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Ontario Government Proposes Changes to the annual Rent Increase Guideline

December 8th, 2011 · ontario landlords association, Ontario Residential Tenancies Act, rent

 The true north strong and free!

We live in a free country, right?  A first-world capitalist nation.  Democracy.  We are the “true north strong and free!”

Except if you are a landlord in Ontario.

If you are a landlord in Ontario you live under conditions known as ‘rent control.’  This means you can’t raise the rent as the market dictates for your current tenants.  Instead you have to follow the government guideline.

So what has the government guideline been over the years?

That’s a great question.  Let’s take a look.

2001 – 2.9%

2002 – 3.9%

2003 – 2.9%

2004 – 2.9%

2005 – 1.5%

2006 – 2.1%

2007 – 2.6%

2008 – 1.4%

2009 – 1.8%

2010 – 2.1%

2011 – 0.7%

2012 – 3.1%

It’s that 3.1% increase that has the Ontario government scrambling!  After all, it’s so much higher than previous years.

But if you combine 2012’s 3.1% with 2011’s 0.7% it’s still really low, right?

Yes, you are correct.  However the 3.1% increase let then Minister Bartolucci to act like he stepped on a land mine.  Oh, he was upset. He promised if his Liberal government was re-elected they would re-vamp the who system due to this ‘outrage.’

Liberals have introduced new legislation capping any future rent increases to…drum roll please….2.5%

On Monday the Liberals introduced a Bill saying they will cap the guideline at a maximum of 2.5% and will create a floor at 1%.

The Housing Ministry website states:

Tenants would benefit from greater certainty that would ensure affordable and stable rents so they have safe and affordable housing. For landlords, this would ensure a fair return so they can properly maintain rental properties.

Does this make sense?

What if inflation rises to 5, 6 or 7%?  How can landlords deal with this if the rent increase is capped at 2.5%?

So what does the government say?

The Minister of Housing in Ontario wrote a letter to the Ontario Landlord Association.

Here’s her letter.

 

Ministry of Municipal Affairs and Housing

Office of the Minister

777 Bay Street, 17th Floor

Toronto ON M5G 2E5

Tel. 416 585 7000

Fax 416 585 6470

www.ontario.ca/MAH

 

December 6, 2011

Ontario Landlord Association

Ontariolandlord@execs.com

Dear Colleague,

I am writing to you that today our government introduced proposed legislation to amend how the annual Rent Increase Guideline is calculated under  the Residential Tenancies Act (2006) RTA.

The annual rent increase guideline is based on an objective and transparent measure – the Consumer Price Index (CPI) for Ontario – which is compiled by Statistics Canada.  The Rent Increase Guideline is calculated by averaging the percentage change in the CPI during the previous months from June to May.

While this formula worked well in the past, recent economic conditions have caused fluctuations in the CPI.  This has produced guidelines that do not reflect the economic circumstances of those who rent.

Our government is proposing that the current formula be retained, but that the annual Rent Increase Guideline be capped at two and one-half percent.  If passed, the legislation would also ensure that the guideline would never fall below one percent.

The proposed amendments, if passed, would reduce the potential volatile effects of the CPI, while providing stability and predictability for both renters and landlords during these uncertain economic times.

The amendments, if passed, would also help ensure that rents remain affordable and stable for nearly one million tenants across Ontario, while recognizing that modest rent increases are necessary for landlords so they can properly maintain rental properties.

If passed by the legislature during the Spring 2012 legislative session, the revised formula would be used to calculate the Rent Increase Guideline beginning in 2013.

Our proposal would also require that the Ministry review the Rent Increase Guideline formula every four years to determine the effectiveness of the new changes as economic conditions evolve.

The proposed legislative amendments will be available to on the Legislative Assembly website (http://www.ontla.on.ca) in the next few days.  I encourage you to visit the website, as there may be an opportunity to provide comments on the proposed amendments if the Bill if referred to Committee.

Sincerely

 

Kathleen Wynne, Minister

What do you think?  Still want to invest in rental in Ontario?

Think about it carefully.
There’s a great thread about this at the Ontario Landlord Association Advice forums here

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What’s this about Ontario landlords hiring the Sheriff?

