How Housing Regulations Ruin Tenant-Landlord Relations

6641Predrag Rajsic writes in today’s Mises Daily: 

Given the current regulatory environment in Ontario, it is in fact, rational that a landlord provides low quality service to his/her tenants. Why? Because under the current regulatory system, a landlord has minimal to no benefits from providing high quality service. In fact, a landlord may even achieve financial gains by providing low quality service. Ontario is one of the most legislated and bureaucratic regions in the world for tenant-landlord relationship management. Under this regulatory system, landlords are subject to the rent stabilization program and to a plethora of other requirements. This program has at least three main consequences: (1) it reduces the revenue that the landlord has on disposal for providing quality service; (2) it creates excess demand for rental units; (3) it provides incentives for landlords to evict tenants with a longer tenancy history.

The rent stabilization regulations prevent landlords from increasing the rent from year to year by more than a certain percentage. That percentage for the 2014 rent relative to 2013 is 0.8 percent, which is a fraction of the general inflation rate for this year. Rent restrictions applied over a longer period of time suppress rents below the level that would be established on the market in the absence of this regulation

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