Rental “Fairness” Act – How bad is it?

April 26th, 2017 · 35 Comments · Kids & Family, Landlord Advocacy, Rental Property

I have read Bill 124, Rental Fairness Act 2017 and I have to say the news is really bad.

Rent Increase Exemption Gone

Remember when we could increase rents to reflect increases in maintenance fees and other costs? Well that just ended. I can’t say I’m surprised with the widespread abuse of the exemption to evict shitty tenants or to evict tenants when you want to sell.

Above Guideline Rent Increases Changed – Utilities Not Included

I spoke to Jeff this morning, and he said he was not aware of anyone ever using the Above The Guideline Rent Increase for condo maintenance fee increases. Having said this, most condos used to be exempt but in my mind I doubt we will be able to apply to the board for maintenance fee increases no matter how much they are.

However for the older buildings most of which were both rent controlled and included utilities, they will no longer be able to apply to the Landlord & Tenant Board for relief. Despite the fact that electricity costs have gone up tons, forget about it. Tenants can look forward to submetering. Personally I’m a fan of metered units and I’ve evicted many tenants that can’t afford their electric heat.

Leases

I don’t even care, leases have been useless for the last 10 years. Tenants don’t have to follow rules and the Landlord & Tenant Board won’t enforce any clauses that don’t comply with the law. I had a one page lease for the longest time, now I have more pages to impress owners that don’t understand that leases don’t mean much. I have had some fantastic clauses I have added but enforcement… well as I send more and more tenants to collections in Small Claims, we’ll see how this turns out.

There’s like lots of when the tenant signs and when the landlord signs, but honestly for me this is a non issue, the tenants get the lease at before they move in, and I treat the lease more like a here’s what you’re supposed to do rather than an actually legal document. My commercial leases can be hundreds of pages but I doubt the Landlord & Tenant Board wants to kill that many trees.

Fun Fact: For over 20 years it’s been a part of the law that if your tenant doesn’t have a signed copy of the lease within 21 days of the lease signing, they were under no obligation to pay rent. Further when the LTB introduced the rule that you had to include the “information to new tenants” brochure in the lease, it was added to that law. So if you didn’t give out the package within 21 days of the tenancy there was no obligation to pay rent.

Landlord’s Own Use Application

This application is terribly abused by landlords.

  1. Have a bad tenant? Own Use
  2. Want to sell? Own Use
  3. Tenant persistently late? Own Use
  4. Rent too low? Own Use
  5. Want to Upgrade? Own Use
  6. Damage to the property? Own Use

It’s finished. Now you have to live there for a year, and you have to pay the tenant a month’s rent to leave.

I suspect this will lead to a rise in the other types of applications as landlords use the proper (but more complicated) channels to get bad tenants evicted.

Good news is, if your application to evict based on your own use (because it’s your property) is denied, you tenant will have to pay you back the months rent you paid them.

Landlord’s Own Use Application

The landlord will have to file an affidavit from the new purchaser that they require it for their own use. (Probably for a year?)

Presumption Of Bad Faith

There is a new notice called the “Notice In Bad Faith” which came out a while back because there was so much monkey business going on with the Owner’s Own Use Applications, and tenants would move out and pass by their old place at a new rent $500 plus higher after a quick paint job. If seemed that tenants had to prove there was bad faith but an owner could give an excuse and win at the Landlord & Tenant Board.

Now if the landlord advertises the rental unit for a higher rent than was last charged to the former tenant it’s assumed that you gave notice in Bad Faith and you will have to prove that you didn’t. So good luck with that.

Collecting Or Trying To Collect Money After a Tenancy is Terminated

Remember a while back there was some bleeding heart stories about rent theives who were evicted being charged  an extra two months after their tenancies were terminated because they failed to give proper legal notice? Ok, you can’t do that anymore. I think this applies to Met Cap only but whatever.

It’s now an “offense” whatever that means.

Elevators

Elevators need to work and you can’t apply for an Above the Guideline Increase unless they do.

