Landlords Have Legitimate Issues with Canada’s Half Baked Legislation

The Federal government didn’t bother to get into specifics on upcoming marijuana legislation.

The tabled cannabis law proposes allowing Canadians to grow 4 plants per person at home – whether they own or rent, provided the plants aren’t taller than 100 centimetres. It sounds benign when it’s framed as a new and progressive law – which in many ways it is – however the practical implications of the legislation are something that a growing number of national and provincial landlord groups aren’t happy with in the least. The government has not said if landlords will be able to prohibit tenants from growing pot in their apartments.

The Professional Property Managers Association and  The Canadian Federation of Apartment Associations are both looking to compel the government to change this aspect of the law. They both seek a ban on tenants growing plants in rented homes or multi-unit buildings. Full disclosure: we also support this change in the law as it is rooted in common sense. We touched on some of the complicated aspects of growing marijuana in a rented unit – particularly the insurance nightmare it has the capacity to create.

“I think the government is obviously balancing a lot of issues here. They do want to break the black market, and that’s important. But we think we can break the black market if they let people [only] grow it in their own owner-occupied homes, and the product is readily available in stores or by mail order.” -John Dickie, Canadian Federation of Apartment Associations

Optimal conditions for growing marijuana include warm temperatures, extensive lighting and high humidity. In order to grow weed, you need these three things. Creating the hydroponic conditions in a residence in an effort to achieve this key trifecta is not something you can do without affecting the domicile in some capacity. That’s just a fact. Water that is fed to plants will transpire and evaporate from the containers into the surrounding air. Cannabis plants also require warmth. Excess water vapour and high temperatures can create humidity damage. Large mold accumulations can follow and grow fast in humid environments and can lead to structural decay.

To boot, unusually high amounts of steam coming from vents in winter can damage exterior finishes on houses. The smell of weed seeps into drywall the same way tobacco smoke does, and even when it’s not being smoked, marijuana can create a permanent odour that can be repulsive to people – like other tenants and incoming ones in the future.

The electricity required for lighting in even a small cultivation of weed is high. It also introduces a fire concern with having that much botanical lighting in a house – and that’s assuming that a tenant doesn’t re-wire the electrical in a home (which they can’t do). Most wall outlets are on a 15-amp, 120 volt circuit. Many outlets are generally on that one circuit. One 1,000 watt metal halide or high pressure sodium light draws 9 amps at 120 volts. So just by using one of those plugged into a wall outlet, you have already significantly maxed your circuit – and that’s not taking into account the other devices, computers, or appliances that are also typically in a unit. Maxing a circuit is not a good thing. Your circuit breaker (if it’s working properly) may shut down your circuit because you’ve overloaded it. Your wiring may heat up, flame up, short out or otherwise fail. Lastly, there is an increased fire hazard danger due to people drying marijuana in a household stove.

Even four plants in a building can change the risk assessment on a property, and creates a greater likelihood of water damage, mould, fire, vandalism and burglary. Under most basic home insurance policies, marijuana-related damages or anything that companies believe is “high risk” is not covered. That view is shared by many insurance companies, according to the Insurance Bureau of Canada.

“Landlords currently have little recourse available if a tenant is growing medical marijuana and aren’t required to be told if it’s happening” -Avrom Charach, The Professional Property Managers Association

Under new federal rules introduced last August, landlords are left a little high and dry (no pun intended) if a tenant is growing licensed medical marijuana. They don’t even have the right to know it’s happening. None of that is right. The federal government should formally include a clause in the Cannabis Act including restrictions on any and all rented dwellings or they should at least mandate that provincial legislation needs to compensate for the loophole this creates.

 

 

An Argument Against Rent Control To Deal With Ontario’s 1991 Rent Exemption

Living in Downtown Toronto Condos Is Not A Right.

We made the news this week! The CBC’s Lisa Naccarato called me on Monday to offer a comment on Ontario’s 1991 Mike Harris rental “loophole” – apparently a controversial topic for many who live in Toronto. Toronto city councillor Mary Fragedakis moved a motion Tuesday that would see council come out in support of a private member’s bill at Queen’s Park that would extend rent control to apartments built after 1991. Her motion supports NDP MPP Peter Tabuns’s private member’s bill aimed at eliminating what he also refers to as the “loophole”. I don’t agree with eliminating this exemption and I’ll tell you why. Before we get into that…let’s start with a few facts.

