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Steps to take to fix rental shortage
Jun 27, 2013

 

In March 2011, WinnipegREALTORS® released a discussion paper on Manitoba’s rental housing shortage. The 34-page report contained a number of recommendations to alleviate the province’s critical rental shortage. 
Many people wondered why an association of REALTORS®, primarily dedicated to selling homeownership, would become concerned enough to specifically investigate the rental market. The answer is that we care about the entire housing market, since impacts are not contained within neat market segments, but spread out so that they affect each other. For example, limited affordable rental accommodations in combination with a strong influx of immigrants has helped make Winnipeg one of the tightest housing markets in the country. By default, resale housing becomes the property of choice when other accommodations, such as new homes or rental units, are either too expensive or unavailable.
Some of the report’s recommendations included reforms to the Residential Tenancies Act, finding ways to increase new rental supply and maintain existing units,  and doing more to align successful immigration efforts to a supportive housing plan. It is one thing to attract new immigrants to Manitoba, but they also require adequate housing.
A simpler solution is to provide incentives to current renters, who are good candidates for homeownership. Once they become homeowners, they will free up valuable rental units for those unable to, or not in a position to, own a home.  
One small step for the province is to match the first-time home buyer’s tax credit of $750 offered by the federal government. The $1,500 a first-time buyer would get back from their income tax return would help offset the high land transfer tax that they are required to pay for the privilege of owning a home. For the purchase of a modest-priced home of $250,000, the provincial government collects $2,650 before you are able to take title to the property. There is another $70 registration fee that is paid to the Property Registry.
Canada Mortgage and Housing Corporation’s (CMHC) spring rental report for Manitoba shows a glimmer of hope thanks to an increase in new multi-family rental construction. The rental market for Winnipeg and the surrounding area saw some improvement in April 2013 compared to April 2012; albeit a very modest one. The rental market went from 52,195 units in 2012 to 52,752 in 2013. The overall vacancy rate went up from 1.2 per cent to 1.9 per cent. 
The challenge for landlords is the one per cent increase allowed in 2013 by the Residential Tenacies Branch. Landlords are hard pressed to maintain older rental buildings, as operational costs are well above the branch’s rent increase guideline. While newer stock has been coming on stream, older buildings are falling by the wayside for lack of maintenance, or the buildings are being converted to condominiums when landlords feel it’s the only alternative they have to salvage their investment.
“As Winnipeg has arguably the second or third oldest housing stock in Canada, more maintenance and capital improvements have to be made to improve our housing stock, and during the last decade, landlords have bene hampered to do just that because of rent guidelines that have been well below the increased costs of operation,” said Mel Boisvert, a landlord and a WinnipegREALTORS® government relations committee member. “In the last few years, the set guideline of one per cent creates a dilemma for the investor landlord, as we have seen three hydro rate increases alone, plus ever increasing insurance costs (seven per cent PST added last year to premiums), and municipal and education property taxes are on the rise. 
“These are just some of the increases landlords have to contend with, so they often have no choice but to defer maintenance which further deteriorates his/her property. Although one can apply for an increase over the guideline, which is quite an involved process, owners are not able to generate the cash flow to finance the necessary improvements,” he added. 
Boisvert appreciates that tenants do not want to have to pay more rent, but he also said they need to understand why it is necessary to be able to have rental property owners continue to provide rental units.
 Boisvert, as co-chair with Manitoba Housing Minister Kerri Irvin-Ross of a Manitoba Rental Supply Roundtable, which released its own set of recommendations last year, said there have been some steps taken to encourage more rental construction. In the April 2013 provincial budget, a new eight-per-cent tax credit was included to support private rental housing construction costs. 
Boisvert said all levels of government, the private sector and housing stakeholders must work together. It also has to be recognized that more affordable rental units are by far scarcer than upper-end units, so much still needs to be done to increase the supply of affordable rental units.