My Opinion

Fortunately we still have vacancy decontrol which means you raise your rent as much as you want in between tenants. Condominium ownership has become even worse. Most of the owners I deal with are cash flow negative as rents were flat for a long time, but now that rents have gone up landlords were raising the rents, hopefully to break even. That option is now gone. My strategy when a building goes up and 80 units become available to price competitively will have to be reworked because what if the tenant stays? Maintenance fees go up like $100-$200 when the building closes. Before I could just give a fair increase and be done with it.

The grossest injustice is for the old buildings with hydro included. They cannot apply for an Above The Guideline Increase based on electricity. That’s really unfair.

We now have the most draconian rent control in Canada. Quebec allows you to raise the rent according to your actual costs in your building. There’s even a net profit adjustment. Vancouver is like us and requires increase be set for the Guideline however a “move out” clause can be included requiring the tenant to move out on the date the agreement ends – both parties must have their initials next to this term in order for this to be enforceable. As a practical matter most leases have this clause and rent is renegotiated to market. Their rent increase guideline is not capped at 2.5% and is 3.7% this year.

Selling a condo has now become really hard and real estate agents are going to have to work a lot harder for their money and be showing the unit with the tenant in it. Wow they won’t like that and neither will owners. Selling a unit to get rid of a bad tenant will be next to impossible as requirements to get a tenant out even after the condo is sold require an affidavit and owners own use for a year and presumes guilt on part of the owner if the unit is rerented for more money.

Unfortunately I don’t see more purpose built rental housing because of the rent control cap and that would help stabilize the rental market long term and could provide a midrange product to market. Simple buildings, energy efficient, built to last, with a more family oriented apartment. Surely we don’t all have to build Jaguars? Surely we can have some nice Toyota Corollas, some Volkswagen Jettas and Suzuki Swifts in this rental market? Right now we are like Cuba in the rental market, every purpose built building dates to 1957.

We live in a global marketplace and even in Canada there are a lot better places to build a rental building. Honestly maybe part of the problem is that rents need to go up a lot more before it even makes sense to build rentals. Right now small investors are subsidizing condo renter’s rent with negative cash flow, but institutional investors will not under any conditions be prepared to take a loss on rent. It just doesn’t scale. Mom and pop investors have paid for this rental supply and they’ve been amply rewarded by capital increases. Unfortunately that leads to profit taking as investors sell to reap their long awaited reward.

As for the idea that this is a fair piece of legislation, there is not a fair anything in there. Here’s some things that could have been added to make it fair…

  1. No endless appeals to higher courts by rent thieves.
  2. Bad tenant tracking
  3. No smoking provisions in lease that stick
  4. Faster processing of rent thieves evictions
  5. Let us protect our existing tenants from antisocial, criminal tenants by kicking them out
  6. Criminal enforcement of landlord fraud
  7. Better process for transferring orders to small claims court
  8. Staff Adjudicators properly so that we don’t have endless delay to get a court date
  9. More court rooms
  10. Access to mediators at any time to make an agreement with a tenant binding.
  11. Allow landlords to use regular bailiff’s, or speed the enforcement process up.
  12. So many more…

There is nothing at all fair about this piece of legislation, if you are a landlord I urge you to immediately email your MP, your MPP and the Minister of Housing. Here you can get the list of them on the tenant advocates website, they know how to lobby don’t they?

Sad.

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35 Comments so far ↓

  • Belinda Liu

    I really appreciated your idea and how can I send these thoughts to mp or whover. I have bad experiences to evict bad criminals tenant at ltb and I really want to say that board is only tenant’board only. They leave no room to landlord to fight against with bad tenant. Now the rent increases cap make landlord into a small Corder and …

  • newe landlord

    Thanks for the all the information.
    Question: do you know if the landlord still needs to pay the tenant to move out, even if the lease is up and tenant is going month to month?