FACT: Rent control in Ontario only applies to units that were first built or occupied before November 1, 1991. If the rental unit is in an apartment building constructed (or converted from a non-residential use) after November 1, 1991, then the rent control provisions of the Residential Tenancies Act, 2006 do not apply.

FACT: The post-1991 rent exemption was originally introduced by Bob Rae’s Ontario NDP government. It’s been maintained over time by Mike Harris’ PC provincial government (they made it permanent) as well as the governing Liberals. A low vacancy rate dropped even lower as developers were disincentivized by the regulated rental market for the freedom of condominiums. The exemption provided the incentive that private developers needed to build much of the existing condo stock as we know it and to recover from years of virtually no rental increases at all. Any changes to this incentive will undoubtedly have a negative effect on the market and real estate development (especially outside of Toronto where vacancy rates can vary) – not to mention the construction that is currently in the pipe.

FACT: 85% of rentals in Ontario are covered by provincially mandated rent control.

FACT: It’s an exemption – not a loophole. These are two fundamentally different things. A loophole is defined as an ambiguity or inadequacy in the law. There are plenty of those in Ontario’s Residential Tenancy Act. This exemption was intentionally legislated. While it is undoubtedly true that many tenants have seen their rents increase significantly and at considerably more than the mandated provincial increase, there is no evidence to suggest there is widespread abuse of the exemption or that it qualifies as enough of an urgent issue that it needs legislative intervention.

FACT: Ontario’s Residential Tenancy Act heavily – almost hilariously – favours tenants. It always has. It favours tenants so much that Ontario Superior court justices have called for the provincial government to adjust the law and end what is a growing issue of tenants gaming the system. In 2014-15, the Ontario LTB received 79,740 applications. The ratio of landlord to tenant applications has remained relatively constant since 1998. 2014-15 was no exception, with 90% of applications filed by landlords. 70% of those landlord applications filed were related to non payment of rent. A stated purpose of the Residential Tenancies Act, 2006, is to balance the rights and obligations between landlords and tenants. It’s plainly clear that the law in fact does the opposite. The last thing landlords need is another short sighted unfair law that hobbles their ability to run their property portfolios as a business.

FACT: This issue is logical hogwash and is politically motivated. As per Martin Regg Cohn at the Toronto Star, “…rent hikes are a result of reduced supply and increased demand, which is what puts pressure on politicians for rent controls, which then depresses supply even further. Extending rent controls to newer (costlier) units would benefit the middle and upper class more than the working class (who tend to be stuck in older units anyway). Why target rentals while exempting the rest of the real estate market, notably the housing speculation that is driving much of the current crisis? It’s much cheaper and politically popular for governments to make landlords swallow foregone rent increases by imposing or extending price controls (vs. housing subsidy vouchers).”

“In the mid-1970s, NDP firebrand Stephen Lewis seized on media accounts of landlords gouging tenants. He goaded the government of then-premier Bill Davis into promising rent controls lest his Tories lose power. It seemed like a good idea at the time. But history is littered with good political intentions — and contortions — that create economic distortions.”
– Martin Regg Cohn, Toronto Star 

FACT: Condo landlords have it tougher than the average landlord. The owner of the condominium will have fixed, predictable costs in the form of mortgage payments and property taxes, but the maintenance fees (commonly called condo fees) can and often change – sometimes dramatically. Condo landlords are bound by two pieces of provincial legislation. The lease agreement is between the owner and the tenant and that relationship is still governed by the Residential Tenancy Act, 2006, in Ontario. However, within the building itself, the Condo Act has precedence and landlords are responsible to make sure that their tenants follow condo rules.

FACT: Landlords want tenants. If they raise prices above what the market is willing to pay then rent will adjust accordingly. The vacancy rate is low for a reason. It takes an average of only 17 days to rent a condo in Toronto. The city averagely sees 200,000 new people move to the 416 area code each year. This issue is supply and demand. Not greedy landlords.

Housing speculation is driving much of the current crisis. Toronto is clearly a city where people want to live. Hundreds of thousands have come here from around the world. Young people want to live where the action is as gentrification has firmly rooted itself.

