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Winnipeg Free Press - PRINT EDITION

Lid pops off rent fantasy

By: Editorial

Posted: 07/6/2011 1:00 AM | Comments: 0 (including replies)

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Rent control, in theory, keeps rent affordable, eliminates volatility in the market and provides predictability to housing costs. In Manitoba, where rent control has been in place for 35 years, the experience shows that pressures of the market can't be defied, not forever and not for the good.

Tenants across Winnipeg are getting walloped by rent increases as property owners apply successfully to the Residential Tenancies Branch for exemptions allowed to property owners. Aging apartment blocks that have had minimal renovations for years eventually need expensive upgrading and the combination of a rent-control exemption, allowing them to recoup the cost of renovations within a short period, and the rental market demand has triggered severe rent hikes.

A family at a Taylor Avenue block is looking at a potential rent hike of 39 per cent, more than $4,400 a year. Their rent, less than $1,000 for a three-bedroom suite, may climb to $1,325 monthly. What was a good deal is now a financial burden.

Rent increases have been kept artificially low in Manitoba; this year, landlords of regulated buildings were permitted an increase of 1.5 per cent. Over the years, landlords have complained about small profit margins and, managing within the command and control environment of government edict, operated their businesses accordingly. But for many of those buildings constructed 50 years ago, time is up. The stark realities have pressed the province to introduce exemptions that allow for modern makeovers and upgrades.

Contrary to the hype, rent control has not been the renter's best friend. Eventually, chickens come home to roost. Rents rise, but they should do so manageably. How many people could afford a 39 per cent increase to the cost of housing -- the shock to mortgage costs with the rise of interest rates in the early 1980s might be a rough comparison except that it did not have the hand of government all over it and it was not permanent.

A measure of predictability let people budget, to buy or rent according to their means. Tenants are waking up to the fact that the hand of government has not defied market forces, but merely suppressed them. Predictably, the lids applied too tightly to rents for too long are popping off all over the place.

Republished from the Winnipeg Free Press print edition July 6, 2011 A10

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