    • Rachelle

      My understanding is that anytime you give notice for landlords own use you will have to pay the one months rent. I also doubt you will be able to terminate during the lease term at all just like now

  • Tony Ont

    I thinking about selling my 4 rentals now because i don’t think it’s worth it anymore. Three of my renters are month to month because they have been there longer than their lease term. Will the one month eviction penalty apply to the three that are month to month.

    • Rachelle

      Well it’s not the law yet, so if you list immediately and sell pretty fast, you’ll save a lot of dough

      • Mark

        Actually it’s retroactive to April 20th. Sorry to bust up the greedy landlord blog.

        • Rachelle

          Sure if the law passes. It’s not passed yet.

        • Patricia Bianco

          Most landlords are not greedy. Based on sine of the extreme tenant situations in the media we could easily claim tenants are mostly crooks. Not fair eh?

          Here’s some math for you. In 1991 – 26 years ago – I paid $990.00 for a mid-town Toronto rent-controlled made-for-purpose building. Much more affordable than the ones my friends were renting. (My brother who was also in a rent controlled 1 bedroom 1 bath paid the same amount $990/ month) Mine was old and tired : a 2 bdrm, 1 bath, parquet floors (which I refinished myself), coin-laundry in the basement, no dishwasher, one sink, water radiator heating, no air conditioning … you get the picture. The Bank of Canada inflation calculator turns that into $1,562.69 in 2017 dollars.

          Now being fair, over a quarter century there are bound to be major expenses. Structural, foundation, boilers, appliances, elevators etc. On guideline increases landlords can’t afford to set aside money for these so use above guideline increases to try to cover some of it- which are also capped) Add a ** bare minimum ** of 20% for big expenses like these and that brings it to a current rent of $1,875.23 for a “humble abode”.

          Unbelievable but true. Here’s the link to the inflation calculator http://www.bankofcanada.ca/rates/related/inflation-calculator/ .

          Until recently I owned a rent controlled condo I planned to retire in. I just couldn’t afford to keep it since condo fees go up according to expenses not just inflation. I had to sell it so now there’s one less rental unit available in Toronto.

          Stop demonizing landlords. They want to keep good tenants but have to cover costs.

    • TO_renter

      Rental Fairness Act is not passed yet, but, most likely will be passed. And the law will be applied retroactively from Apr 20, 2017. So, when the law passes, you’ll have to pay a month’s rent compensation to all your tenants regardless how soon you’re selling them.

  • Linda

    Does this rental fairness count towards houses being rented out as well?

  • Tony

    I gave 72 days polite (no official forms were sent) notice through email to my month to month tenant that we needed the property for personal use on April 12.
    He wrote me back a couple of days later saying he would leave at the end of may.
    He then sends me an email linking me to the article that details the new fairness act…
    And then writes me another email telling me that I didn’t send him the official forms.
    Is this law in effect?
    Is it applicable if I sent an email before it was applied?
    Is the tenant obligated to leave or can he retract even if he gave me 60 notice of termination of tenancy?
    What are my options?

    • Rachelle

      First of all your tenant is right, you need to give notice on official forms, the new proposed act is not yet law. However you should be aware that you have to live in the house for a year for your own use. I’m not sure what the effect of when the payment of one month’s rent comes into effect.For now you have to use the forms on the LTB website.

  • Cindrella Michos

    Last week, I leave my apartment with 1 month notice period as my tenant said about this. There is no issue in my case. It think, if we rent any house and live in it like own home then we have to follow the instructions given by them.

  • Ahmed

    Is this Act applicable to Semi-detached house rentals or only condos and apartments?

  • Quinte Region Landlords Association

    Great write-up Rachelle!

    Housing Minister Ballard has previously expressed concern that the regulatory environment is discouraging small landlords. What does he expect Bill 124 to do?

    We are helping to coordinate a province-wide response of small landlords to voice concern over this bill. It is our belief that small landlords keep getting the shaft because most are not a part of any association or lobbying organization. Therefore we do not speak with a strong voice and are easy pickings.

    We are seeing landlords from outside of our region join us as members and support our efforts to change this.