I admire ethical landlords. I admire ethical tenants even more. Most landlords and most tenants are both. My solemn advice to any landlord who has a Toronto unit that falls under the exemption: Act in good faith. Be straightforward and upfront with your tenants. Tell them that your unit qualifies as exempt and explain the degree of exposure that exists. Be empathetic about having to potentially uproot your living arrangement and consider the discomfort, hassle, and inconvenience associated with losing your home after a year. Ultimately – a happy long term tenant is better than expensive turnover. Exercise common sense, and demand that politicians do the same.

 

Absolute Idiocy On Unpaid Electrical Bills in Prince Edward Island

In another fantastic assumption that landlords are rich, entitled building owners, the wise city councillors in Summerside, Prince Edward Island are contemplating what to do about unpaid electrical bills in the small town of just under 15,000. The city takes in $20 million a year from the utility with the majority of people paying on time, however, after council “discovered” 1.3 million dollars of delinquency, all these city councillors determined the problem needed to be decisively addressed. Their proposed solution? Landlords should pay the bill. Seriously.

Summerside’s Director of Finance, Rob Philpott said involving landlords is just another option for council to consider that if for whatever reason the tenant is unable to pay in a timely matter or doesn’t pay at all, then landlords could potentially be held accountable for that. “There are 225 landlords in the city. It is safe to stay that if they became aware that they might be liable for the debt of a tenant who skipped out… it would generate a lot of attention,” added Philpott. If passed, this new law would affect residential, commercial, and industrial units.

If the municipality passed this law tomorrow, and also got all 225 of these landlords to foot this bill, they’d be looking over $5700 a piece.

City councillor Frank Costa thinks this is a step in the right direction. “Landlords have a collective responsibility to the city to ensure that we are not alone in having to absorb delinquent accounts,” added Costa. “If it is communicated well and there is an education process out there, I think people will recognize the value of this. I think we are giving them notice.”

Fellow councillor Tyler DesRoches disagreed.

“We are not signing up the landlord for the power; we’re signing up their tenant. The landlord has no idea whether or not their tenant is paying on time.”

Coun. Gordie Whitlock owns rental properties and agreed with DesRoches.“If you have a consistent collection policy with a consistent cut off time as to when the final notice is given after there is no attempt to pay, then there is no need for the landlord to be involved whatsoever,” said Whitlock.

Why the city doesn’t consider a more aggressive policy with respect to it’s unpaid bills is a head scratcher. Why the 1.3 million dollars in unpaid bills even occurred in the first place is interesting. The city of Summerside services 6950 customers. It’s reasonable to expect this utility to manage its accounts better. That’s their job! If they can’t wrap their heads around it, as a municipality supported for profit organization, how do they expect the small city’s 225 private landlords to be any better? Why should the city’s landlords accept this? How would the city’s landlords manage this any better? Are they to open their mail? How would landlords manage this as a new issue? Is not paying your electrical bill immediate grounds for an eviction? How many chances would someone get to settle up their electricity bill? This seems like a remarkably short sighted, objective ignoring, illogical, precedent setting idea. Utilities can and do ask for deposits in advance, engage collection agencies, cut off service and sue the tenants. Landlords have to wait until the tenants move out and then initiate a small claims suit at their own expense. What this whole idea represents is a desire to see electrical utility delinquencies at zero, improving the cash position of the municipality, at the overall expense of the landlord.

Time to go back to the well, city councillors.

Perfect Storm For Landlords in Alberta

The slow down in the oil patch is affecting Alberta’s major city residential landlords. Seriously. The market was once quite hot. Now…not so much. CBC reported a doubling of the vacancy rate late last year.

Edmonton is a renter’s paradise right now. Economic slowness, coupled with more supply than demand in terms of available units, has flexed adversity on Alberta’s landlords. Vacancy rates have increased steadily since last year, and now range from six to eight per cent, depending on property type. The average rent in Edmonton and the surrounding area has dropped between 10 and 15 per cent from a five-year high in July 2014. This has been forcing landlords to get creative about attracting tenants and signing leases, including free Wi-Fi, amenities, groceries, and even flat screen televisions as part of rental agreements. We touched on this phenomenon in Halifax late in 2013, when landlords there were offering free iPads to prospective tenants.

