Today I wanted to talk a little bit about the rules in Ontario regarding residential renting. I have been in real estate 12 years now and I have seen a lot of major changes in that time.
The landlord tenant act has always been pretty biased towards tenants in Ontario. But I find that its worse than ever now. I have been to to the housing tribunal and witnessed many cases where even though the tenant is clearly in the wrong they still seem to get the benefit of the doubt and get an extreme amount of leeway.
Some of the newer rules are if you kick a tenant out. To move in or sell your unit you will now have to pay them one months rent. Previously condos that were built before 1991 were under rent control, now all condos are under rental control regardless of when they were built. The percentage you can raise the rent is determined by the Ontario Government. Which cannot be any higher than 2.5% but changes from year to year. The Ontario standard lease which is the newest change as of April 30th is a document laid out to cover mostly everything that a lease in Ontario would need. This is a required document for all landlord leasing documentation. You can have schedule A attachments but it cannot be anything that contradicts the act.
Another new law is if the Landlords property tax goes down then the tenant will get a reduction in their monthly rental price.
Some frustrations we’ve had are tenants moving additional people into the unit that are not on the original lease. There is nothing the Landlord can do about that. As long as they meet the space requirement of 150 sqft per person they are allowed to do that.
Landlords also forget that the Landlord tenant act supersedes all leases. So you can put tons of wacky things in your lease which a lot of landlords do and think its the law. But if it contradicts that act then it means nothing at all.
Tenants agreeing to pay more than first and last in their offer can also apply to get those rents back after they have moved in. Even though its on paper it doesnt matter the landlord will have to give that prepaid rent back and if they dont they can be taken to the tribunal.
I do agree that landlords being able to raise the rent a crazy amount from year to year is unfair. But the minimal amounts the Government is allowing for no enough for Landlords to keep up with costs.
Problems with being a Landlord
One of the biggest issues is the amount of time it takes to get a tenant out of a property. Currently if the tenant stops paying rent it will take somewhere around 6 months to kick them out. You can collect zero rent during that time with no way of getting it back except to sue. This is a delay from the tribunal court system, filing paperwork and ultimately the court marshal removing the tenant. This can be a huge problem for the landlord if he doesnt have enough of a slush fund to carry him through those tough times.
There are so many new rules that are against the landlords. The unwillingness of the courts to help landlords we are now finding less and less people looking to invest in real estate to specifically rent out. With most condos being cash flow negative. Combined with all the rules against them it doesn’t make as much sense anymore to be a landlord.
Ultimately this is driving rents upwards because there are less and less rental properties. Less and Less people want the hassle of being a Landlord. The Government with all its new rules. Has done the opposite of keeping rents low and driven the market rapidly upwards. We have seen a 10% rent increase over the last year in the downtown core. Driving the average rent up to 3.5 to 4$ a square foot.
Hopefully when the next rental changes come into affect they will be a little more Landlord friendly!