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A new report commissioned by an industry landlord groups says 1,000 rental units have been cancelled since Ontario expanded rent control rules across the province.
And while the head of Canada’s largest real estate investment trust told the Financial Post the decision to turn one of its project into a condominium as opposed to a rental unit is traced back to provincial rules which will tie rent increases to inflation, the REIT is still planning to go ahead with many other rental projects.
“There are two things that happened. One was the Liberal government changing policy to apply to buildings like this, brand new buildings,” said Ed Sonshine, chief executive of RioCan, referring to his 133-rental unit project at King and Portland.
Sonshine said the REIT has since reviewed every one of its rental projects and has about 20 underway at some point in the pipeline. The traditional retail landlord will have about 4,000 units in its portfolio as it takes advantages of some of its strategic locations in urban centres.
“Our stated goals is to have 10,000 units across Canada,” he said, adding his company does not want to switch to condominiums over rentals. “We are in the cash flow business and we like cash flow even though the government has put a crimp in future growth.”
Sonshine said the unit it converted to condominiums was driven by the fact it had a partner on the development in Allied REIT, so only half of the 133 units belonged to his REIT, and the price of the condominiums had gone higher than expected.
The report, commissioned by the Federation of Rental-housing Providers of Ontario and provided to the Financial Post in advance of the Monday release, was conducted by condo research firm Urbanation Inc.
It warns that unless 6,250 additional new rental units are built each year for the next decade vacancy rates will continue to drop to critical levels. The report maintains vacancy rates are 2.1 per cent across the province and 1.3 per cent in the Greater Toronto Area.
The group maintains before Bill 124 was introduced, it expanded rent control rules to buildings constructed after 1991, purpose-built rental projects were at a 25-year high with 28,000 units in the planning pipeline in the GTA.
“Ontario’s scarce rental housing supply combined with escalating house and condo prices have created a housing crisis in our biggest cities,” said Jim Murphy, president of FRPO. “The only solution is for Ontario to build itself out of this situation. This begins with our provincial leaders working with industry to identify and implement policies that create more purpose-built rental units, not less.”
Written by: Garry Marr
Original Article: financialpost.com