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Tuesday, March 08, 2011 

Brad Wall Is Just Plain WRONG On Rent Controls

Few Right wingers are more ideologically driven than Saskatchewan's Premier Brad Wall. When it comes to the call for 'rent control' in Regina and Saskatoon, he simply advances flawed research from the Fraser Institute. On the other hand, reliable new research from the University of Winnipeg should cause Brad Wall to perhaps examine the ideology that he loves to repeat.

"REGINA — Premier Brad Wall on Monday dismissed rent control as a "dangerous" approach while the NDP used the first question period of the spring sitting to hammer home the party's call for a legislated cap on increases."
Regina Leader-Post

What Brad Wall needs to do is to expand the boundaries of the information he uses to make his idiotic statements. For example, rather than simply repeating the fraudulent schlock that the Fraser Institute spouts, he may want to take a look at recent academic research completed by the U of W:

"Rent controls should not be blamed for Manitoba's minuscule vacancy rate or the dilapidated condition of some apartment buildings, according to a report to be released today.

The 39-page study, authored by University of Winnipeg economics professor Hugh Grant, also concludes "there is no evidence" that caps on rent have slowed the pace of new apartment construction or spurred a recent spike in condo conversions.

Furthermore, the provincial government-commissioned report says there is no proof rent regulations have "unduly restricted" rent rises in Manitoba. That's because the rules allow landlords to pass on their increased costs to tenants.

Family Services and Consumer Affairs Minister Gord Mackintosh said the report vindicates the government's approach to protecting renters.

"We're on the right path," he said Monday.

However, an organization that represents Manitoba landlords dismissed the findings Monday as "incorrect."

Wally Ruban, president of the Professional Property Managers Association, said the vacancy numbers don't lie.

"In a healthy rental market, there is tons of competition. Vacancy would be in the three-plus (per cent) range," he said, not less than one per cent as is the case in Winnipeg. He blamed two decades of rent controls for the current predicament.

Mackintosh said the government commissioned the study to find out whether, in fact, rent controls are to blame for the ultra-low vacancy rate. He said it is now convinced they are not.

In his report, Grant contends the rental shortage is largely due to a rapid increase in demand sparked by an aggressive immigration policy, specifically the Provincial Nominee Program. Rental construction has been slow to catch up, a situation that is not unusual in the housing market, he said.

Grant said a 20-year exemption from rent controls on newly built suites minimizes rent controls as a deterrent to new construction. Although Winnipeg apartment construction lagged throughout the 1990s, it has been well above the average of other large Canadian centres over the past five years, he said.

The impact of condominium conversions on the number of rental units in Winnipeg "has been exaggerated," Grant said. Conversions peaked in the mid-1990s and have been lower ever since, he said. And rental vacancy figures don't take into account the untold number of condos that are rented out.

The study also disputes the notion that rent controls are to blame for buildings falling into disrepair. In fact, incentives built into the rules -- such as temporary exemptions from rent caps -- have encouraged, rather than discouraged, improvements to properties, the report said."

Winnipeg Free Press

The market has a perfectly reasonable and logical response to price controls.

It just charges new tenants higher prices than it normally would to compensate for the inability to adjust prices later.

Rent controls, in other words, have a cost which is ultimately passed on to the consumer, as it always is.

No free lunches.

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