Sunday, October 19, 2008

Where did the rentals go?

Affordable housing is hard to find because there are insufficient apartment buildings. You will be hard pressed to find any company constructing new apartment buildings. This is because of the landlords and tenants act.

Over many years, politicians have changed the landlords and tenants act to be more and more in favour of the tenant over the landlord. This is because there are more tenants than landlords, and consequently politicians can get more votes by pleasing the tenants.

The landlords and tenants act is so out of balance that most business people will never get into the rental business. Consequently, there is barely any new rental buildings. This reduces the supply curve for rental units, which drives up rental prices. Instead, business people prefer to build condos where they can sell them and not be burdened by tenants and the unfair landlords and tenants act.

The tenants have benefited in the short term by the unfair landlords and tenants act. However, in the long term, they suffer, as rental units become fewer and more expensive.

In any type of relationship, the only sustainable ones are those in a win-win relationship. Any relationship that is a win-lose relationship, will inevitably become a lose-lose relationship in the long run.


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