Is Los Angeles Treating Landlords Fairly?

Los Angeles institutes a tenant favored program to stop all evictions for nonpayment of rent during Coronavirus. But, does it make sense?

In a city where more than 60 percent of households rent, city lawmakers passed a law designed to help renters – namely two local emergency measures to thwart evictions.  While it doesn’t absolve renters from paying their rent, it does allow them to defer their rent for up to 12 months. You read that right – 12 months after May 15th – when the mayor’s emergency measure expires. In a city where the average rent is over $2500 a month, that’s a tall order for landlords to take on.

The ordinance also halts evictions of renters who have “unauthorized occupants,” such as family members or pets, living with them because of COVID-19. (It covers tenants facing eviction for “nuisance” reasons, like a loud child who’s in the apartment more now that schools are closed.)

There are also protections against two more types of evictions, in addition to nonpayment of rent, including:

  • Cases where tenants who have contracted COVID-19 are being evicted for reasons that are not their fault. “No-fault” evictions include instances where a landlord might want to tear down the building or take the unit for a family member.
  • Evictions under the California Ellis Act, which owners of rent-controlled buildings invoke when they want to demolish their buildings or remove them from the rental market, have also been halted now and are not allowed to resume until two months after the end of the “local emergency period” we’re in now because of the COVID-19 pandemic.

Under the city’s anti-eviction rules, residents just have to notify their landlord within seven days after the rent is due that they’re unable to pay because of economic or health circumstances caused by the virus. The city does not require tenants to provide their landlord with documentation proving they have been impacted by COVID-19. So in other words, all you have to do is claim you’ve been affected by Covid 19 and you can get up to a year deferral on your rent – interest free. On the other side of this, landlords are required to act like banks, and continue paying their mortgages, property taxes, utilities, and any other expenses related to operation.

As per Curbed LA, The California Rental Housing Association, which represents more than 22,000 landlords who lease out more than a half-million units, and the Apartment Association of Greater Los Angeles, are advocating for a relief program where the state would cover the cost of at least some of the rent and pay it directly to landlords.

“Many landlords are so small, they’re mom-and-pops. They depend on that rent to supplement their retirement incomes and put food on their tables,” says Daniel Yukelson, executive director of the Los Angeles apartment association. “They’re going to be in severe financial peril today.”

What makes this even tougher and more confusing for landlords is the overlapping and dizzying federal, state, and local tenant protections that have emerged in the last few weeks.

As part of the federal stimulus package approved last month, there is a nationwide eviction moratorium for nonpayment of rent, but only for renters whose landlords have mortgages backed by the federal government — something most tenants don’t know and would have a difficult time figuring out. Gov. Gavin Newsom has agreed to delay eviction proceedings for renters affected by the virus, but only through May. And dozens of mayors and city councils across the state have come up with their own rules like the ones enacted in L.A.

Landlords are struggling to understand which rules they have to follow, said Daniel Yukelson, executive director of the Apartment Assn. of Greater Los Angeles. At the same time, many are also navigating a similarly haphazard patchwork of government protections for late mortgage payments.

“It’s really unfair what’s being done,” Yukelson said. “We did not go in the business to be lenders to tenants. And that’s what we’re being asked to do.”

Who’s looking out for landlords in Los Angeles? While the adaptive laws to help tenants make sense, why isn’t the city balancing out the remedy with a program to help property owners? That’s a question that Mayor Eric Garcetti is ultimately going to have to answer.

Cincinnati Might Ditch Tenant Security Deposits

Two thirds of the population of the city are renters

Cincinnati may do away with security deposits under a proposed bill and replace it with a requirement that landlords accept a security deposit insurance policy instead. The proposal could make Cincinnati the nation’s first locale to mandate a new option for renters to pay security deposits. Landlords and property owners aren’t fond of the proposed measure, but city officials believe the traditional security deposit format is in need of a serious revisiting. A security deposit in Cincinnati is typically the equivalent of single month’s rent. Lawmakers are citing what is a growing affordable housing crisis in the United States and maintain that the necessity to supply that a security deposit is a heavy burden to place on tenants.

The monthly rent for a typical one-bedroom apartment in Cincinnati was $850 in 2017. Two years later it’s risen to $1,300, with a 2-bedroom costing about $1,600 a month.

“This would keep money in the pockets of middle- and working-class Americans to be able to provide for their families,”  – Cincinnati Mayor John Cranley

With security-deposit insurance, a tenant signs a policy with an insurer and pays a monthly premium. The policy guarantees an amount of money would be given to the landlord if there’s damage to an apartment. The premiums cost less than the average security deposit in the city, with the only drawback being that renters don’t receive the money back, with interest, after they leave an apartment.

