August 15th 2024
As we saw last issue, there is a growing problem affecting a large segment of the residential rental market. Pitting landlords against tenants. It’s come about because of the incredible increase in acquisition costs of residential rental property together with soaring interest rates and an alarming rise in maintenance and utility costs. All the while residential rents for existing tenants continue to be suppressed by rent controls. I maintain that at the heart of the problem is the Residential Tenancies Act and the approach taken by the Landlord and Tenant Board. These things need to be fixed, and they can be. Quite easily.
STEP ONE – All rents need to be allowed to keep abreast with market rents. The government, while recognizing the problem, attempted to fix it by removing any rental property built after October 2018 from rent controls. This, they reasoned, will encourage development and foster investment. But all it did was create a two-tier system. It does nothing to help landlords saddled with long-term low rental tenants who quite frankly are never going to move. While at the same time, leaving tenants in newer buildings vulnerable to irrational rental increases.
I believe the solution is to set up a rental advisory board to which any landlord could apply. Once the application has been made together with a fee to cover operations, any given rental unit could be assessed and market rent established. Then the landlord should be allowed to raise the rent to the established market rent over a 3-year phase-in period, much like IMPAC does with taxes.
STEP TWO – Enforce evictions. The way it stands right now, whenever a tenant is served a notice of eviction, whether it be an at fault eviction for example, for non-payment of rent via an N-4, or a no-fault eviction because the property has been sold and the new beneficial owner needs the property to live in, the notice is really just a suggestion. It says right on the notice ‘You do not have to move out if you disagree with this notice’. This is nonsense. An owner sells his property to an end-user, not an investor. The buyer has sold his property. It is scheduled to close the same day he is to take possession of his new home. But the tenant, who has been served the requisite 60-day notice is told he doesn’t have to move out. And, believe me, if the tenant contacts the Landlord and Tenant Board, they actually tell him “Relax. You don’t have to move out. Take your time. It will take the landlord months to evict you.” This is outrageous. Here the enforcing body is telling the tenant to disregard the law. Get the statement off the forms that tells the tenant they can disregard the deadline. 60 or 90 days should mean 60 or 90 days. If the notice has been given in bad faith, then after the tenant has moved out, they can challenge the notice with the Board. The Board can investigate and if warranted order the landlord to compensate the tenant financially.
STEP THREE – Speed up the process. As it stands right now, it can take a year or more for a landlord to process a righteous eviction. Cut that time frame down to a month. The Attorney General claims they can’t speed up the process because they don’t have enough adjudicators. At the moment, when you submit an N-4 and L-1 you are assessed a fee of $201. Suppose landlords were given a fast-track option. Pay $1,000 for example to cover the expedited costs but guaranteeing an eviction inside 30 days. Landlords would gladly pay the added $800 if they knew they could count on a tenant being out at the appointed deadline, and if they submitted the N-4 and L-1 after the 14-day period, they could count on the tenant being out within the stated time frame. That would put an end to ‘cash for keys’. It would put an end to buyers stranded without the ability to move in to the property they have purchased, and as we’ve said, if the eviction was not done in good faith, the tenant could challenge after the fact and be compensated.
Simple solutions. And steps that need to be taken. But in the meantime, as landlords it is imperative that they do this homework before they accept a tenant application, his deposit and hand over keys. And it’s expected that the landlord act as a prudent and reasonable business person in his dealings with his tenants moving forward.