‘Well Designed’ Program Protects Tenants from Unwarranted Rent Increases, Encourages Landlord Investment: Report
An independent study on the impact of Manitoba’s rent regulation on the availability of apartments found that it strikes a good balance between the needs of landlords and tenants, Family Services and Consumer Affairs Minister Gord Mackintosh announced today.
The study by University of Winnipeg economics Prof. Hugh Grant was commissioned by the province and released today.
“Some landlords have argued that rent regulation is responsible for the low vacancy rate in Manitoba, but Winnipeg has been seeing the biggest investment in apartment construction in known provincial history while Regina, which has no rent regulation, has a similar vacancy rate,” Mackintosh said. “When faced with this apparent contradiction, we concluded that an outside review was needed so we can focus on the real solutions.”
Rents in Manitoba are among the lowest in Canada. For example, the average one-bedroom rent in Winnipeg is $1,392 cheaper annually than in neighbouring Saskatoon, which has no rent regulation.
Mackintosh noted that more than 800 new rental units are now under construction, outpacing other Canadian provinces and setting an historic record for Manitoba. The province is continuing to develop strategies to help sustain this trend and increase the supply of housing, building on the introduction of tax increment financing to stimulate downtown construction, secondary suite incentives and historic public investment through HOMEWorks!.
“We are pleased that Dr. Grant has found our rent regulation program is ‘well designed’ and achieves an appropriate balance between giving tenants greater security by protecting them from unwarranted rent increases while ensuring landlords can recover costs incurred to operate the rental property,” the minister said.
Grant finds that “There is no evidence that Manitoba’s rent regulation program has a negative impact on the supply of rental accommodation, either in the conversion of existing units to condominium ownership, or in slowing the rate of construction of new rental units.” To the contrary, he finds the regulations offer “…an incentive for landlords to undertake expenditures on maintenance, repair and capital improvements…” and the program “…has maintained a stable policy environment, an important consideration for entrepreneurs when considering a large investment in an extremely durable asset.”
Grant also concludes that, when it comes to rent, “…unwarranted increases, or ‘gouging’ that might be expected in a period of excess demand, have been prevented.”
Grant advises the primary cause of relatively low vacancy rates is the “…recent increase in demand for rental accommodation, associated with the success of the Provincial Nominee Program.”
He says “…the supply response has been slow, but not unusually so.”
In June 2010, the province strengthened protections for tenants by extending the eviction notice to five months depending on the vacancy rate when an apartment is to undergo major renovations and requiring landlords to pay up to $500 for moving costs when terminating tenancies for major renovations.
Grant’s report can be seen at www.manitoba.ca/fs/cca/pubs/rental_report.pdf.