The Impact of Rent Control on Housing Affordability

The purpose of this study is to gain a better understanding of rent controls and the impact on rental markets. In particular, this study focuses on the impact on rental prices and the supply of rental starts. The results have some implications for CMHC’s Apartment Construction Loan Program and the Affordable Housing Fund.

There are 5 findings from the study on the Toronto, Vancouver, Montreal and Winnipeg rental markets:

Main findings

• There was no significant evidence that rental starts were lower in rent control markets than in no rent control markets
• Rental prices appear to be better able to respond to market supply and demand change in markets without rent control
• Rental prices appear to be more likely to vary in rent control policies that are less strict
• New unit exemption regimes lead to an increase in rental prices

Regression analysis findings

• New unit exemption regimes lead to an increase in rental prices
• Tenancy deregulation regimes may lead to a decrease in rental supply

The findings of the study were not sufficiently robust to draw major implications with regard to the Apartment Construction Loan Program and the Affordable Housing Fund. However, it was possible to identify appropriate target market types for them. Generally, the Apartment Construction Loan Program would be more appropriately targeted to rent control markets. On the other hand, the Affordable Housing Fund would be more appropriately targeted to markets in which rental prices are relatively less affordable.

Author:

CMHC

Document Type:

PDF

Date Published:

December 11, 2020