Abolishing Rental Replacement

Hey All,

Welcome back to Middle Ground; this is the tenth newsletter of our 28 policies in the 28-day series ahead of the 2025 Ontario provincial election.

Today’s issue will discuss how removing the rental replacement requirements can help increase housing density in Downtown Toronto.

What is Rental Replacement?
Under the existing laws of the City of Toronto, when a developer is going to displace an existing tenant to build new units they are responsible for compensating the tenant during the construction period then allowing the tenant to pick a unit (of the same size) in the new development to return to at the same price upon completion. 

This process is extremely difficult for developers and causes many to avoid re-developing existing rentals due to the complicated process. The issue for developers is that rental replacement is time-consuming, requiring constant contact and planning with the displaced tenant, and leads to long-term losses as the new units are still bringing in old rents. 

What is the alternative?
The solution to this problem is to create a framework for developers to buy out existing tenants without worrying about rental replacement. Similar to how all other evictions work, there needs to be an option for developers to buy out their tenants with a single payment. Given that under these circumstances, the developer would be undertaking a large project, a payment equivalent to 12 months rent would be fair to all parties involved. For the developer, the payment is still small relative to the scope of a construction project, while for the tenant, it provides enough immediate compensation to cover the cost of moving and subsidize the increased rent. 

What are the downsides?
The downside of this policy proposal is that most tenants in buildings old enough for developers to want to demolish have low rents as they have been rent-controlled for years. This means that they are likely to experience a sharp increase in the cost of living after being displaced.

Despite this potential consequence, this policy still benefits Torontonians on the whole, as the long-term solution to the housing crisis is to increase supply rather than keep artificially low prices for the few lucky enough to have secured a lease when prices were lower. 

To assist those who might be displaced, the City of Toronto should offer them priority access to any affordable housing units that become available in other developments.

Onwards and Upwards,

Liam Gill

P.S. - Please share this with as many people as possible to help grow our community and help us hold our elected officials responsible for implementing these policy initiatives.