Shares of Canadian apartment companies dropped on Ontario after the province said it plans to freeze residential rents in 2021.
New rules announced Thursday apply to the vast majority of rental units in Ontario. Without the change, owners of rent-controlled apartments, condos and houses would have been able to boost rents by 1.5 per cent next year. The legislation also extends a ban on evictions of small businesses.
Real estate investment trusts with rental properties in Ontario had been trading higher before the announcement. Ottawa-based Minto Apartment REIT fell to C$17.96 as of 2:37 p.m. Toronto time, down 3.2 per cent from its intraday high, while InterRent REIT sagged 1.8 per cent from its earlier high.
Canadian Apartment Properties REIT, the country’s second-largest real estate trust by market value, initially fell more than 1 per cent on the announcement before recovering. The REITs didn’t immediately provide comment on the rule change.
At a news conference in Toronto, Ontario Premier Doug Ford said: “The last thing I want any family to worry about right now is whether or not they can afford to stay in their home.”
Ford’s government also imposed new limits on social gatherings in Toronto, Ottawa and Peel, where COVID-19 cases have been rising. Outdoor gatherings are now restricted to 25 people, down from 100, and indoor gatherings are limited to 10, down from 50.
The rules are primarily meant to crack down on parties and don’t apply to restaurants, movie theaters and other businesses operating with less strict capacity limits.