September 7, 2011
It’s Time to End Rent Control
Cities with rent control pay more
NDP Premier Greg Selinger recently made news with announcements he will work to ensure regular minimum wage increases, make cottage lots more available, and create more energy efficiency programs.
The Manitoba PCs promised to hire more doctors and nurses and pave back lanes in Winnipeg. Yawn.
The governing NDP, and to a lesser extent the PCs, seem to be running under an incumbent-oriented, low-risk “if it ain’t broke, don’t fix it” electoral policy program.
But what is alarming is many of these policies are in fact broken. For example, housing affordability is absent in the election debate. Ironic, since the NDP’s very successful immigration program is threatened by rock-bottom apartment vacancy rates. New folks arrive and there are few places to stay.
Which brings us to that old policy chestnut: rent control. Rent control policies are defined as governmental regulations that limit landlords’ ability to freely set and increase rents on residential properties.
The intent, ostensibly, is to protect tenants from exorbitant rent increases and keep prices down. But the consequences of these policies are a reduction in the number of rental units and a general decline in quality.
A new study for the Frontier Centre for Public Policy confirms many of these worst fears about rent control, but presents more alarming information for rent control defenders.
The most interesting nugget is that beyond discouraging housing maintenance and new investments, cities that had rent control — such as Winnipeg — actually have higher rents than places like Regina and Saskatoon, where rent control was removed.
This obviously dashes the arguments presented by supporters of rent control policies, as their most critical justification has been proven wrong.
Supporters also need to realize lowering profit margins for landlords hurts the public purse, too. As rent control artificially suppresses the value of real estate, owners are less able to borrow against the asset to conduct needed improvements.
Housing damage due to lack of maintenance, as well as all the other associated costs, drives down the profits for suppliers, which means corporate and sales taxes are lower for government.
A better strategy would be to give lower-end renters cash allowances and housing vouchers to allow them to rent at the market prices.
Selinger should show the same political courage NDP Saskatchewan Premier Roy Romanow showed back in 1992 when he ended rent control. Manitobans deserve better than an “if it ain’t broke, don’t fix it” campaign versus “more spending, but don’t rock the boat” campaign. They need a bold, pro-growth vision and honest discussions about the policy consequences of the road we’re on.
In other words, someone needs to start talking about real issues which means confronting the equalization-dependent, public sector-padded, low economic performance, government interventionist model we’ve created here.
In the words of Led Zeppelin’s immortal Stairway to Heaven, “There’s still time to change the road you’re on.”
But not during election time apparently.
is a policy analyst at the Frontier Centre for Public Policy who focuses on aboriginal matters and property rights. Based in Lethbridge, Alberta, he is from the Sudbury region of Northern Ontario, and has Metis ancestry from Quebec. He graduated from McGill University in 2001, majoring in political science and history. He specialized in Canadian and American politics, with an emphasis on constitutional law. He is completing a master of journalism degree at Carleton University, where he is specializing in political reporting. For two years, he covered House standing committees, as well as Senate committees. His career in journalism includes several stints at community newspapers in Northern Ontario, including Sudbury and Espanola. He also completed internships at CFRA 580 AM, a talk radio station in Ottawa and the Cable Public Affairs Channel. He writes a weekly column in the Winnipeg Sun and contributes to the Taxpayer, the flagship publication of the Canadian Taxpayers Federation. Quesnel's policy commentaries have appeared in the Lethbridge Herald, Vancouver Sun, Globe and Mail, Financial Post, and the National Post, among others.