FOUR YEARS OF RENT CONTROL MAKES NOVA SCOTIA HOUSING CRISIS WORSE
November 25 marks the 4th anniversary of the introduction of temporary rent control in Nova Scotia.
When temporary rent control was announced, government’s stated intent was to address the housing crisis by capping rent increases to 2% per year.
Evidence to date shows that rent control in Nova Scotia is only making a difficult situation worse.
There is a misconception that limiting rent increases somehow improves access to housing and makes what housing is available more affordable. In fact, the opposite is true.
Simply put, rent control makes owning rental housing unsustainable for many family managed operators. This is because rents cannot be increased to keep pace with rising costs of operating and maintaining housing units. Like other homeowners with and businesses with, rental housing providers are facing increased costs for property taxes, mortgages, heat, electricity, water, and other supplies, as well as the higher costs of maintaining and upgrading common areas and property improvements.
With over 97% of revenues dependent on rent, rental property owners have few options to address these increased costs, other than through reasonable annual rental price increases based on the market. With rent control in place, rental property owners are sometimes forced to let units sit empty because they can’t afford the higher operating costs.
In other situations, they have no choice but to sell their units, either as rentals or as condos. At the same time, being a rental property owner has become far less attractive to, with property owners unable to operate at a loss. As a result, the existing housing supply shrinks and renters have fewer affordable options. This also affects overall housing affordability as those who are building new units are often forced to charge even higher rents to reflect a rent control marketplace. At a time when every unit is crucial to addressing the housing crisis, rent control is causing Nova Scotia to lose its most affordable rental units, as property owners are being forced to sell their properties or leave units vacant.
Since the introduction of rent control four years ago, homelessness has gone up in Nova Scotia. We warned politicians when they legislated rent control in the fall of 2021 that rent control would increase homelessness. The housing crisis and homelessness will continue to deteriorate the longer rent control is in place.
When we look around the world, we see many governments and others are realizing that rent control doesn’t work. Argentina has repealed its rent cap and saw a surge in available units and stabilization of rental prices (Newsweek, August 2024). In the United States where unregulated rental markets have an oversupply of rental units and stabilized rents, economists from the across the ideological are urging Presidential candidates to rethink rent controls that reduce available housing and prevent development of new rental properties (Politico, August 2024). In California, over 20 mayors are protesting rent cap expansion policies they say will decrease access to affordable housing (San Jose Spotlight, August 2024). And in New York City, research has shown that rent control has led to decaying housing stock and supressed housing values, while reducing the amount of affordable housing (Manhattan Institute, January 2020). Communities are also finding rent controls may not actually serve those who need them the most (Gardiner Pinfold, 2021).
There are many who want to oversimplify this complex situation by insisting that rent control is the only solution. Based on what we have seen here in Nova Scotia and in other jurisdictions, this is what we know does work:
Policies at all levels of government that encourage and support the creation of new rental housing units, at a wide range of rental pricing, as well as maintaining the existing supply.
A return to rents set by the free market, a policy that resulted in more affordable rents in Nova Scotia before rent control was put in place.
Rental property owners have the same goal as renters – a healthy rental housing stock in Nova Scotia, with a diverse range of high-quality units available for renters at all income levels. Rent control will not get us there in Nova Scotia, and we urge government and all parties to work with us on solutions that will.
Link to resource: Rent Control Anniversary
Topics: Editorials