Saturday, May 13, 2017

Letter to Minister of Housing - The Honourable Chris Ballard



May 13th, 2017

The Honourable Chris Ballard
Minister of Municipal Affairs and Housing
777 Bay St., 17th Floor
Toronto, ON
M5G 2C8


Dear Minister:

I am writing you as a small landlord  in Ontario, looking to you for assistance in navigating Ontario’s difficult and complicated residential tenancy laws.  The playing field is about to become even more unbalanced following the government's April 20th announcement.

The quasi-judicial agency overseeing rental housing in Ontario, the Landlord and Tenant Board (‘LTB’), is broken.  The heavy load at the provincial Board combined with the automatic right of appeal of a Board decision to the courts routinely delays justice.  The inconsistency of decisions by adjudicators at the Landlord and Tenant Board is shocking.  Most of their mistakes come from the lack of common sense, the overly strict interpretation of the wording of the statute without giving regard to the purpose of the statute or the real substance of the disputes.  The appellate body, the Divisional Court, almost always fixes the problem with common sense decisions but that’s a slow and VERY expensive process that most landlords can’t afford.  Glaring drafting errors and oversights have not been fixed through statutory amendment.  More than once the Divisional Court has suggested that the Tribunal and the government get its act together and fix the problems.

Over the last two decades the appellate courts have made a number of decisions modifying the generally accepted interpretation of the law.  For instance, a recent appellate decision has confirmed that lease-breaking parties are legal, negating the purpose of lease term as a benefit to the landlord.  

A decision in 2007 from the Ontario Court of Appeal, Price v. Turnbull's Grove Inc., 2007 ONCA 408 (CanLII) struck down a section of the RTA that deemed unlawful rent to be lawful if a year had passed and the tenant had not disputed the lawfulness of the rent.  This was a result of inadvertent drafting.  This decision has thrown rent disputes into disarray.  Evictions for non-payment can’t happen unless the lawful rent can be determined.  Successive governments have had over 10 years to fix the problem and to this point have ignored it despite the occasional updating of the Act.

Serious confusion now exists between the jurisdiction of the Landlord and Tenant Board and the Ontario Small Claims Court with regards to utilities as well as for damage or rent owed after a tenant has moved out.  The issue of a landlord’s claims for damages that are legal in nature, not physical damage where something could be repaired or replaced, is also a grey area in terms of the LTB’s jurisdiction.  

Now this April, this government has further shifted the balance, discouraging small landlords and driving us out of the business of creating housing, much of it affordable through basement second suites.  The Ontario government and non-profit agencies practically beg landlords to rent out units despite the terrible risk landlords take and the unattractive rental environment the government has created.  The 2011 Strong Communities Through Affordable Housing Act, and the recently passed Promoting Affordable Housing Act, 2016 which promote inclusionary zoning are honest efforts to create more accessory suites and affordable housing. But it won’t work and landlords won’t open up their homes until some of the risk is mitigated, the playing field levelled and the confusion eliminated.

The LTB’s Rules of Practice need amendment related to serving notices of entry.  Email is not allowed.  Fax is permitted.  Currently, a landlord with a home in Burlington and a rental in Oshawa wanting to change a furnace filter on the weekend, would have to drive from Burlington to Oshawa on Thursday or Friday to serve a notice of entry, return home, and then make the trip again on the weekend to change the furnace filter.  In a day and age when most faxing is done via email and e-fax, it is ludicrous that the RTA Rules permit service of notices of entry to tenants by fax and not by email.  Our tenants generally do not have fax machines, and they all have email.

We urge you to re-consider the elimination of the s.6 exemption on rent increases.  Those of us who are investors in condominiums will have no choice but to charge higher rents to mitigate the risk of increasing condominium fees or special assessments which cannot be recovered.  Above Guideline Increases can not recover costs incurred through these types of aggregated expenses.

I am asking specifically for eight changes to the Residential Tenancies Act that would assist landlords, restore some balance and create efficiencies:

1.       Reconsider the proposed elimination of the s.6 guideline exemption

2.       Streamline the LTB process to have matters resolved more quickly, ensuring that rent is paid into the Board by the tenant if disputes are protracted

3.       Fix the confusion currently existing between the Small Claims Court and the LTB regarding jurisdiction for utilities and post-occupation claims at Small Claims Court for damage and rent.

4.       Amend the RTA provisions regarding “damage” to make it clear that the LTB is the forum for legal, monetary damages, not just physical damage, arising in the rental complex.  That will go a long way in resolving the LTB vs Small Claims Court confusion.