In Calgary – a city where mayor Naheed Nenshi famously criticized what he considered rent gouging in 2014, things are not that much better. Rents have fallen astonishingly fast. A 20% drop in January of this year from the beginning of 2015. The Calgary Real Estate Board is anticipating that the vacancy rate will rise to 7% by the fall. By the fall of 2017, CMHC expects the vacancy rate in the city to decline back to 5.5 per cent. Calgary’s 2016 civic census revealed that while the city’s population increased slightly to more than 1.2 million in April, more people moved out of the city than arrived here. More than 20,800 units were empty in April, a 67 per cent spike over last year’s levels, which brought the vacancy rate for dwellings to 4.3 per cent, according to the census. According to the Financial Post, the vacancy rate hasn’t been this high since 2004, when the city reported the lowest level of migration in 12 years. A city hall analysis of historical housing data shows there are more vacant units in 2016 than in any of the past 16 years. To put this into perspective, Canada’s national vacancy average for urban centres is 3.3 per cent.

Even rural cities in Alberta have been affected.The Government of Alberta annually conducts the Rural Apartment Vacancy and Rental Cost Survey of multi-family dwellings in Alberta’s rural communities between the months of May and August. This survey does not include cities whose population is more 10,000 people. Vacancy rates have increased and decreased in a cyclical pattern with vacancy in rural Alberta communities being on an upward trend, having risen 3.7 per cent in 2014, up to 8.2 per cent in 2015. Not only are vacancy rates up in general, in a number of communities they are at their highest point since 2006.

Experts say the next big hit to the market could come in the spring, when many leases typically come up for renewal. Not good.

Questions? Comments? Are you a landlord in Alberta? We’d love to hear from you.

No… Tenants Can’t Just Airbnb Their Place in Quebec

It seems like you can do everything on the internet these days. Airbnb is and has been a wonderful way to make a bit of extra cash when it comes to renting out your home, cottage, or vacation property. Things can get a little dicey though, when you don’t own the property in question. In Quebec, you need to get your landlord’s approval first. The province’s rental board (Régie du logement) recently reached the decision when it ruled on a case involving a Montreal tenant who rented out his downtown condo to tourists on Airbnb.

The landlord rents the luxury one bedroom unit for $1,770 per month. After receiving numerous complaints related to transiency, smoking in hallways, and a general change of pace, the landlord determined the tenant was renting out his unit on Airbnb for more than double the rent he was paying. Landlord gets miffed. Increases the rent by $1000 a month. Tenant refuses said rent increase. Bad bing/bada boom – you’re in front of a judge.

The province handed down the landmark precedent setting decision in one fell swoop. The board ruled that tenants cannot rent out their apartment to tourists without getting the landlord’s approval first.

“The message that these lucrative sublets sends to landlords is that the value of the unit does not represent the value of the rental market,” the board concluded. “The frequency, the difficulty in verifying the identity of sub-tenants, the inherent risks … are all issues that can be raised,” the judgment read.

A cornerstone element of this decision was that the province felt that it was clear the dwelling was being rented out for commercial purposes, not residential, which is what the original lease itself was predicated on. The ruling indicated that tenants are required to get their landlord’s approval prior to doing anything on Airbnb, and that the landlord has 15 days to refuse if they don’t approve. The ruling also indicated that the landlord cannot spike rent because a tenant decides to list a unit on Airbnb, which in essence is encouragement by the province to get tenants and landlords to partake in a healthy meal of being reasonable and co-operative. All in all – tenants can’t do anything without clearing it by their landlord first. A logical ruling. Lastly – a tenant who lists their unit on a home-sharing site cannot charge more than the price of rent.

In an effort to be fair and balanced, Airbnb does provide some good tips for using their service, which include but are not limited to, maybe mentioning to your landlord that you’re sub leasing your place to strangers for an assumed profit. If you’re thinking about starting an Airbnb business on the back of your landlord, you might want to consider reading this paper by Lapointe Rosenstein Marchand Melançon.

Excellent work, Quebec! Supress the hustle.

 

Ontario’s Landlord & Tenant Act Has More Holes Than A Block of Swiss Cheese.