Although the measure has garnered support from Cincinnati Mayor John Cranley, fellow council members and property owners are skeptical about the proposal. According to Inman, some landlords at the first recent public hearing on the law indicated that the plan could possibly remove the incentive to take care of the property. Another point tabled was that tenants’ credit could also be at risk if they fall behind on insurance payments. There were also questions about what would occur if a claim was denied by an insurance company.

A second hearing has been scheduled for December 31. Are you a property manager or landlord in Cincinnati?  What do you think of this new law?

Nova Scotia Needs To Revisit Their Residential Tenancies Act

There’s a serious loophole in the province’s law

This is a doozy of a story that both CBC and the National Post reported on. Jason Selby just wanted to rent his house out to a good tenant. When he met Nadav Even-Har, he thought he found one. He was presented with glowing previous references and an equally impressive credit report after he and his family (including two small children) came to an initial meeting with Selby.

“They rolled up in a BMW and Audi. They presented a credit report with a high score. Their references checked out and they have two young children, so I thought that … it would be wonderful to be able to have the home used for a family.”

Even-Har signed a 12-month, fixed-term lease for the home in Cole Harbour with rent at $2,000 per month, beginning in May of this year. The first rent check post signing of the lease, bounced in June, and he never saw another dime after that. The postdated rent cheques Selby received were written from closed bank accounts.

This is how is it all went down…

He initially gave the family a 45 day grace period in good faith. After that yielded nothing but excuses from Even-Har, Selby applied to Service Nova Scotia for an eviction. Two weeks later, he filed for a hearing before a residential tenancy officer. When Even-Har didn’t appear at the hearing, he was ordered to pay more than $5,000 in rent and to leave by Sept. 1. Selby obtained an eviction order on September 3rd.

Even-Har immediately appealed to Nova Scotia’s Residential Tenancies board and the eviction was stayed until a court hearing on Sept. 23.

When Selby showed up for the hearing, Even-Har again wasn’t present, and Selby was granted a court order to evict him. When Selby removed Even-Har’s belongings from the home on Sept. 29, Even-Har called police. The police arrived and did not accept Selby’s notice of vacant possession. A spokesperson for Nova Scotia’s Justice Department said Even-Har went back to the court before the eviction decision by the Residential Tenancies board was reflected in the computer.

Another stay order was issued – but the court ultimately admitted it was issued in error. Once that was established, Selby moved to proceed with the eviction with a sheriff, only to find out that Even-Har had appealed his eviction to the Nova Scotia Supreme Court and delayed the process until another  court date on Oct. 11. Keep in mind, at this point – Even-Har was in arrears more than $8000. Selby vented about his experience on Facebook.

That’s when he heard from Lori Sampson of Cole Harbour. She said she had rented her home at 60 Tamara Dr. to Even-Har in August 2018 and had a similar experience.

Then Jaro Schubert came forth. He owns a café and Airbnb in Fall River, N.S. He said Even-Har owes him nearly $5,000 for rent and food dating back to this spring.

On October 15th, CBC News published a story after having spoken to the eight  (you read that right) landlords who said they’ve failed to collect rent or damage deposits from Even-Har between 2013 and last month. With the cat out of the bag – Even-Har tried to get in front of the growing story with an interview with CBC for that same piece. He defensively admitted to the trend and vowed to make amends to the previous landlords he’d wronged while comparing his situation to someone who is caught up in a payday loan cycle. The intimate knowledge of the provincial appeal process, the granting of stays, the timing of data being entered into Service Nova Scotia databases, and the pattern of not being available for hearing dates for a variety of reasons are also obviously elements to his circumstances that he didn’t intend to play out as they did. The ability to delay and defer on a landlord’s dime in Nova Scotia is problematic.

Patricia Arab, the minister responsible for Service Nova Scotia, said the Even-Har case has led her department to look to other jurisdictions for guidance on how to avoid similar incidents.

“Even if it’s just this one individual … it’s opened up an issue that’s an important one to address so we don’t get to a point where people are using this loophole in the Residential Tenancies Act to avoid rent.”

The story ends on a good note. On October 16th, Selby reclaimed possession of the home, but is still out over $8000. He is advocating for a provincial review of the Residential Tenancies Act. Frankly, it’s needed. Provincial governments need better mechanisms in place to more effectively identify and deal with glaringly obvious cases of professional tenancy like this as early in the process as possible. Otherwise, single instances like this, as has been demonstrated, yield hundreds of thousands of dollars of loss.

