David & Mark Goodman

The matter of rent review/rent control has become a personal fixture amongst BC’s
rental apartment industry.  Imposed and modified by previous Provincial
Governments, its implementation has proved anathema to landlords and has long
been regarded as one of the key obstacles to the expansion of rentals by supply
advocates.  New purpose-built development remains uneconomic as
politicians find it expedient to shift the onus and the burden onto the backs
of apartment owners with arbitrarily capped rent levels.

In a recent Wall Street Journal op-ed, NYU Law Professor Richard Epstein comments
on a New York City landlord’s challenge to the city’s long-held rent control
and stabilization laws. The Fifth Amendment to the U.S. Constitution provides
that “No person shall be deprived of life, liberty, or property without due
process of law; nor shall private property be taken for public use, without
just compensation.”  The op-ed suggests that rent control collides with
the last prohibition, the “takings clause.”

While our Canadian Charter of Rights and Freedoms declines to enshrine similar rights
with respect to private property, the BC Legislature has recognized and
codified such rights by way of the Expropriation Act.  Much like the Fifth
Amendment, this Act allows the government to unilaterally claim an interest in
private property provided that the owner is compensated to the extent that his
property rights have been compromised. In particular, Section 31 of the Act
specifically requires the compensation to be in accordance with “market value”,
quite akin to the Fifth Amendment’s call for “just compensation”.

Indeed, the BC Legislature, by virtue of the Expropriation Act, contemplated and
protected a property owner’s economic freedom by providing for full value
benefits should that freedom be infringed. How, then, can this same government
justify a forced suppression of fair market value rents? One may question
whether the imposition of rent controls on a landlord is nothing less than a
pseudo-expropriation, except without, as Section 31 of the Act so rightly
requires, market value compensation.

A legal challenge could prove interesting…

A special thanks to Howard Flinker of New York City for bringing this to our attention.