Canada's Condominium Magazine
As real estate prices soar — largely due to short supply — landlords have been steadily increasing their rental prices, where allowed, leaving renters with limited options.
Up until recently, tenants renting out condos were still subject to major increases, as the rent continued to increase annually according to the market demand. In many cases, prices are soaring above market value because high demand and limited housing options leave tenants with no choices.
As we previously reported In an effort to keep the real estate market fair and balanced, Ontario has expanded its rent control to all private market rentals across the province with the Rental Fairness Act of 2017, issuing a rent increase cap at 1.8 per cent. [See our announcement story here>>]
Chris Ballard, Minister of Housing in Ontario announced, “Today is a good day for tenants in this province. In the face of dramatic rent increases and unfair practices, our government is answering the call to bring fairness and predictability to Ontario’s rental housing system. With the changes under the Rental Fairness Act, Ontarians can rest assured that they will continue to have an affordable place to call home.”
What tenants and condo landlords need to know
The following are some facts you may need to know about the Rental Fairness Act:
- The rent control cap protects approximately 250,000 tenants from unfair rent increases.
- The increase cap went into effect immediately for all private rental units that were occupied on or after November 1, 1991.
- Landlord can no longer evict tenants for their own use without compensation
- The guideline set a cap of 1.8 per cent for increases occurring between January 1, 2018 and December 31, 2018.
- The guideline is not applicable to:
- Vacant residential lots
- Social housing units
- Nursing homes
- Commercial property.
Rent increase guidelines limit landlords’ ability to raise their tenants’ rent at any point throughout the year. In order to raise the rent at a rate higher than allowed in the guidelines, the landlord would need to acquire approval from the Landlord and Tenant Board. However, guidelines are based on the Ontario Consumer Price Index, which reflects economic conditions over the past year, thereby making it difficult for landlords to argue in favor of a rent increase higher than that which is outlined in the rent control guidelines.
Landlords cannot evict for own use without compensation
The most controversial section of the new rules are guidelines on “evicting for own use.” Previously, landlords could evict if they planned to move in themselves, but this was abused as a method to obtain vacancy. For instance, a landlord could have had a family member move in for two months, then bring it back on the market with significantly raised rent. Now, under new rules, the Landlord will have to compensate the tenant one full month, or provide another apartment. Tenant advocates have said this is a big issue under the old rules and are happy with this change.
The Rental Fairness Act of 2017, which altered and expanded upon the Rental Fairness Act of 2006, made several changes to policies dealing with rental guidelines. Previously, three categories of properties were exempt from guidelines pertaining to rent. However, these exemptions are no longer in effect, as subsection 6 of the Rental Fairness Act of 2006 was repealed. The following are the categories of properties which were previously exempt:
- Units not occupied for any purpose before June 17, 1998
- Units not previously rented since July 29, 1975
- Units in buildings, mobile home parks, and land lease communities which were completely unoccupied for residential purposes before November 1, 1991
Landlords cannot raise rent based on utilities
Rental guidelines previously allowed landlords to raise prices according to utility increases, repairs and maintenance, municipal taxes, etc. However, new guidelines which took effect on April 20, 2017 prohibit landlords for raising rent according to utility costs, regardless of how expensive they may be. They may, however, appeal to the Landlord and Tenant Board for rental increases based on major repairs. In these instances, the board may allow an annual increase of three per cent above the guideline for a period of three years. Likewise, landlords may appeal to the board in order to recover tax increases above 2.3 per cent from the tenant but only after the year of the increase. Automatic rent reductions, which apply if the property taxes decrease by more than 2.5 per cent of the taxes, also go into effect