Rational Reform of Housing Access Policy in Ontario
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Rational Reform of Housing Access Policy in Ontario by Benjamin Carter Ries A thesis submitted in conformity with the requirements for the degree of Master of Laws Graduate Department of the Faculty of Law University of Toronto Licensed CC BY-NC-ND by Benjamin Carter Ries 2011 http://creativecommons.org/licenses/by-nc-nd/2.5/ca/ Rational Reform of Housing Access Policy in Ontario Benjamin Carter Ries Master of Laws Graduate Department of the Faculty of Law University of Toronto 2011 Abstract Ontario’s current regulatory approach to low-income housing lies between two primary challenges: the human right to housing, and political/fiscal constraints. This thesis draws on legal theory and economic analysis of law to articulate the proper goals of housing access policy. A structural theory is proposed to explain the normative relationship between efficiency, communitarianism and justice in housing. An array of regulatory options are compared and considered in light of the features that characterize Ontario’s low-income rental housing markets. This analysis favours demand-side housing subsidies to low-income households, combined with supply-side tax expenditures to improve elasticity in the low-income rental market. Further reform of rent and covenant controls, social and affordable housing supply, and land use planning is recommended to ensure an efficient residential tenancy market. These reforms are offered as a framework for the implementation of the human right to housing in Ontario. ii Acknowledgements I would like to express my sincere gratitude to Professor Michael Trebilcock for his supervision of this thesis. It has been a true privilege to draw upon his illustrious record of legal scholarship and expertise. I am forever indebted to my partner, Naomi Steenhof, for her patience and encouragement. I also wish to thank my colleagues and dear friends – particularly Sarah Bratanek, Jacob Shelley, Matthew Norwood and Jennifer Simpson – for their helpful insights at various stages of my research. I also wish to recognize the indulgence of my employers and mentors: Claire Hepburn and Judith McCormack at Downtown Legal Services, Kenneth Hare and Francis Mencarelli at the Legal Services Branch of the Ministry of Municipal Affairs and Housing, Julius Mylanarski at South Etobicoke Community Legal Services, and my colleagues at the Advocacy Centre for Tenants Ontario. Each has guided me in the practice of law while allowing me to explore many of the questions addressed herein. Finally, it is with sadness that I note the tragic passing of Jack Layton just prior to the completion of this thesis. His commitment to ending homelessness in Canada has been both a bright light and a shared end, irrespective of the means endorsed. iii Table of Contents Abstract ............................................................................................................................... ii Acknowledgements ............................................................................................................ iii Introduction ....................................................................................................................... 1 Part I: Goals of Housing Access Policy ........................................................................... 6 1. Efficiency ................................................................................................................. 8 Pareto Efficiency ..................................................................................................... 9 Kaldor-Hicks Efficiency .......................................................................................... 9 2. Communitarianism ................................................................................................. 15 The Ideal Home ..................................................................................................... 15 The Ideal Neighbourhood ..................................................................................... 17 Ecology and the Precautionary Principle ............................................................. 18 Geographic Mobility and Equality ....................................................................... 19 Communitarianism when Other Rationales Fail .................................................. 21 3. Distributive Justice................................................................................................. 23 Equal Entitlement and Non-Commodification ...................................................... 24 Shelter as a Primary Good: Maximin ................................................................... 26 The Positive Right to Housing at International Law ............................................ 31 The Negative Right to Housing at Domestic Law ................................................. 41 iv 4. Corrective Justice ................................................................................................... 50 Property and Liberty: Locke ................................................................................. 52 Property and Legal Personality: Hegel ................................................................ 53 Mandatory Property: Waldron ............................................................................. 54 A Structural Theory of Housing Rights ................................................................. 57 Limitations of the Structural Approach ................................................................ 59 5. Conclusion ............................................................................................................. 63 Part II: Features of Low-Income Housing Markets .................................................... 66 1. Demand Inelasticity ............................................................................................... 67 2. Supply Inelasticity ................................................................................................. 71 3. Externalities ........................................................................................................... 75 4. Information and Cost Asymmetries ....................................................................... 76 5. Geographic Differences ......................................................................................... 79 6. Conclusion ............................................................................................................. 81 Part III: Housing Access Policy Choices ....................................................................... 82 1. Rent Control ........................................................................................................... 84 The Current Statutory Framework........................................................................ 85 Arguments For and Against Rent Control ............................................................ 88 Arguments For and Against Vacancy Decontrol .................................................. 90 Arguments For and Against Total Decontrol ....................................................... 94 One Statute, Three Visions .................................................................................... 97 Recommended Reforms ......................................................................................... 98 v 2. Covenant Control ................................................................................................. 100 The Current Statutory Framework...................................................................... 101 Arguments For and Against Minimum Standards .............................................. 105 Strict Judicial Characterization of Covenant Control ........................................ 107 Efficient Selection of Rights Strategies in Property and Contract ..................... 112 Regulation of Lease Clauses: the Optimal Mix .................................................. 116 Recommended Reforms ....................................................................................... 120 3. Social Housing ..................................................................................................... 123 Direct Public Delivery ........................................................................................ 124 Independent Delivery .......................................................................................... 130 Recommended Reforms ....................................................................................... 135 4. Market Subsidies .................................................................................................. 139 Supply-Side Subsidies ......................................................................................... 139 Demand-Side Subsidies ....................................................................................... 145 Recommended Reforms ....................................................................................... 152 5. Conclusion ........................................................................................................... 154 Conclusions and Recommendations ............................................................................ 157 vi Introduction The regulation of housing in most societies is a matter of critical social and economic importance, due in no small part to the centrality of shelter as a basic human need and despite its conventional distribution through the free market. In Ontario, several related pieces of law and policy comprise the province’s