Like many Canadian cities, rental vacancies have been slim to none for years, as rent controls effectively eliminated any new, large apartment block construction – and the investors to fund it.
But Manitoba decided to get to the heart of the problem – rent controls – without raising the hackles of those already living in rent-controlled buildings, by placing a moratorium on controls for new builds.
A recent provincial decision to waive rent controls for up to 20 years on new apartment building construction has generated a flurry of new building in Winnipeg, says Garret Wong, president of Garamark Property Management. But it didn’t happen overnight.
“They tried giving people a five-year rent control break a few years ago to entice people to build here; and there wasn’t much of a reaction,” says Wong. “Then they switched it to 10 years with no rental control, charge whatever you want, and then it gets locked in after that 10th year. They’ve now changed that to 20 years of rental exemption – and now people are starting to build.”
The lack of new rental until building has been a sore point for many Canadians – and especially felt in Ontario – where rent control legislation introduced in the 1970s all but stopped new apartment building.
It has been the same story in Manitoba, where Wong sees the latest government initiative as a positive step towards more rental units for those looking, and more opportunities for investors looking to place their money.
“You try to maintain a good relationship with government; I think here (Manitoba) they are doing a decent job taking both landlord and tenant into account,” says Wong, “not in terms of the day-to-day renting, but in trying to shape where they want the province to be in the next five to 10 years. And that bodes well for new investors, knowing that government isn’t putting up as many roadblocks as they used to.”
While the removal of rent controls is a welcome breath of fresh air for investors, it shouldn’t be viewed as a green light to inflate rents without proper property maintenance and management, cautions Wong.
“Their mandate here has been: if you reinvest in the property, you should get paid back for it in rent,” he says. “But you don’t have a right to jack the rent up if you haven’t put anything into the property, such as a 100-year-old home; and that makes sense.”