I’m pretty sick and tired of hearing the variety of gripes about landlords. Very few people like landlords and it’s easy as pie to pick on them. Too easy. As a matter of fact, I’m going to take it a notch up. I think landlords generally suffer from a grossly misinformed perception from renters and entitled people and are considered a privileged group – receiving more criticism than they generally deserve.

Sure – there are lousy landlords. Lots of them. I particularly have negative reserves of sympathy for predatory or blatantly negligent landlords  who don’t care about the well being of their tenants or who ignore their professional and legal responsibilities and obligations.  If you’re a George Woolsey – I think you need to go to jail.

With all of that said, Nina Willis was charged with fraud this week, and it’s about time. She – along with every other tenant who games the system for their own benefit (especially in tenant friendly provinces like Ontario) – are no different than con men. They should all be charged with fraud and we should have a public registry for people like this. Landlords, like consumers, should be protected. They deserve it.

Take Adam Buttigieg as another example. He has a gamut of fraud convictions and appearances at the Ontario LTB. The Toronto Star did a wonderful exposé on this guy last year. They revealed how tenants can delay eviction by exploiting protections offered through Ontario’s Landlord and Tenant Board, and how privacy rules keep landlords in the dark about bad tenants. It’s about time on that, too.

Nina Willis has been ordered out of at least seven properties since 2005. She’s a professional liar and fraudster. She deserves to go to jail because she knowingly and willfully lied on tenant applications and would exaggerate maintenance complaints as justification for withholding rent. Sometimes she’d even accuse landlords of discrimination or harassment. Whatever to delay the process as long as possible. Once that was done, she would effect her perfected dance of waiting for N4s, then waiting for L1’s and a hearing at the LTB, and then providing checks for the arrears amount during the mediation process, which would bounce. Stalling evictions in the province of Ontario is a relatively easy thing to do. Once she exhausted her options, she’d have already bought herself months of living rent free and would simply move onto the next landlord to do the same thing.

There are bad landlords. That’s a fact. There are also bad tenants. That’s also a fact. The most important fact in the province of Ontario is that if you’re a bad tenant, you can buy time on your landlord’s dime to pay the rent. You can use your landlord as a bank. You can live rent free for months if you really wanted to, and you can do it a number of times without getting caught. I understand the need for privacy, and believe everyone is entitled to it – but if you exploit people – you should be exposed. I’m glad Nina Willis’ is getting the justice she deserves, but it doesn’t change the fact that being a landlord in this province is a tough job and those who do it, suffer from a significant degree of financial exposure courtesy of our friends at Queen’s Park. Good legislation is airtight and adaptive when necessary. Ontario’s laws aren’t there yet, but they should be.

Questions? Comments? I’d love to hear them!

Mayor Naheed Nenshi Thinks Calgary’s Landlords Need To Take It Down A Chevron

Mayor Naheed Nenshi is a great mayor. The majority of Calgarians think so. He’s a responsive and witty guy, and clearly he’s doing something right. I’m personally quite fond of him too – especially with some of these gems on Twitter.

Last week, he propped himself up on the soapbox to talk about Calgary’s landlords (“too many landlords” to be specific), and how they’re screwing tenants and gouging them on rent. There are some alarming rent increases going on in the city. To put this into perspective, one needs to consider a few things.

In July of this year, the CMHC indicated  that Calgary has one of the lowest vacancy rates of any major city in the country. That rate is 1.4 percent. The average cost of a one-bedroom apartment is just over $1,130 per month. An average two-bedroom apartment goes for just under $1,300 per month. Alberta’s provincial residential tenancies act doesn’t limit how much landlords can raise rents, but they have to give three months’ notice for monthly renters and they can only do it once per year. If you’re a tenant on a year long lease, you wouldn’t see a rent increase inside of the year of your lease. Here’s a few other facts about Calgary as well…

25,000 people a year are moving to Calgary. You heard that right. The city’s population is surging. Property taxes and utilities have also increased in the city, not to mention other municipal and residential costs for residents – both landlords and tenants.

On Friday, Mayor Nenshi clarified that his statement on rent gouging was largely based anecdotal evidence and not, in fact, a systemic problem.

