Rents in Canada have been increasing in recent years, causing financial strain for individuals and families and resulting in a decline in their standard of living. Despite claims from government officials that wages are keeping up with the cost of living, Canadians are well aware that housing and food prices are rising at a much faster rate than headline CPI, and few workers are receiving raises that outpace their necessary expenses. It is disheartening to see one’s standard of living deteriorate, and even more frustrating when those in power deny the reality of the situation.
There is a tendency in Western nations, and particularly among Canadians, to demand immediate government intervention to solve perceived problems, without considering the government’s capacity or willingness to actually improve the situation. In the case of the housing crisis, it is important to recognize that the crisis itself was created by government actions. The same individuals and institutions that caused the crisis may not be the most effective in resolving it. It is worth noting that these problems have persisted for a long time, but have been largely ignored by the majority of people who did not demand solutions.
Currently, there is a growing call for rent controls as a quick fix for rising rents. However, Canadians should be wary of such political opportunism, as quick fixes often lead to poor outcomes. Rent control policies, particularly when they involve the transfer and confiscation of wealth, are not only ineffective but also immoral.
The housing crisis in Canada is not a single issue but rather a combination of three related yet distinct problems. Firstly, the steep increase in interest rates has caused mortgage costs for homeowners and landlords to soar. Borrowers became accustomed to artificially low interest rates that were unsustainable in the long run. Secondly, there is a significant lack of housing supply in Canada, despite being one of the least densely populated nations on Earth. Governments must take responsibility for this situation, as restrictions on expansion and excessive taxes and regulations discourage builders from constructing new homes. Lastly, rising rents are also a concern, although the extent of the problem is often exaggerated by the media. While some renters have faced substantial rent increases, implementing rent controls would be detrimental for everyone involved. It is crucial to understand that correcting economically maladaptive policies should not involve the implementation of other flawed policies. Canadians should resist short-term vote buying and demand structural change instead.
Rent control policies have been shown to result in unintended consequences. In the past, during the 1970s and early 1980s, when rent control was widespread, it affected both the wealthy and the poor. Rent-controlled buildings primarily housed young professionals who saw their incomes grow while benefiting from decreasing rents. Poor families struggled to find affordable housing because of limited availability, and the practice of “key” money emerged, where renters would charge cash payments to sublet their apartments. The freeze on new apartment buildings resulted in a chronic shortage of housing options, and landlords had little incentive to maintain or upgrade their properties. Ultimately, the quality of housing deteriorated over time.
While it may seem that society is becoming increasingly amoral, it is essential to recognize that rent control is essentially the government confiscating investor capital to buy votes, which is inherently immoral. It is comparable to the government taking away part of homeowners’ equity or retirement savings to gain political favor. Canada needs less rent control and a greater emphasis on free-market solutions.
Disclaimer: The views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.