It seems like something out of George Orwell’s novel 1984 or the real-life events of pre-Second World War Germany, but it’s happening here in Ontario and threatens to expand across Canada.
In January 2022, the City of Oshawa’s City Council heard a proposal from its bylaw department to roll out a residential housing licensing program that would be the first of its kind.
If you think this is a local municipal issue that doesn’t affect or apply elsewhere, you’re likely to be proven wrong. Municipalities routinely justify new “fundraising” programs by pointing to other municipalities that have previously been “successful.”
Oshawa justified its program proposal in part because “other municipalities are doing it.” However, only Toronto and Waterloo, out of a total 444 municipalities in Ontario, currently license multi-unit residential properties. Oshawa wants to license every type of rental housing.
The city referenced data it created, managed and “analyzed” using thinly veiled, one-sided surveys and carefully selected participants in “public feedback” forums that could lead to only one pre-determined outcome. The city’s foregone conclusion was that it must set up a demerit point system that rates how “bad” every housing provider is by employing 33 additional bylaw officers at a cost of almost $5 million.
At the January 2022 council meeting, one council member was described as literally flying out of their chair, exclaiming that taxpayers should not get “stuck with (the) extra cost.” What was particularly egregious was that the council’s unasked questions and unprotested acceptance of the program essentially meant that council agreed that all of Oshawa’s housing providers are slumlords.
The city essentially sanctioned a state-run surveillance regime comprising relentless mandatory “spot” inspections using unaccountable law enforcement Praetorian guards empowered to make legal interpretations and pronounce financial penalties for even the most trivial infractions.
This time-tested strategy is exactly the same as that used to deny citizens their democratically granted freedom slowly and methodically in 1930s Germany. And demanding that landlords pay for a punitive licensing system is no different than demanding that convicts pay for the court and prison system that convicted them.
What are some inevitable consequences?
- Any additional fee, tax or “cost recovery” makes housing less affordable
- Property standards define a minimum quality of building that housing providers will adopt as the norm, thus reducing quality of lifestyle for many tenants
- Licensing fees discourage housing development and upgrades. It’s no coincidence Ontario has the lowest housing-per-capita of all the G7 nations. No one wants to build housing here
- Durham Region’s 10 least-affluent groups are all in Oshawa. Almost all low-income tenants live in rental properties. Tenants pay the property tax – not landlords, who remit it on their behalf the same as retailers remit their customers’ HST. Therefore, Oshawa is taxing its low-income wage earners double what it taxes its more affluent single-family homeowners
- Arresting high municipal infrastructure costs can only be addressed with densification. Licensing discourages densification. Aging infrastructure maintenance costs increase and all taxpayers wind up paying more.
- The $5-million program cost obliterates $110 million or more of Oshawa’s rental property equity (at 4.5 per cent cap rate). Low equity means higher costs, which means lower property value on which property tax revenue is based. Lower property value means lower tax revenue for the city or higher property tax rates. It’s a vicious circle caused by bureaucratic and political short-sightedness and no understanding of how housing actually works. Every tenant will wind up paying for the program.
“Full cost recovery” is the holy mantra and tired cliché of municipalities to justify every extra fee that can’t be justified by raising taxes. How easy is it for an unaccountable bylaw officer to deny a small operator, retiree or pensioner’s total livelihood by denying a license because of a cost-prohibitive missing window screen or because the grass is too high around a fire hydrant? At what point does mindless enforcement of petty trivialities become extortion?
Most rental housing providers are not slumlords but the very existence of a licensing program implies otherwise.
A detailed analysis of Ottawa’s (not Oshawa) 311 property standards-related calls over a 10-year period determined that only 51 properties (0.5 per cent) out of a total 100,000 received more than two calls per year, and those complaints weren’t necessarily violations.
Instead, create a “merit” certification program that rates and rewards the top housing operators with “certificates of praise,” based on achieving high scores. Housing providers would proudly display such certificates in their foyers. Bylaw enforcement can identify and focus on the slumlords. It would instill pride throughout the legitimate housing community and re-establish some long-overdue respect for housing providers. Importantly, it would near-eliminate the many frivolous claims from tenants who exploit bylaw officers to further personal agendas.
The cost to implement and operate this type of certification program would be a fraction of any housing licensing scheme.
Tenants will ultimately suffer the most in the long run under Oshawa’s proposed licensing program. The net result will be excessive property standards enforcement leading to minimalist property quality and no new housing construction, resulting in a grossly inadequate number of property standards-conforming rental units at extremely unaffordable rent rates.
Chris Seepe spent 35+ years in I.T. before entering commercial real estate a decade ago. He’s a published writer and author of two books on “landlording,” course instructor, president of the Landlords Association of Durham, and a commercial real estate broker of record at Aztech Realty in Toronto, specializing in income-generating and multi-residential investment properties. Call (416) 525-1558, or send him an email.