London Mulls Making Landlords Pay For Parties

The city is known for epic illegal student street parties – also known as FOCO – or “fake homecoming”.

London, Ontario is a party town, evidently. In a classic case of municipal policy clashing with provincial, this month, London city staff suggested to increase the maximum fines for nuisance parties to $25,000. This was in response to an insane illegal street party that flooded a street near Western University with 20,000 revellers in September. That event completely overwhelmed police, sent 57 people to hospital and prompted warnings from law enforcement that future street parties could easily cost a life.

As per the CBC, social media videos that showed students “brewfing” — literally drinking beer while climbing onto roofs and even jumping off them. Emergency services couldn’t access the street that this was occurring on.

Fines are going up, but more importantly, the municipality also proposed amendments to the public nuisance bylaw that would allow the city to pursue tenants — and landlords — to recover costs from cleanup and damage.

“Where an absentee landlord … takes no action to prevent, end, or clean up after a nuisance party, they may be subject to invoicing,”

This is almost as crazy as the parties themselves, at least according to Joseph Hoffer. He’s a lawyer representing more than 600 members that make up the London Property Management Association. His position is that landlords are prohibited from controlling the conduct of their tenants under the province’s Residential Tenancies Act. Some of the more interesting suggestions that city staff have made is for landlords to hire private security, something Hoffer is adamant is illegal.

“The effect of the bylaw is to compel landlords to do something illegal, and that’s repugnant. There seems to be an assumption built into the bylaw amendment that landlords can control the actions of their tenants, and that assumption is fundamentally flawed.”

The committee voted to ask staff to review the bylaw — taking into consideration the legal concerns raised by Hoffer — and report back on May 28. What do you think?

Quebec Landlords Introduce No Weed Clauses In Leases

July 1st, 2018 marks the day the drug will be legal, but landlords are taking steps to ban smoking and growing pot in units which fuels what will ultimately be a national debate

Under Quebec’s proposed marijuana law, residents will be allowed to use marijuana recreationally in their homes but won’t be permitted to grow cannabis for personal use. Many landlords have already sent notices to tenants informing them they won’t be allowed to smoke weed in their apartments. According to the CBC, landlords are introducing clauses and conditions to get a handle on what many, if not most, assume will be an emboldened and more casual approach to smoking pot.

Kevin Lebeau, a spokesperson for the Quebec Landlords Association, thinks most people find the odour and presence of marijuana unpleasant and believes landlords need to act in the best interest of all of their tenants – including many who he believes will be vehemently against it.

“It diminishes your enjoyment of your apartment. For some people it is a health issue and other people don’t want their children exposed to this at all.” -Kevin Lebeau

In a recent association poll, a majority of members anticipate a significant increase in tenant complaints. As a result, a comparable majority has also indicated they plan to prohibit smoking marijuana inside their buildings altogether. This has put them directly in conflict with various tenant rights groups across the province who are questioning whether the smoking prohibitions will be legal once marijuana itself is legalized. The tenants’ association of Sherbrooke, Que., argues that banning tenants from smoking marijuana inside their homes will be discriminatory after July 1st. Other tenant’s rights advocates argue that since they are paying for the apartment, they should be entitled to consume cannabis or cigarettes without fear of consequence. Any position to the contrary is discriminatory.

“The landlord doesn’t have the absolute right to do whatever he or she wants at any time.” – Kevin Wright, tenant’s rights advocate.

Opinion: Neither does the tenant

Here are the facts. As of right now, marijuana is nationally illegal. Most Canadians support legalization and regulation of what is widely perceived to be a generally benign substance that has been vilified and historically  mischaracterized in the media and by the government for decades. Many, if not most people, consider it something that has benefits for those who suffer and those same people, generally speaking, consider it to be a substance that is less harmful than alcohol and cigarettes, which are both legal and regulated, and have been for years.

There is no law preventing you from smoking or growing cannabis in a rented unit. If your consumption or growing of marijuana impedes the use or enjoyment of another tenant’s unit or creates an issue for the landlord themselves (the landlord reserves the right to have a preference for a smoke free building or unit), then there is a problem. The landlord can pursue a provincially supported judgement against the tenant or an eviction if that is the case, and they should have the right to do that.

We need to ask ourselves if anything is served by conveniently dismissing certain realities or creating false equivalencies when it comes to this issue. Societally, we appreciate the right to clean air, personal space, and health. That’s why we have laws when it comes to not smoking in restaurants, in cars with children, or on planes.