“What I’m calling for is ethical business more than anything else. If you’re a landlord and your costs have gone up … then of course you pass that on to your tenant. That’s part of your business. But every day I get calls in my office from people who have been given no notice, a month’s notice, of 30, 40 per cent increases in their rent,” Nenshi added. “And nobody’s costs have gone up that much.”

Nenshi’s comments drew the ire of Gerry Baxter, executive director of the Calgary Residential Rental Association, who considered the comment an inaccurate characterization of the majority of Calgary’s landlords.

What do you think? Do you live in Calgary? Are you a tenant or landlord? Do you think it’s the city’s responsibility to provide more affordable housing? Do you think that Alberta’s Residential Tenancies Act should change to cap increases that landlords can impose? Share your thoughts with us!

Home Insurance Industry Kicks Montreal Landlord To The Curb After Repair

Montreal property owner Sari Buksner is in the midst of a nightmare of sorts, courtesy of her insurance company, and she’s yet to wake up from it.

Back in 2012, one of her tenants alerted her to a leak dripping from the second floor to the first. Her insurance firm saw the problem was a valve linking to her water heater on the second floor. They also proactively noticed a completely separate leak, near the toilet of her third floor. The estimate on the repair work for both claims originally came in at a little under 20K.

According to the original CBC News piece, Buksner said she settled with a contractor recommended by the insurance company after the first one she found declined the job, indicating it was beyond their capabilities. Once she started with the recommended contractor from the insurance company, the work began, and unexpectedly continued for months. Some of the reasons for this included a lack of proper insulation for the new pipes, which froze, creating an even bigger issue than the initial leaks. A rip up was required, and a complete re-do of the work – as in new pipes, gyproc, drywall, painting, etc. etc. The initial $20K that was speculated turned into a little under $87,000 in construction/renovation costs. On top of this – the insurance company paid her $58,155.00 in lost rental income while the work was taking place. The total payout to Buksner was about $145,000. Whoa.

After the work was done, her insurance company decided not to renew her policy – something that insurance companies have the right to do.

So far, she has only found a willing insurer in the substandard market, and that policy would cost her around $11,000, roughly $4,000 more than what she was last paying, per year. Adding insult to injury, she’d be required to pay the whole thing up front and wouldn’t receive water damage protection. Jesus.

Thoughts? Comments? From personal experience, water damage claims aren’t exactly a cakewalk. Here’s another kicker – water damage claims are on the rise in Canada.

 

 

Yukon’s Landlords Get A Break

Landlords in Yukon got a break recently with a decision by the government to cancel a 13 million dollar affordable rental housing program in what is already a highly crowded rental market.

Terry Bergen of the Yukon Real Estate Association says there are currently at least 4,000 rental suites in Whitehorse. In a city that has less than 28,000 people as of the 2013 census, that’s a helluva lot of rental units. Like a lot.

Check out the story on CBC here. You can also learn a bit of the backstory here.

Professional Tenants Royally Screw Multiple B.C. Landlords

CBC ran an exclusive story this morning on two highly professional tenants who are working the system in a huge way in British Columbia.

Susan and Chris Perret, have lived nearly rent-free in at least five homes over the past two years. CBC News found records going back to August 2012, when the pair were evicted from one Maple Ridge home. They affect people financially, ignore eviction orders, bounce rent checks, and prey on property owners and landlords. Most importantly – these two know the province’s landlord and tenant legislation better than most people. The only thing they know how to do better than this is moving every 3-9 months.

Amy Spencer, president of Landlord B.C., says tenants like the Perrets are exactly what her association want to warn its members about.

“Ninety-nine per cent of tenants are good, but it’s those ones that get out there, like the ones in Maple Ridge, that give tenants a bad name,” Spencer said.

Landlords who lost money to the Perrets are angry no one at B.C.’s Residential Tenancy Branch warned them about the couple’s history of evictions.

“When people go around doing it professionally time after time, I mean, somebody — there should be a place that you can check,” said landlord Noel Beaulieu, who said he was out $1,500 from the ordeal.

Kim Gouws, who evicted the Perrets last month, said she was frustrated there didn’t seem to be a way to warn the next landlord.

“Every time I’d call I’d say,’ what about the next person? They’re just going to do this to another innocent person. How can I stop that?” she said. “I couldn’t.”

Credit and background checks everyone.