Call us NOW          647-615-2884

Consequences and Considerations of Properties Exempt From Rent Control

Consequences and Considerations of Properties Exempt From Rent Control 

In Ontario, rent control laws generally apply to most residential properties. Rental units constructed after November 15, 2018, are generally exempt from rent control. This means that landlords of these newer units could set the initial rent at market rates and are not subject to the annual rent increase guideline.

When managing properties exempt from rent control regulations, it’s essential to contemplate the potential implications that can affect both landlords and tenants, especially concerning rent collection. Here are some key factors to bear in mind in such cases:

  • Higher Rent Increases: These properties can experience more significant rent increases between tenancies or lease renewals. Landlords are not subject to the annual rent increase guideline established by the government, which limits the maximum allowable rent increase for controlled units.
  • Uncertainty for Tenants: Tenants may face greater uncertainty about their housing costs. They may be concerned about the potential for large rent hikes and the impact on their ability to afford their homes.
  • Market-Driven Rents: Rents in properties exempt from rent control are often determined by market forces. This can lead to higher rents in areas with high demand and limited supply, making it challenging for tenants to find affordable housing in popular neighbourhoods.
  • Decreased Tenant Stability: Tenants in properties not covered by rent control may be more likely to experience frequent rent increases, leading to a lack of stability in their housing situations. This can result in higher tenant turnover and increased relocation costs for renters.
  • Incentives for Property Upgrades: Landlords of exempt properties may have more significant financial incentives to invest in property upgrades and improvements, as they can raise rents to cover the costs. This can lead to improvements in the quality of housing in these properties.
  • Increased Housing Investment: Some property investors may prefer to invest in properties exempt from rent control due to the potential for higher returns on investment. This can lead to increased investment in the rental housing market.
  • Greater Flexibility for Landlords: Landlords of exempt properties have more flexibility in setting rental rates, which can be advantageous in a volatile housing market. This can result in rental rates that more accurately reflect market conditions.
  • Inequities in the Rental Market: Differences in rent control coverage can lead to inequities in the rental market, where some tenants enjoy stable rents while others face significant increases. This can contribute to disparities in housing affordability.
  • Policy Considerations: The consequences of properties exempt from rent control often lead to ongoing policy debates. Policymakers must balance the need to protect tenants from steep rent increases with the need to incentivize property investment and maintenance.

It’s important to be aware of the consequences of properties exempt from rent control because it directly impacts the affordability and stability of housing for tenants. In markets where rent control does not apply, landlords have greater flexibility in setting rental rates, potentially leading to substantial rent increases. This can result in housing insecurity, tenant displacement, and financial strain for renters, particularly in high-demand areas. Although it may seem like there are more advantages for landlords, landlords may have to deal with more turnover with tenants due to the rent hikes.