“Smoking” cannabis is defined as the inhalation of smoke or vapors released by heating the flowers, leaves, or extracts of cannabis and releasing the main psychoactive chemical, Δ9tetrahydrocannabinol (THC), which is absorbed into the bloodstream via the lungs. When you smoke weed, in most cases, the process is creating a smell. That smell comes from compounds made in the plant called terpenes or terpenoids. Not all weed stinks, but in the vast majority of cases, it will produce a noticeable scent. It can and often does, smell bad, and lingers in homes and apartments – much like cigarette smoke. It’s also a psychoactive substance. Exposure to the second hand smoke of cannabis is not exactly pleasant for anyone, kids or adults.

We put value on consideration and respect for other people’s rights to enjoying their environment and space. Why doesn’t that apply here? Because it is treated and increasingly categorized as a medicine for people? Because it is inevitably going to be legal? Because people have been unjustly jailed and discriminated against because of their weed habits? Because we feel people need to get over their own hang ups and misconceptions about a natural plant that has never been the cause of death when prescription drugs and booze kill more people in a day than weed ever has? Because the time is now to make people’s lives better with deserved access to something that will reduce suffering? All of the aforementioned might be true – but we got off topic pretty quickly there.

Alcohol is legal, however, if you were producing small batches of potato vodka out of your apartment without your landlord’s knowledge, and that process was impeding the enjoyment of the unit for others or created an elevation of fire risk or informed the environment in a way that was not in the interest of the owner (i.e. odour), would we be crying foul? What entitles us to do whatever we want in a rented apartment? If a landlord wants a smoke free environment, then why is that discriminatory? What is preventing people from smoking outside – like we ask them to do in most places like hospitals, libraries, or museums currently? You should be able to do whatever it is you like in a home you own, but when you’re renting, the landlord has a reasonable right to preserve the unit he is leasing to you and protect the interests and rights of the other people who do the same thing – because – they own the premises and assume most if not all of the risk. If you that doesn’t work for you, then you have the right to find a place that does.

 

Criminal Fraudsters Too Often Effectively Game Provincial Legislation

The eviction process in Ontario, Nova Scotia and Quebec typically takes between 3½ to five months. Due diligence is an absolute essential.

Go Public published a really interesting story this week about a landlord in Bedford, Nova Scotia who got burned by a professional tenant, badly. Elizabeth Anne Critchley was renting a duplex from Jim Johnson, and managed to not only secure exceptions for not paying her rent  – but also loans by playing on her landlord’s sympathy. Critchley was a professional. Other known aliases are Betty Drake, Betty Burns and Elizabeth Anne Drake, and she has a criminal record that dates back more than 25 years and includes more than 120 convictions, many of them for fraud in Nova Scotia, Prince Edward Island and Ontario.  By the time Johnson went to the Nova Scotia Residential Tenancies office in May, his financial situation had gone from bad to worse. CBC had reported on her sentencing in an unrelated fraud scheme back in 2014. She’s as bad news as it gets. She pleaded guilty to one count of fraud in 2014 and spent a year in jail when she defrauded a low-income Charlottetown couple.

Here’s the thing. Johnson didn’t do his due diligence. He did not run a background check on her. His mistake in trusting a bad character was not helped by a system in Nova Scotia that many consider to be more tenant friendly than balanced and that facilitates this kind of fraud. Johnson said the system moved so slowly, it allowed her to live in his duplex for three more months without paying a cent. All the while, Critchley was preparing for her next victim. She engaged Terry Gerard to rent Johnson’s duplex, using the name Betty Drake, claiming she was the owner and lived in the other unit. Tanya Gerrard gave almost $1,100 to Critchley in cash when she answered a rental ad for half a duplex. Critchley now faces charges related to Johnson, Gerrard and others, including two counts of fraud over $5,000.

“The tenancy board, in my opinion, takes care of the tenants and the landlords are on their own.”

Too many renters are getting away with not paying rent, then appealing eviction orders. The Toronto Star reported on the issue last year, hitting on a series of instances where professional tenants clearly demonstrate a strategic and intimate knowledge of bending rules and doing things just at the right time – like in the case of Eldebron Holdings vs. Jeffrey Mason.

Mason was renting a unit for $1700 a month. The only payment that cleared was his first. When the landlord filed an eviction application with the Landlord and Tenant Board in November, the tenancy was terminated and the tenant ordered to vacate the unit. On the last day before the eviction could take place, the tenant filed an appeal – buying more time. When the Divisional Court hearing took place in April, the landlord disclosed that the tenant’s previous landlord had been in court on a similar set of circumstances in May 2015.

Think that’s bad? How about the case of James Regan? How about Nina Willis? How about Adam Buttigieg?