    I encourage all of your readers to reach out to us if they want to be a part of this effort.

    Robert Gentile
    President
    Quinte Region Landlords Association

    • Patricia Bianco

      Can you let us know how/where to reach out?

    • Patricia Bianco

      I just sold my rental condo, so the new act applies and one month’s rent has to be paid.

      Now my question is to whom does it apply:. to me the seller out to the buyer who wants it for their own use.

  • Susan

    My landlord gave me notice on Apr 4 that I had to vacate by June 30 due to the sale of the property. Am I entitled to the extra month of rent? Does it matter when I move out? I know that I can now give 10 days notice.

    • Rachelle

      You don’t have to move at all, did he give you a notice on the proper form?

      • Susan

        Update: he gave me the N13. I gave him the N9, with a termination date of May 15. The new owner bought it for a family member. I’ve signed a new lease at another place. I paid last month’s rent when I first got the place im in now. They’re saying it covers June, that they don’t have to refund me for May, and that I owe them for May.

        I will be moving in the next few days. It’s costing a small fortune to move (movers, lost wages due to time required for the move, etc. ). I really need my half month’s rent back. How do I do this, with minimal cost to me? I don’t have a lot of money for a lawyer.

        • Ahmed

          The owner must return last month’s rent. For the month of May If you have provided more than 10 day’s notice, then he also must return back unused portion of May at pro-rated basis. He also must pay you interest on the last month’s rent and any deposit money you have paid.

          Rental fairness act is not passed yet. When it does, you’re entitled to one month’s of rent compensation from the landlord. The rental fairness act will be retroactively applied from April 20th, 2017. So, you’ll qualify.

          If the landlord denies these, then file against him/her to LTB. You don’t need a lawyer for this type of straight forward case. LTS should be able to take care of this easily.

          http://www.sjto.gov.on.ca/ltb/application-and-hearing-process/

  • Manda

    My landlord sent me a text message that he wasn’t going to renew my contract due to the fact the he is giving my apt to his son and his son’s wife…..
    Can he do that to me can I go after him for this rental fairness act?? He told me that I need to be out July 1st when he told me May 5th can he do that too?

    • Rachelle

      No he has to give you proper notice on proper form.

      • Miranda

        No I have still yet to receive anything from him all I got was a text saying he wasn’t going to renew my lease which is up the start of July.
        I was looking to leave anyways but I find it unfair that he wants me to be out July 1st when he gave me notice a few days after May 1st and he he is giving it to his own family.

    • TO_renter

      When rental contract is not renewed, it automatically converts to month to month rental agreement. He needs to provide eviction notice using N13 form and provide at least 60 day’s notice (2 full month’s) using proper paper form. If he serves notice, he can not evict you before the end of July. You’ll also qualify for a month’s of rent compensation when “Rental Fairness Act” passes.

  • TO_renter

    Quote: “Now if the landlord advertises the rental unit for a higher rent than was last charged to the former tenant it’s assumed that you gave notice in Bad Faith and you will have to prove that you didn’t.”

    With the new act, the landlord can’t even rent out that unit before at least one year’s of personal use. So, it’s moot whether the landlord is charging higher rental or not. It will still be considered “in bad faith” regardless.

    • Linda

      Could the landlord sell? Right after eviction notice N13?

      • TO_renter

        On which ground did the landlord server eviction notice? Was that notice served on grounds of landlord’s own use? Then if he sells within a year, it will be considered that the eviction was done in bad faith. If he intended to sell and the new owner wanted the unit for his personal use, then the current owner can definitely sell. But the new owner’s responsibility would be to fulfill “for personal use” clause used in the eviction notice.

  • YeeHaw

    124 is a great Act and long overdue. Tenants have been getting screwed by scumbag landlords and flippers since that shitbird Mike Harris was in power. Suck it up, people. You had your turn. Now it’s payback time. Can’t wait to take my “bad faith” landlord to the tribunal. “Own use” my ass. A year from now they’ll be $15K poorer for their lies.