as pension funds in the purpose-built rental sector.
He also warned that the numbers were still low compared to what is needed.
For David Hulchanski, a housing expert at the University of Toronto, the increase was not large enough to justify the policy. He thinks old subsidies and incentives such as the federal multi-unit residential building program of the 1970s — which offered tax benefits to stimulate rental construction — were much more effective at stimulating supply.
While he doesn’t think the exemption will hurt the city’s most vulnerable tenants — newly built units, he said, were often rented at higher prices to begin with — he thinks more tenants should know the rules and whether their unit is eligible. before signing a lease.
“People who are in these units should know,” he said. “There are no regulations in terms of annual rent increases, unlike other similar units, maybe across the street, but a few years older.”
Frank Clayton, senior researcher at the Center for Urban Research and Land Use Planning at Ryerson, says the policy has been helpful, but it’s also limited. Even if a developer was encouraged by the 2018 change, Clayton said, he likely knew it could be time-limited, with the possibility of a new government and a new rent control regime every four years. .
“If you’re an investor looking to buy a brand new rental project…you want to get some income. And if there’s uncertainty in that income, there’s a higher risk, and you might not.
Months away from the next election, Ontario politicians are already vying for rent control.
At Queen’s Park in October, NDP Housing Critic Jessica Bell raised the case of a tenant who reportedly faced a 57% spike. Government House Leader Paul Calandra defended the exemption in response, saying she could announce increased supply to drive down rental prices.
Meanwhile, Chubulu and Moradi Dastjerdi are still awaiting their 2022 rates.
Moradi Dastjerdi says his landlord has relaxed his initial proposal, instead offering a 10.8% raise: $1,950 per month, starting in March. It’s even more than he thinks he can afford.
Chuburu says she could afford a raise, but is frustrated with the exemption’s lack of limits. Even if someone was a good tenant, she says, that can’t beat the lure of a higher profit.
“It’s not about the people who live there,” she said. “It becomes a question of money.”
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