Even though some form of rent control has been in place in B.C. for 50 years, the issue is not over — especially elsewhere. Two opponents make their arguments. Is compromise possible?

The debate over rent controls elicits strong arguments from both sides, suggesting a need for creative compromise.

Even though some form of rent control has been in place in B.C. for about 50 years, that doesn’t mean debate over the policy is over.

While Ontario has rent controls and Quebec has modest limits, Alberta and New Brunswick do not have rent controls. So-called “rent stabilization” laws exist in only about half of OECD countries, a club of 38 well-off nations.

Given it is an ongoing debate, Postmedia asked two B.C. housing analysts for their opposing arguments. Wendy Waters is an independent real-estate specialist who spent almost a decade with GWL Realty. Marc Lee is a senior economist with the Canadian Centre for Policy Alternatives, a left-leaning think-tank.

Since rigorous rent controls have long been the status quo in B.C., it’s worth beginning with Waters’s disruptive views.

“Places with strict rent controls typically have fewer options for renters — and higher rents,” says Waters. “These jurisdictions (such as B.C. and Ontario) have both fewer rental homes and lower-quality rental options. The stricter the rent control rules, the worse the problem.”

In Metro Vancouver, 38 per cent of residents are tenants — a portion that rises to 55 per cent in the City of Vancouver. In B.C., landlords are allowed to raise rents in line with the consumer price index, which this year is calculated as 2.3 per cent every 12 months. If a rental provider wants to raise rates beyond that, they must pay a fee to to make their plea to the Residential Tenancy Branch.

Waters has found rents are lower in non-controlled markets.

“Calgary and Edmonton and good examples,” she said, since without rent controls, the two Alberta cities have lower rents than Vancouver and Toronto. “In Calgary and Edmonton, rental housing providers are encouraged to respond quickly to growth in demand. When rents start rising quickly, a wave of new supply is built, bringing down rents, and also giving renters choice.”

The once robust construction of purpose-built rental housing in Metro Vancouver collapsed in the 1970s, Waters said, after B.C. imposed harsh rental controls. Unlike today, the rules did not allow landlords to raise rents to prevailing market levels after a tenant moved out.

Almost all rental housing is built by investors, Waters said, including individuals, pension funds and corporations. But it does not offer a high return. Since there is risk in building, buying and operating a rental apartment, she said investors “need a rate of return that exceeds a lower-risk investment, such as a government bond.”

Strict rent controls also produce “greater inequality,” Waters maintains. Tens of thousands of high-income renters in B.C. and Ontario have been “in low-cost, rent-controlled homes they have lived in for years. Meanwhile, younger individuals, couples and families do not have access to this naturally occurring affordable housing, and have to rent in the new stock.”

That said, rental prices have finally been going down in the past year or more. Last week, a Canadian rental housing analyst, SingleKey, reported that, nationally, rents have fallen 2.1 per cent year-over-year to an average of $2,051 per month. Vancouver rents have declined six per cent to an average of $2,833.

But, Waters said, “The only reason for some market rents to be trending down right now” is recent federal migration policy. Ottawa’s reforms “reduced the number of renters in each region by tens of thousands, after increasing it by hundreds of thousands. This was a one-time market distortion.”

On the other side of the debate, Lee emphasizes the vulnerability of tenants.

“I think if you just take out rent controls, landlords are going to make a lot more money. But it means tenants are going to be in situations where they fear their landlord saying, ‘Oh, guess what? I’m going to be doubling your rent this month,’” Lee said.

“Tenants are going to be absolutely worse off. It’s not just a market for them. It’s their homes. It’s the foundation of their lives.”

The key is to balance the interests of rent providers with tenants, said Lee.

“To side with landlords would be like only taking the side of corporations.” He compared rent stabilization programs to unions, “which exist as a kind of counterbalance” to owners’ pursuit of profit.

In addition to maintaining B.C.’s current rent stabilization measures, Lee advocates more restrictions. He wants the return of so-called “vacancy controls,” which stop landlords from raising rents above a small annual percentage when a tenant vacates.

In addition, Lee recommends governments get behind more non-market rental apartments, like co-ops. That’s where rents are based solely on the cost of land, construction, maintenance and interest rates — and less likely to be inflated by a private rush for “windfall profits.”

Because of a lack of purpose-built rental construction since the 1980s, both Lee and Waters recognize municipal, provincial and federal governments have in recent years been aggressively encouraging construction of rental apartments by dramatically reducing demands on developers.

It would be better, Waters suggests, if rental construction wasn’t subject to such severe ups and downs. She would start “unwinding rent controls” in B.C. by returning allowable annual rent increases to 2017 levels, which means to the consumer price index plus two per cent.

But change is unlikely to come any time soon, particularly under Premier David Eby’s NDP, which has traditionally tried to appeal to tenants through limits on annual rent increases and other renter-protection measures.