A big part of the problem that leads to such long lead times before someone is officially evicted? Delays. The Federation of Rental-Housing Providers in Ontario says delays are happening in each step of the eviction process. They’re not helpful at all. They include but are not limited to…

  • Statutory delays, which means the legislated time landlords have to wait before taking action.
  • Hearing/order issuing delays, which is the amount of time landlords have to wait to get a hearing and then an eviction order after the hearing.
  • Enforcement delays, which is the number of days landlords typically wait for either a sheriff or a private bailiff to enforce an eviction order.

Provincial registries of the worst and most frequent offenders should be part of the solution.

Ontario MPP Ernie Hardeman says part of the solution should be a provincial registry of repeat problem tenants who exploit the system’s flaws. Such a list could be referenced before renting out a unit and would likely reduce a significant number of instances where an eviction order is being sought in the first place.

“We need a system to be able to find people who are doing this professionally, who have figured the system out”

Landlords often make the mistake of giving problematic tenants too much time to rectify a problem or being too lenient. Once they get wise, they realize they’re waiting months to get to the tribunal stage where an eviction notice is formally issued. Earlier this year, Ontario made changes to its Residential Tenancies Act, aiming to strike a “fair” balance between the rights of landlords and tenants. It actually ended up doing the opposite. Tenants who fail to show up at a first hearing now automatically get a second one that sometimes takes more than a month to reschedule. Meanwhile units are lived in by people who often have done this over and over again, and often simply move on and do it again to someone else.

 

Ontario Landlords Are Now Required To Pay Tenants If They Evict On The Basis of Personal Use

Tenants are now entitled to a full month’s rent as compensation if units used by landlords or their families

As of September 1st, the provincial law in Ontario has changed. When a landlord ends a tenancy to have family member move in or for their own personal claimed use, people evicted must receive compensation. Alternatively, landlords can offer tenants another acceptable rental unit. Landlords are also required to express an “intent to occupy” for at least a year. These measures are designed to discourage landlords from converting units into short term rentals or re-renting the units at a higher rent as a result of a hot market, like in Toronto. Breaking any aspect of this new law can garner a fine of up to $25,000.

“When a tenant is evicted through no fault of their own, they are forced to scramble to find new accommodations and cover the costs of a sudden move,”  – Housing Minister Peter Milczyn

This has proven to be an extraordinarily busy year of tweaking the Ontario Residential Tenancies Act (formally referred to as the Rental Fairness Act), courtesy of Kathleen Wynne’s Liberal government. The changes are an element of her housing plan announced this spring, which included expanding rent controls to all rental units in the province, not just those built before 1991, per the previous rule.

It’s safe to say that landlords aren’t exactly happy about these new rules, especially in a city like Toronto where the vacancy rate has been hovering at about 1%. There is significantly more demand than supply.

“This will have a very significant impact on small landlords and a very significant impact on condominiums,” – Jim Murphy/Federation of Rental-Housing Providers of Ontario.

Regardless, tenant advocates have been reporting wide spread abuse of the N12 form in the highly sought condo market in Toronto, and many are welcoming this change.

Report Reveals Renting From Small Landlords Is Cheaper

Big news from the Canada Mortgage and Housing Corporation! They released their Housing Market Insight report at the beginning of the month. Individual investors and private corporations own about 90 per cent of Canada’s purpose-built rental apartment units and most markets with a higher concentration of individual investors have lower average rents. In other words….Units owned by individual investors tend to have lower rents than units owned by other ownership types. This is most pronounced in smaller markets in Canada.

Individual Investors are defined as: all non-incorporated owners of rental housing stock, mainly comprised of individual investors and small joint ventures, representing 49.3% of the market.

Individual Investors are well-represented across all 35 metropolitan centres that were assessed as part of the report. The average rent associated with the units they own tends to be lower than the rent associated with other ownership types in most centres, including Montréal. However, the difference is generally smallest in centres with high overall rents, including Vancouver, Edmonton, Toronto and Halifax.

This isn’t really a surprise here. Smaller, private, non corporate landlords are better. It’s simple to see why.

They have a lot more to lose and generally rely on rental income as supplemental for retirement or for their daily lives. These kinds of landlords are exactly who we’ve created Renting Well for. Small landlords are like small businesses. Generally speaking, they have an interest in keeping tenants happy, ensuring that their units are in good shape, and have an inclination towards a more personalized approach. They have a tendency to be easier to contact and more often than not, they have a vested interest in avoiding turnover. Keeping tenants is cheaper than getting new ones. Even across the pond, english tenants were surveyed about satisfaction levels with their tenancies as part of the English Housing Survey 2015/2016. Tenants in the private rental sector were more satisfied with their accommodation than those in the social rented sector.

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.