Picture this: You decide to invest in a little piece of real estate. Maybe it’s your retirement plan, maybe it’s a nest egg for your kids. 

You’re not a corporation sitting on 100 properties; you’re a small landlord. You saved, you scraped, and you decided to rent it out. You help someone by providing housing, they pay you rent, and everyone wins. 

Except… in Ontario, it’s not quite that straightforward.

The reality for small landlords in Ontario

Enter the Residential Tenancies Act (RTA) and the Landlord Tenant Board (LTB).

What was meant to ensure fairness in the renting process has turned into a gauntlet where small landlords get crushed under the weight of endless delays, professional tenants who know how to game the system, and a Residential Tenancy Act that overwhelmingly favours tenants. 

The financial strain of delays

Add to this, the average wait time for a first hearing at the LTB is eight months, which doesn’t even account for adjournments and stays which often extend the eviction process to upwards of two years! All while the mortgage, property taxes, and maintenance bills keep piling up.

The impact of rent control on housing supply

Tenant rights advocates like to talk about landlords playing real-life Monopoly, but in this version, someone else’s piece gets to live in your hotel rent-free while you still have to cough up for Boardwalk. These same advocates lobby the government to impose strict rent controls as they say it keeps housing affordable. The reality? It’s doing the exact opposite.

Here’s the thing: we don’t have a housing crisis; we have a housing policy crisis. When you cap what landlords can charge for rent, you’re not helping tenants in the long run. You’re strangling the housing supply. 

Why would anyone want to build or invest in rental properties when they can’t even cover their costs, let alone make a profit? It’s like running a restaurant where you can only charge $5 for a steak dinner. You’re going to run out of money, fast, and eventually, you’ll stop serving steak altogether.

Global examples: Sweden and Argentina

Sweden had some of the strictest rent controls in the world. The result? A housing market so tight you’d think it was being managed by a tourniquet. People were waiting up to 20 years for what Swedes call “first-hand” accommodation contracts.

Despite laws intended to prevent individuals from being taken advantage of, the overwhelmed rental market fuelled a booming subletting or “second-hand” industry, with “first-hand” renters providing properties to tenants for extremely high prices. Once Sweden relaxed those controls more people built rental units, housing availability increased, and rents stabilized.

Argentina’s previous rent control law was introduced in 2020 and aimed to provide tenants with more financial security, but by the end of 2023, an estimated one in seven homes in Buenos Aires was sitting empty as landlords chose not to rent them out.

Landlords were not allowed to accept deposits, and it became nearly impossible to end tenancies (sound familiar Ontario?). On December 29, 2023, Argentina’s repeal of rent control laws took effect and the supply of rental housing in Buenos Aires jumped by 195.23%.

It turns out that when landlords are allowed to make enough money to cover their costs and make a modest return, they’re willing to keep providing housing. But let’s not let facts get in the way of the “all landlords are evil” slogan.

The case for easing rent controls

It may sound like I’m saying, “Poor landlords! Boo-hoo!“. But the reality is, rent control hurts tenants too. Over time, as fewer rental units are available and existing ones fall into disrepair, it becomes harder and harder to find a decent, affordable place to live. Long waitlists, dilapidated buildings, and frustrated small landlords bowing out of the game altogether.

The true cost of rent control for small landlords

Do you really think small landlords enjoy hiking rents by more than they need to? They’re trying to cover the costs of an increasingly expensive housing market, high property taxes, and skyrocketing repair and maintenance costs. Rent control says they can’t charge what it actually costs to maintain their property.

Some small landlords start to skimp on maintenance and others sell to developers and corporate landlords who are more than happy to bulldoze affordable rentals and replace them with shiny, expensive condos that no regular tenant can afford. The irony is rich.

I skipped a lot of my grade 10 Intro to Business class, but I do recall the chapter on supply and demand. What we need is more housing. If we want to solve the housing crisis, we need to incentivize people to build and convert more rental units. The more options there are, the lower the prices. You don’t need to be an economist to figure that one out.

Learning from cities like Tokyo

Cities like Tokyo, which has avoided strict rent controls, have one of the most affordable housing markets, the lowest rate of homelessness and the highest level of satisfaction with housing relative to their size and population. The Japan Housing Corporation (JHC) was established to promote the collective construction of housing and the large-scale supply of residential land for middle-income people, mainly in major urban areas.

Tokyo allows people to build housing, and in the process, it keeps rent relatively low because there are enough units to go around. Imagine that, a city where you can find a place to live because there’s enough housing. Revolutionary.

Concluding thoughts

If Ontario keeps punishing small landlords, forcing them to subsidize housing at unsustainable prices, we’re not helping tenants and things will continue to get worse. If we want affordable housing, we need to take a page from the countries that lifted rent controls and saw their markets improve.

Until then, small landlords are stuck playing the world’s worst game of Monopoly, while tenants are stuck on Baltic Avenue paying Pacific Avenue rent if they’re lucky.

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