5.       Allow service of notices of entry (not termination notices) by email if the parties agree in the lease that communication may be by email and if they have provided their respective address in the lease. 

6.       Lease term has become meaningless.  Jurisprudence since the Act came into force has confirmed that lease-breaking parties are legal, negating the purpose of lease term as a benefit to the landlord.  This needs fixing.  A notice to terminate that can be remedied (rent N4’s for instance) should not end the tenancy thereby ending any statutory or common law obligations related to term.

7.       Fix the problem caused by Price v. Turnbull's Grove. Governments never intended sections 136 and 116(4) of the Act to operate in this conflicting manner. 

8.       While theoretically tenants with a non-smoking lease can be evicted for smoking, the legislation should be more specific.  This is especially important with the impending legalization of marijuana.  In addition, Ontario should specifically ban the proposed “4 plant” rule from all rentals.

In summary, I am asking that the government consider fixing, clarifying and modernizing the Act to make it more balanced, instead of just amending with the April 20th amendments which will simply drive more landlords out of the business.

Yours very truly,


cc:              Premier Kathleen Wynne
                   PUT LOCAL MPP NAME HERE AND COPY THEM AS WELL

Thursday, April 20, 2017

Wynne's Solutions for Rental Housing are Puzzling and Harmful


Anything this government touches turns bad, and Wynne’s announcements regarding rental policy changes is no exception.  A return to full rent control will bring American-style slums to Toronto.  New rentals won't be built, and that includes purpose-built rentals, and condos that are 50% filled with rentals.  Why would an investor risk being subject to rent control when they have no control of condo common area maintenance fees and assessments?

I'm reading mixed messages in the news, but it appears that the post-1991 buildings will be subject to the same rental guideline as older rental buildings, and that the legislation will be retroactive to today, April 20th.  That means rent increases will be subject to the Consumer Price Index for Ontario from June to May of each year, compared to the same period in the prior year, with the result reaching out to the following January.  But as with older buildings, the Regulations say that if the math works out to more than 2.5%, the amount is capped at 2.5%.

It's unclear whether those in the exempt units who gave their tenants an N2, the 90 day notice of rent increase last week (as I suggested), will get those increases, or if the retroactivity extends all the way to the date the increase comes into effect rather than the date the notice was served.

But of all the measures in Thursday’s announced changes to curb out-of-control property prices, the standardized leases for tenants has me scratching my head.  The Liberals seems to be providing a solution for a problem that does not exist.

Any provision in a lease that is contrary to the Residential Tenancies Act is not enforceable, and most tenants know that.  Ontario moved away from contractualization of residential tenancy agreements with the Tenant Protection Act back in 1998.  But having a good lease is important nonetheless, as it gave the parties a way to agree on things in areas where the legislation was silent. 

Losing the ability to agree on things that makes each tenancy unique will create more confusion and litigation.  Parties should be able to agree on things such as what nights a tenant can use the laundry room in a shared house, what are a tenant’s rights to shared versus exclusive use areas of a house such as a yard, rules about smoking, water beds, window air conditioners, discounting, Airbnb, insurance, parking, adherence to condominium rules etc.

Without the ability to make rules specific to the character of the rental, there will be more disputes, more fighting between landlords and tenants, and bigger crowds litigating the disputes at the Landlord and Tenant Board.  

And no surprise, while the Minister of Housing had been suggesting that the government was looking at statutory amendments to relieve some of the risk from landlords to encourage rental of basement apartments in order to create some more affordable housing, they have completely ignored the issue in their plans.


Thursday, March 16, 2017

Ontario's Residential Tenancies Act Needs Modernizing

Ontario’s residential landlord and tenant legislation is badly outdated and needs a complete re-write.  The basic framework of the Residential Tenancies Act and its immediate predecessor the Tenant Protection Act is almost 20 years old, despite some minor, political amendments made in 2007.  A lot has changed since then.  Housing prices in Ontario’s major metropolis have skyrocketed.  Airbnb has added a new type of residential occupation not anticipated by the legislation.  Nor was there any clue that condos would become the new rentals when the Tenant Protection Act was being debated back in 1997.

