Rent controls are taxing for homeowners and inner cities
Author:
Victor Vrsnik
2001/02/18
Celebrating rent control is like putting a positive spin on air raids. Sure the bombs reduced your city to rubble, but at least you have your health. Rent control has an equally devastating impact on an urban landscape.
Rent control is a fossilized throwback to the Jurassic school of urban planning that put its stamp on urban decay in Manitoba. The policy is rotten to the core but the NDP refuse to chuck it.
To keep rents low for tenants, Manitoba landlords must comply by law to an annual provincially set rate cap. This price control has held rent increases lower that the rate of inflation. As a result, rent control has taken its toll on all Manitobans.
The guardians of rent control justify its reign of terror by pitting tenants against landlords. They say without rent controls, landlords will have tenants over the barrel, demanding unreasonable high rents. Rubbish. Rent control has tenant, landlord and homeowner nailed in a barrel and flung headlong over Niagara Falls. All suffer.
Rent control rains misery on all walks of life. Even left-leaning civic politicians and school boards trustees bitterly complain how rent control erodes the property and education tax base and shifts the tax burden on to homeowners.
Rent control forces assessment values to fall for apartment blocks. With low assessment values, municipal governments and school boards cannot extract a fair share of tax revenues from rental units. To make up for the tax shortfall, they pass the property and education tax burden on to single unit homeowners.
Another casualty of this ill-conceived price control is the inner city - generally characterized by depopulation and disregard. Leave it to the rent control aficionados to blame the slumlords.
Given the chance, any landlord with the slightest savoir-faire would prefer to upgrade a rental unit than leave it to nature to take its course. But artificially suppressed rents dash any hope of sprucing up rental units. The result - tenants get shoddy digs and low vacancies, and landlords get crummy returns on their investment.
Without the cash to build, new rental developments rarely rise from the blueprint.
Worst of all, rent control encourages urban sprawl by submerging rents below natural market values in the suburbs. Faced with the gritty landscape of the inner city and the lure of cheap rents in the suburbs, lower-income earners join the middle class in the race to the city's outer edge.
If the Doer government is committed to urban renewal, it should let market forces restore dignity and a solid population base to the core area. The NDP should eliminate rent control. Suburban rents will recover and drive people back to lower rent inner city housing.
The trickle back affect to the core will do wonders for the urban landscape. Crime will head into retreat as people repopulate, restore and protect inner city neighborhoods.
With steady rents and fuller occupancy, landlords will be better positioned to upgrade rental units. Urban centres will get a new look and net greater tax revenues from apartment dwellers. Tax relief to homeowners would follow suit.
The Province should wipe the law off the books. Central planning initiatives are no substitute for a surefire solution to inner city decay - pull the plug on rent control.