University of Regina economist says rent control policies bad idea

 

By Terrence McEachern, Leader-Post

REGINA — A Regina economist is cautioning that recent calls for rent control legislation is not the best way to deal with the availability of affordable rental units.

“The short answer — not really,” said Jason Childs, an associate professor of economics at the University of Regina. He explained rent control legislation can be divided into two types — those that set a cap on rent and those that control rent increases gradually.

Jason Childs, associate professor of economics at the University of Regina, argues rent control policies could have negative impacts on the people they are designed to help. Instead, he says social housing and subsidies to low-income renters should be considered. Photograph by: Don Healy , Regina Leader-Post

Regardless of the type, Childs argues rent control legislation doesn’t help the people it is supposed to help. He said in places with rent controls, there is a tendency for tenants to hold onto low-rental units even if their economic situation improves. Childs cites actress Faye Dunaway as an example of someone who lived in a rent-controlled apartment in New York City for several years before finally vacating.

“If you’re already in an apartment, you’re golden. If you’re trying to find one, you’re out of luck,” he said. “The distribution of the effects of this policy is really, strongly negative for younger folks and new arrivals. So, we’re going to be protecting established residents at (their) expense.”

Childs also argues rent control legislation would negatively affect the quantity of rental units. Developers would be faced with a disincentive through the introduction of uncertainty in terms of demand and the ability to make a profit in the rental market.

This is combined with a quality problem with rent-controlled units.

“Basically, if you control the rate at which I can increase the rent … (and) if I’m not making money at this, I’m going to let maintenance slide,” he explained.

The issue of rent control arose earlier this week when a group of tenants living at 2221 Robinson St. spoke out about approaching monthly rent increases as high as 77 per cent on Sept. 1. Many have said they would rather move than pay the monthly rent increases — in some cases — from $675 to $1,195 for a two-bedroom apartment.

On Tuesday, the matter reached the floor of the Saskatchewan legislature during question period when NDP MLA David Forbes argued for rent control legislation in light of the Robinson Street situation.

However, Childs argues more social housing and subsidies to low-income renters are better ways to approach the issue.

In terms of the Robinson Street rent hikes, Childs admits 77 per cent is a huge monthly rent increase and that he has sympathy for the tenants, but also questions the fairness of tenants receiving a reduced rent when young people and new arrivals to the city are paying market value.

“This is less than a zero-sum policy,” he said. “Society as a whole loses.”
Source: Leader Post

Rent-increase complaints on rise, city councillor says

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July 28, 2012 – 4:16am BY MICHAEL LIGHTSTONE STAFF REPORTER

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John MacDonnell, the cabinet minister responsible for the Residential Tenancies Act, said in May that reviewing rent control was not on his list of priorities. (TIM KROCHAK / Staff / File)

Minister says issue not a priority.

Provincial cabinet minister John MacDonell has said his office hasn’t received many complaints about rent increases. But a Halifax councillor says she has.

“This is an issue that has been going on since January, which I brought to the attention of the (provincial) government awhile ago,” Dawn Sloane said Friday.

At first, she said she heard from one or two people.

“Then it became four or five, then six or seven, then 20. And it keeps accumulating, in the number of individuals who are looking at these rate hikes.”

The late John Savage’s former Liberal government dissolved rent control in Nova Scotia in 1993.

MacDonnell, the cabinet minister responsible for the Residential Tenancies Act, said in May that reviewing rent control was not on his list of priorities.

“If I was getting inundated with complaints, I might consider this as a much bigger issue,” he said in the spring. “In my department, we’ve only received two or three complaints in six months.”

A spokeswoman for Premier Darrell Dexter said this week the government has no plans to resurrect rent control.

“It is not something the province is considering,” Jennifer Stewart told The Chronicle Herald.

Sloane, who represents downtown Halifax on regional council and is running in the new Peninsula North district, said many seniors, people on fixed incomes and disabled tenants need help when faced with rent increases.

Coun. Sue Uteck (Northwest Arm-South End) has also urged the NDP government to take a look at the rent control issue.

Source: TheChronicleHerald.ca