December 5th, 2011 · evictions, Residential Tenancy Act (Ontario), sheriff

After months of going through the legal process, dotting every’ i’ and crossing every ‘t’ on every application you filled out, taking days off work to go to Landlord Tenant Board hearings, and lots of sleepless nights you finally have your order telling the tenants they have to move out.

What a relief!

Hey wait a minute.

The order said move out on Tuesday.  You go to your property expecting it to be empty…and the tenants are still there!

They haven’t moved out.  In fact, you can hear the stereo blaring and smell the smoke.

Instead of moving out it looks like your tenants are having a party!

So what in the name of the Great State of Texas is your next step?

You have to go hire the Sheriff to evict.

Wait a minute, Ontario has a Sheriff?

Yes, they do.  The Sheriff is there to enforce Orders from the Landlord and Tenant Board.

So how does the Sheriff system work?

Don’t expect any quick-draws, shoot-outs, or a 5 man posse of Marshalls riding to your rental property.

Let’s say your tenants (we’ll call him Billy the Kid) has an Order from the Landlord and Tenant Board to vacate your rental home (let’s call it the saloon) by March 1st.

You get on your horse and ride on over and see Billy still hasn’t left.  You knock on the saloon door and ask Billy why he “hasn’t left Dodge yet.”    Billy answers “I ain’t go’in no where Yankee!”

Wait, a tenant can just ignore an Order from the Landlord and Tenant Board?

The simple answer is ‘yes.’  This is why you now get on your horse and mosey on down to your local Enforcement Office.  While there you explain the situation, give them the Order, and they will give you some paper work to fill out.  You pay over $300 and they will either give you a date or contact you later with a date when the Sheriff will come and enforce the Order.  The date is usually between 1 -3 weeks, depending where you are located.  Once you have a date, it’s a good idea to either buy a new lock yourself or hire a locksmith because you don’t want Billy getting back into the saloon.

High Noon

On the day of the scheduled enforcement of the eviction Order you need to go and meet the Sheriff (likely two people) at the property.

Make sure you wait far away from the saloon because you don’t want to give Billy any reason to open fire and blame you for the shoot-out!

The Sheriff(s) will knock on the saloon door HARD, and identify themselves.  They will then open the door and clean out the premises, making sure there is no threats or living things in the unit (humans or animals).

What if Billy the Kid is still in the Saloon?

If Billy or anyone else is there, they will be told to leave.  Wait until you see him run!  Once he’s gone the Sheriffs will make sure the unit is safe and ask you to sign documents giving you back the saloon.

So the Saloon is finally back in my hands!

Um….no.  It’s not that simple.  The Sheriff will post a message on the outside of the door telling Billy he has 72 hours to contact you to pick up any he has left in the unit.

A notice will be posted on the door by the Sheriff’s officers, directing the tenant(s) to contact the landlord or their authorized agent should they wish to pick up any remaining belongings. They will be given 72 hours within which to do so.  So you wait.  He’ll likely call.

You make an appointment for a time withing the 72 hours.  You can watch over the final “move-out.”  Any issues, call the police….the Sheriff is done for the day.

To read an interesting discussion about this, go to the Ontario Landlords Association Advice Forums by clicking here

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Renting to tenants on welfare and it works (?)

November 26th, 2011 · ontario landlords, ontario landlords association, Residential Tenancy Act (Ontario), welfare

 

So what about renting to tenants on welfare?

It’s a valid and often-asked question.  After all, tenants on welfare are guaranteed their money from the government as long as they qualify.  There’s no risk of lay-offs or firings in this era of a potential double-dip recession.  So why not!?

There’s an excellent discussion about this at the Ontario Landlords Association discussion forum (www.Ontariolandlord.ca)

To read the thread click here.

There are certainly many excellent tenants who happen to be on social assistance.  Life if tough and we all have our ups and downs.

So why not focus on tenants on welfare who are making an guaranteed income to pay the rent?

Let’s look into this in more detail.  Here we go.

1. Tenants on welfare often tell the landlord the rent will paid directly to the landlord.

Sounds great doesn’t it!  The problem is the reality of the situation.  The welfare tenant can make a quick and simple phone call and that rent money goes to the and not to you!

2. Landlords often think if there is owed rent or damages they can get the government to compensate them.

This also sounds great!  You have the government responsible.  It’s also wrong.

Any rent owed or damages are the responsibility of the tenant.  And you know what?  Even if you sue and win against a tenant on welfare you cannot ‘garnish’ them.