The system is grinding to a halt.  The heavy load at the province’s rental housing tribunal combined with the automatic right of appeal to the courts of a decision a party doesn’t agree with routinely delays justice.  The inconsistency of decisions by the statutory decision makers at the Landlord and Tenant Board is shocking and rampant.  Most of the mistakes come from the lack of common sense, the overly strict interpretation of the wording of the statute without giving regard to the purpose of the statute or the real substance of the disputes.  The appellate body, the Divisional Court, almost always fixes the problem with common sense decisions.  But despite the availability of the Divisional Court when the Landlord and Tenant Board gets it wrong, it’s a slow and VERY expensive process that most landlords can’t afford.  More than once the Divisional Court has suggested that the Tribunal and the government get its act together and fix the problems!

In fact, in 2012 Justice Ted Matlow from the Ontario Superior Court commented in a decision, an appeal from a Landlord and Tenant Board order as follows:

My recent experience sitting as a single judge of this Court to hear motions has convinced me that there is a growing practice by unscrupulous residential tenants to manipulate the law improperly, and often dishonestly, to enable them to remain in their rented premises for long periods of time without having to pay rent to their landlords. It is practice that imposes an unfair hardship on landlords and reflects badly on the civil justice system in Ontario. It calls for the Government, the Landlord and Tenant Board and this Court to respond……   It is my hope that those in a position to amend the Rules of this Court will consider this judgment and see fit to restrict the right of appeal in residential landlord and tenant cases and, perhaps, require that leave to appeal be obtained before appeals can be brought.

Over the last two decades the appellate courts have made a number of decisions that have modified the generally accepted interpretation of the statute as it was when it was introduced.  For instance, jurisprudence since the Act came into force has confirmed that lease-breaking parties are legal, negating the purpose of lease term as a benefit to the landlord.  A decision in 2006 from the Ontario Court of Appeal struck down a section of the statute that deemed unlawful rent to be lawful if a year had passed and the tenant had not made an application about the rent’s lawfulness.  This has thrown rent disputes into disarray.

Serious confusion now exists between the jurisdiction of the Landlord and Tenant Board and the Ontario Small Claims Court.  Landlords often bounce back and forth between the two bodies, finding there is no remedy at either court as each denies jurisdiction.  This is true in case of utilities as well as monies owed to the landlord after the tenant has moved out.  There is also confusion about cases that straddle what are normally seen as residential tenancy issues, versus things that may happen in a rental unit, such as personal injury, but which generally head to the superior courts or small claims court.  The issue of a landlord’s claims for damages that are legal in nature, not physical damage where something could be repaired or replaced, is also a grey area in terms of jurisdiction.  Confusion reigns!

Finally, the government is struggling with the availability of affordable housing.  The Ontario government practically begs landlords to rent out units despite the terrible risk landlords take and the unattractive rental environment the government has created.  The 2011 Strong Communities Through Affordable Housing Act, and the recently passed Promoting Affordable Housing Act, 2016 which promote inclusionary zoning are honest efforts to create more accessory suites and affordable housing. But it won’t work and landlords won’t open up their homes until some of the risk is mitigated, the playing field levelled and the confusion eliminated.

Many poverty activists are satisfied to retain these tenant-centered policies that are creating this crisis.  They imagine that more non-profit housing, built and operated by government will be the result. But the government coffers are empty.  Coincidentally, so are hundreds of thousands of potential basement apartments that could be freed up as affordable housing units.

On the other side of the coin, maybe it’s time to change the section 6(2) exemption in the Residential Tenancies Act that allows buildings built after November 15th, 1991 to be exempt from the provincial rent increase guideline.  We now have 25 year’s worth of new buildings, many in downtown Toronto, that are not rent controlled.  While the policy objective was legitimate, this “forever” exemption from rent increases caps creates uncertainty for tenants, allows evictions at the landlord’s whim disguised as rent increases, and is contributing to the high cost of rentals.  Today Peter Tabuns, an NDP MPP is introducing the 4th Private Member's Bill since 2011 to eliminate this exemption.  Perhaps what the government needs to do is to get rid of the permanent exemption, and have a sliding scale phase-out period, during which the allowable increase that can be charged slides back to the provincial guideline 15 years after a building is first occupied.

We need a re-write to create a modern residential tenancy statute that reflects the realities of 2017.

Wednesday, October 5, 2016

Residential Tenancies Act Needs Changing to Avert Affordable Housing Crisis

While I loved the musical Les Miserables, the song Master of the House always struck me as backward as the cast sings “Everybody loves a landlord. Everybody's bosom friend.”  From my perch, it seems that everyone despises landlords and wants to make them responsible for government’s shortcomings and many of society's problems.

Decades ago residential landlord and tenant law was contractual, that is, people signed lease agreements and lived by them.  But starting in the 1970’s in Ontario, the contractualization of residential tenancies has given way to a strict, complicated and onerous statutory model.

