Do rent controls limit development?
The other day I was listening to a podcast, the wealthy Barber in fact speaking to an economist about the economy. A narrative that was brought up was that rent controls reduce and restrict development.
We hear this all the time from developers and landlords when they are restricted in their ability to increase the rents to current market rates. It is always reported as studies show that rent controls restrict development of property which in turn reduces the supply of the product. It was stated during the podcast that there are very few housing starts in Vancouver due to many factors including these rent controls. It is hard to compare two very different cities and regions when they build differently. Vancouver and the lower mainland build up, out of need which increases costs and time to build. I hear a comparison that Alberta doesn’t have restrictions so they build more. They also build less towers and more single family homes as does Ontario. Those properties are easier to start and take less time to build.
A quick google search shows that currently Calgary has fewer housing starts planned for 2026 than they did for 2025. Wait what, why is that? Based on the rent control issues they should be building all the time should they not? Why are they building less? The reality is there is only one factor that creates more development, how the economy is performing.
The current Liberal government wants to build more housing to make it more affordable, yet the developers are telling them sorry, right now we are not able to make it work and across the country are slowing down development. This is why there is great pressure on the development charges to be reduced to help developers build more product.
When the economy is going well developers will build and when it slows down developers stop building. We could remove all the tenancy laws allowing landlords to do anything they want with their properties, if there is no economy to support it they will not build. If you removed all the tenancy laws there would be no tenants.
We are experiencing this in Vancouver at the moment, rents are declining due to an over supply of product. We could build more housing now and it would sit vacant because there are not enough people to occupy the units. It is hard to build at a steady pace to meet all the needs of a growing city as it never grows at one pace. These ups and downs have occurred throughout history and will continue in the future.
I agree that rent controls can be restrictive and limit a landlord’s ability to manage their properties. What rent controls do for society is provide a balance of cost for tenants.
I wonder what the landlord would think if the banks had the same power to take back a property like the landlord’s demand when rent is not paid. If banks could sign one year mortgages and after that year raise it to any price they want nobody would buy a home.
Would they be demanding controls on what the banks are allowed to do in those instances? The answer is yes, which is why we have controls on banks ability to repossess a home when a mortgage payment is missed. It is not an easy process, it takes time and gives the home owner the chance to make amends.
During covid when rents were increasing rapidly tenant advocate groups were out in force demanding change to the system to protect tenants from escalating costs. Now that the table has turned and rents are declining they don’t really have much of an argument which is why they are not as vocal at this time. It is hard to argue that landlords should not be able to change the rent during tenancies when the rents are declining.
Every industry has regulations it must manage under to work in that industry. Hotels, taxis, bars and restaurants would all love more control over how they manage their business. Without rules and regulations we succumb to the whims of the few who have all the power. It is a difficult balance to obtain and will never be perfect. One side will always be asking for more. Our experience is that many landlords enter the business without understanding how the business works, they don’t know the laws. In any industry if you are unaware of the rules and regulations you must adhere to you are not going to be successful.
We think that some rent controls are a good thing for the industry as a whole. There can always be improvements from the tenant side and the landlord’s perspective. The majority of the rent controls in BC have been created due to tenant complaints about how landlords have managed the system in the past. Governments have felt the need to step in and change the law to protect the party with less power in the transaction.
Rent controls or restrictions are not preventing development, the economy is the only factor that encourages or slows development.
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