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Ontario’s residential landlord and tenant legislation is badly outdated and needs a complete re-write.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.

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