You can’t open the papers without reading about how government laments the lack of social housing, the lack of affordable housing, the high rents being charged in major cities and alternative rental models such as Airbnb. But the government is burying its head in the sand as politicians refuse to consider realistic solutions to a problem they themselves created.

The change has happened incrementally, as most change does.  Governments have practically nationalized private residential rentals, putting landlords in the driver’s seat and having them foot the bills to administer the government’s misguided public policy. Ontario has been the worst jurisdiction in Canada for piling impossible burdens on residential landlords.  Some examples include:
  • The government mandates rent increase guidelines that discourage building of new rental housing.  While it’s true that post-1991 buildings are exempt, the threat of eliminating that exemption is real, evidenced by two private members’ bills being introduced (and thankfully defeated) over the last decade.
  • The government requires landlords to continue housing tenants for long periods of time even when no rent is being paid.  No interest can be charged on late payments and most rent-arrears are noncollectable after eviction.  Yet the statute, the Residential Tenancies Act (the ‘RTA’) permits easy lease-breaking if the tenant wants to move out before the agreed term is over.
  • The government refuses to allow damage deposits, and won’t allow a landlord to enforce “no pet” provisions in a lease. While eviction applications for smoking in non-smoking units are sometimes successful, it should be clarified in statute.
  • The government allows an automatic right of appeal of Landlord and Tenant Board (the 'LTB') evictions to the Superior Court, costing landlords at least 6 months and thousands in legal fees, even when no rent is being paid.
  • The Residential Tenancies Act is overly complex and too strictly enforced with respect to timelines; the law doesn’t permit “fixing” defective termination notices, a requirement that doesn’t extend to tenants filing and then amending their own applications to the LTB.
  • The RTA cannot end a tenancy after a hearing, even if it’s about getting one’s own house back to move in or in the case of serious safety issues, if the landlord is found to be in serious breach of an obligation under the Act.  I’ve seen landlords forever lose the right to move back into their own homes based on a tenant’s inflated, exaggerated or entirely fictional complaints. 
  • The RTA allows the tenant, without notice, without filing an application and without providing any disclosure, to make their own claims at a hearing that was scheduled to deal with rent arrears, delaying the matter another 6 weeks with a needed adjournment so that the landlord can prepare to defend against the often minor or imagined breach.
  • The RTA doesn’t allow sophisticated parties in high-rent situations to freely contract out of the prevailing statute, and won’t allow absolute fixed-term leases for a set period.
  • The government’s own Policy Guideline on Rental Housing produced in 2009 by the Ontario Human Rights Commission doesn’t permit landlords to make sensible choices regarding income or lack of credit and tenancy history while conducting pre-tenancy application screening.
  • Worse, the Human Rights Code and its Policy Guideline upheld by the Courts don’t allow an eviction until the landlord, even the smallest single-unit landlord, has made efforts to accommodate a tenant’s refusal or inability to follow basic rules if that inability is caused by Code related issues.  Landlords have to accommodate the tenant’s conduct, at their risk and expense, to the point of undue hardship…practically the point of insolvency.  We all agree that those disadvantaged by disability or other Code-related factors need assistance, but shouldn't the dollars come from general tax revenues and not from landlords...the easy targets?
  • The Ontario government refuses to protect landlords who risk renting to those on public assistance by not mandating that Ontario Works or ODSP pay the shelter portion of the tenant’s monthly allowance directly to the landlord.  Tenants on government benefits are among the most likely to face eviction, yet this simple change that would benefit both landlords and tenants is seen as too draconian by Queens Park.
  • The City of Toronto makes it almost impossible to get out of the rental housing business.  Try to get a demolition permit to knock down an old building at the end of its life, and the City will insist you replace it with more rental units.  That type of policy makes a joke of personal property rights.  You can check out any time you like, but you can never leave.
The shortage of affordable rental housing is becoming acute.  But the Ontario government has washed its hands of it, and are practically begging landlords to rent out units despite the terrible risks they take and the unattractive environment government has created. 

The 2011 Strong Communities Through Affordable Housing Act, and new efforts at inclusionary zoning are honest efforts to create more accessory suites. But it won’t work and landlords won’t open up their homes until some of the risk is mitigated and the playing field levelled.

Some on the left are satisfied to retain tenant-centered policies that are creating this crisis.  They imagine that more social housing, built and operated by government will be the result. But the government coffers are empty.  Coincidentally, so are hundreds of thousands of potential basement apartments that could be freed up as affordable housing units.