Bill 205’s rent caps not the answer; just ask B.C. and Ontario

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Such is the precarious state of the NDP’s proposed Bill 205 that it may all be moot by the time you read this. At best, it will be on life support. But even once the bill meets its inevitable demise, the underlying cause it champions is unlikely to go away.

The reality is that this bill and the debate around it represent a distraction from finding and implementing actual solutions. Hopefully, that will be the focus now moving forward.

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This bill, first proposed by NDP MLA Janis Irwin, seeks to tackle the issue of rent increases. Specifically, it would legislate caps on rent increases, limiting them to the rate of inflation or capping them at five per cent if inflation climbed above that number.

And to be sure, there is real pressure on the rental market right now. The latest report from Rentals.ca shows that the average monthly rent for a one-bedroom apartment in Calgary has increased 11 per cent year over year. In Edmonton, it’s been a 19 per cent increase. Conversely, Toronto saw an annual increase of only 2.2 per cent, while Vancouver actually saw a 1.7 per cent decrease.

What should also be noted, however, is that Toronto and Vancouver still represent — by far — the most expensive rental markets in the country. The average one-bedroom apartment in Vancouver goes for double Edmonton’s average rate, for example. Out of 35 cities surveyed, Edmonton is the fourth most affordable while Calgary remains the 11th most affordable.

Both Ontario and B.C. have rent caps, yet the 12 cities with the highest rents are found in those provinces. It’s hardly evident that these are the models for us to follow on how to approach this issue. We should not be blind to the potential effect that such policies can have in disincentivizing new supply. Ultimately, that’s our way out of this situation.

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We see similar debates unfolding in some American cities. In Boston, for example, a plan to cap rents has been before city council for some months now. And indeed, Boston is a city where rents have increased.

The more interesting story from south of the border, however, is the number of large cities where rents have come down — substantially, in some cases. The latest U.S. numbers from Realtor.com show continued declines in markets such as Atlanta (3.8 per cent), Austin (3.8 per cent), Las Vegas (1.8 per cent), Memphis (5.5 per cent), and Phoenix (four per cent). These markets also saw declines last year.

While the specific circumstances vary from city to city, there’s a common — and obvious — thread that connects them: they are building supply. In fact, some of these cities might have actually put themselves into a situation of oversupply. From a renters’ perspective, that’s a nice problem to have.

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In Alberta, there’s less of a role for the provincial government to play in housing supply, which may explain why some politicians would choose to focus on regulation. But red tape doesn’t add more supply, and could potentially even pose a barrier to that.

There is likely common ground to be found in using whatever tools are available to encourage and incentivize housing construction. It would be much more productive for the Opposition to direct its focus in that direction. Arguably, the government could be doing more to address the supply of non-market housing and rental supports. Again, that’s something the NDP should be devoting their time and resources to addressing.

Rightly or wrongly (the former, in my view), attempts to convince this government to embrace rent caps or rent control are futile. The NDP is welcome to run on this idea in the 2027 election if they so choose. For now, though, the necessary and obvious focus needs to be build, build, build.

“Afternoons with Rob Breakenridge” airs weekdays from 12:30 to 3 p.m. on QR Calgary

rob.breakenridge@corusent.com

Twitter: @RobBreakenridge

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