RioCan REIT CEO weighs in on Ontario's new rent control measures
Ontario’s new rent control measures are targeting the wrong end of the hot housing wave sweeping the Golden Horseshoe, according to the CEO of Canada’s largest real estate investment trust.
“They’re solving a problem that I’m not really sure existed,” RioCan REIT CEO Ed Sonshine told BNN on Monday.
“It can’t be helpful to what we’re doing because we really had to go back – and we’re in the process of doing that - and re-evaluate every project we have,” he said.
Ontario announced a spate of new housing measures on April 20 on the heels of a summit between Toronto Mayor John Tory, Ontario’s Finance Minister Charles Sousa, and federal Finance Minister Bill Morneau.
Included in those measures was extended rent control to properties built after 1991, altering the property taxes on apartment buildings to bring them to the same rate as residential properties and the launch of a new five-year $125 million rental construction program.
Sonshine told BNN that instead of lowering rents around the city, the planned measures could deter the construction of new apartments in the city, with developers opting for one-time sale endeavors, like condominiums, instead of building units which will continually require new tenants as the years pass.
“It probably won’t affect the going-in yields, the day one yields much - it will effect that a little bit – [but] it may impact what you’re going to build,” he said.
“If their purpose was to encourage more new affordable housing in the purpose-built rentals side, I don’t, quite frankly, see how it can do that. They need some tweaks that will encourage new construction.”
Sonshine does, however, see an upside to the new measures for his own company.
“There will probably be less competition,’ he told BNN. “We’re able to take a long-term view of things and –more important[ly] - we already own the land. We’re typically only building by and large where we already own the property.”
“Already owning the land, you don’t have the big cost risk that somebody does having to come in and buy the land at today’s prices.”