May 22, 2018
Author: John Fox
At the Land and Development Conference last week in Toronto, I was invited to participate on a panel to discuss legislative changes stemming from the governement’s Fair Housing Plan. The panel was seated – no doubt by political co-incidence – from right to left. Mike Czestochowski of CBRE, Steve Diamond of DiamondCorp., myself, and Peter Milcyn, Minister of Housing.
The panel talked through some of the major changes in housing brought in by the current Liberal government: Rent Control, Inclusionary Zoning, and the replacement of the Ontario Municipal Board being among the hotter topics. I have attached a brief memo setting out some of these changes.
As you can imagine, the panel did not see eye to eye on all of these things. Maybe even none of these things. Good news for the audience since agreement on a panel is, well, super boring.
Fundamentally, there was no agreement on how much the government should intervene in Housing – or if it should at all. In fact, the most audible crowd reaction came when one panelist suggested that the government “just stop” its interventions in the housing market. That’s actually a radical proposition and I don’t think even those applauding really mean it. There are very few who promote the withdrawal of federal government from the housing scene and, in particular, the exemption to capital gains tax on the sale of your home. That program is the single biggest intervention in the housing space, and surely the most costly. Its also been very successful at promoting home ownership. However, the exemption is so baked in the cake of our lives, we tend to forget that it is, in fact, a choice. To be clear, I think the government not only should, but must intervene in the housing market.
Its fair to say that the Liberals have been particularly activist and have made choices that make even more middle of the road observers pause. We need more rental units in our City and we need 2 and 3 bedroom units. So why impose rent controls right away on new developments? New developments need time to stabilize so that investors can make the returns that drive investments. I am good with rent control generally. Security of tenure is critical. However, I thought the balance would have been to bring new units into the rent control world after 10 or 15 years. I am also supportive of inclusionary zoning as a means of bringing more affordable units into the City. Where else would new units be built but in new developments? One of Steve’s points is that while developers may build it, they will need to be compensated for that exercise – that the cost of solving affordable housing and meeting the goals of the province is for the province to pay for – that it’s a shared burden. It’s a compelling argument. There is so much still uncertain as to how municipalities will proceed that its hard to say what that burden will actually be. The OMB proved to be the only point on which the three non-political panelists agreed – bad idea to get rid of it.
This legacy of activism is very much in the balance in the provincial election. Rent control being probably the most volatile of these issues. Would the NDP go back to unit based controls? Would Conservatives scrap the recent amendments? Point it – lots at stake in this election.