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.


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