Rental rules not working

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This article was published 02/08/2023 (1077 days ago), so information in it may no longer be current.

Manitoba’s rent control for residential dwellings has become a joke for many tenants. But for those struggling with soaring rental costs, it is no laughing matter.

The provincial government has long professed its commitment to keeping housing costs low and affordable for Manitobans by imposing limits on rent increases. Its stated goal is to ensure landlords have sufficient revenues to cover their operating and capital costs while protecting renters from unreasonable rate increases.

However, that balance appears to have shifted in favour of property owners over the years, with more ways for landlords to skirt rent increase guidelines and fewer ways for renters to protect themselves.

Under Manitoba’s rent control legislation, the province sets a maximum increase each year most landlords are allowed to charge. Those limits have typically been in the one to three per cent range (they were set at zero for 2022 and 2023 to partially offset the cut in education property taxes for property owners). The province recently set the guideline for 2024 at three per cent.

However, the rent guidelines are in name only. As a story in the Free Press this week shows, many landlords are able to circumvent the limits, leaving some tenants with increases as high as 15 per cent this year.

The province’s rent guidelines do not apply to all categories of rental units, including some social housing, government-owned units, co-ops and monthly rents above $1,615. Newly constructed rental buildings are also exempt from rent control for 20 years.

One of the most common ways for landlords to bypass the guidelines is by applying for an exemption to cover maintenance and renovation costs. While some of those expenditures may be legitimate ones, questions have been raised about how those costs are assessed by the province’s Residential Tenancies Branch and to what extent they should be passed down to renters.

Capital upgrades to rental property are not simply costs to landlords. They are also investments that typically yield returns to property owners.

According to a freedom of information request, landlords who applied for exemptions in 2020, 2021 and 2022 were successful between 80 per cent to 96 cent of the time. Rents increased on average in those cases between 9.2 per cent and 11.7 per cent.

Those increases are unmanageable for many low and middle-income Manitobans, some of whom face the prospect of either cutting back on essentials such as food and clothing or ending up on the street.

Tenants can challenge exemptions granted to landlords, but it is a lengthy process that offers no guarantee to renters and is likely out of reach for most.

Meanwhile, the problem appears to be getting worse. The average rent for a two-bedroom unit in Manitoba increased 39 per cent from 2000 to 2010, according to the Canada Mortgage and Housing Corporation. From 2010 to 2020 (before the recent rise in global inflation), average rent increased by 53 per cent.

The vacancy rate also dropped to 2.8 per cent in 2022, down from 4.9 per cent a year earlier — the lowest since 2017 — leaving Manitobans with fewer rental options. Even with rental guidelines frozen in 2022, the average rent for a two-bedroom unit rose almost three per cent that year.

A legislative review of rent control in Manitoba is long overdue. A more equitable balance between the interests of property owners and renters is sorely needed.