What does this mean?

It means you will never collect from them.  If someone works at a job, you can garnish them after winning your law suit or LTB hearing.

Still think renting to people on welfare is a great business decision?  Up to you.  Know the real facts.

 

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My tenants won’t let me enter the property!

November 24th, 2011 · landlord entry, ontario landlords, Residential Tenancy Act (Ontario)

It happens more than most people who want to become landlords might believe.  There are many tenants out there who honestly think the ‘law is on their site’ and the landlord does not have the right to enter the property they rent.

Does it sound crazy?  Yes, it does!   But many tenants believe their rental property in their ‘home’ and you, the landlord (who owns the property, has the deed, pays the property taxes….cleans the eavetroughs, fixes the fence, makes sure the furnace filters are changes and hires the plumber when the tenants clog the toilet….) have no rights of entry!

Is it true?

No, it’s not.

The Ontario Landlord and Tenant Board has clear rules regarding when and how landlords can enter their rented out properties.

Let’s look carefully at the rules.

Here is what the Ontario Landlord and Tenant Board says about “Entry Without Written Notice.”

A landlord can enter a tenant’s rental unit without written notice if:

  • there is an emergency such as a fire,
  • the tenant agrees to let the landlord in,
  • a care home tenant has agreed in writing that the landlord can come in to check on their condition at regular intervals.

A landlord can enter a rental unit without written notice, between 8 a.m. and 8 p.m. if:

  • the rental agreement requires the landlord to clean the unit – unless the agreement allows different hours for cleaning,
  • the landlord or tenant has given a notice of termination, or they have an agreement to end the tenancy, and the landlord wants to show the unit to a potential new tenant (in this case, although notice is not required, the landlord must try to tell the tenant before entering for this reason).

Entry with 24 hours written notice

A landlord can enter the rental unit between 8 a.m. and 8 p.m., and only if they have given the tenant 24 hours written notice:

  • to make repairs or do work in the unit,
  • to carry out an inspection, where reasonable, in order to determine whether repairs are needed,
  • to allow a potential mortgagee or insurer of the complex to view the unit,
  • to allow a potential purchaser to view the rental unit (note: the Act also allows a registered real estate agent or broker to enter for this purpose if they have written authorization from the landlord),
  • to allow an engineer, architect or other similar professional to make an inspection for a proposed conversion under the Condominium Act; or
  • for any reasonable purpose allowed by the rental agreement.

The notice must include the reason why the landlord wants to enter the rental unit and must state what time, between 8 a.m. and 8 p.m., the landlord will enter the unit. If the landlord gives the tenant the correct notice, the landlord can enter even if the tenant is not at home.

Can a tenant refuse to let the landlord in if the landlord wants to enter their unit?

If the landlord enters the tenant’s unit as allowed by the Act, the tenant cannot refuse to let the landlord in. If the tenant does not let the landlord in, the landlord can give them a notice of termination claiming that the tenant is interfering with their lawful rights.  A Member could order the tenant’s eviction for this reason. Also, interfering with a landlord’s lawful right is an offence under the Act, and the tenant could be prosecuted.

For information about when a landlord can enter and how much notice a landlord is required to give before entering a tenant’s rental unit, see A Guide to the Residential Tenancies Act.

What can happen if a landlord enters a unit illegally?

If a landlord enters a tenant’s unit illegally, the tenant may file an application with the Board. If the Board finds that the landlord has entered the unit illegally, there are a number of things that the Board may order. For example, the tenant could receive an abatement of rent or the landlord could be ordered to pay a fine. What is ordered is up to the Member who hears the application.

For information about when a landlord can enter and how much notice a landlord is required to give before entering a tenant’s rental unit, see A Guide to the Residential Tenancies Act.

 

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Does the tenant have to move out at the end of the lease? (Ontario)

November 13th, 2011 · ontario landlords, Residential Tenancy Act (Ontario)

Question:  Is The End of the Lease the End of the Tenancy in Ontario?

This is one of the most common questions from new landlords in Ontario.  And it should be.

In other provinces in Canada a lease is treated like a regular contract.  When the contract ends both parties have choices:

Choice #1:  Renew the contract

Choice #2: Renegotiate the contract

Choice #3: End the contract

Many new landlords ask their tenants to sign a fixed term lease thinking it’s just like a normal contract.  Here’s the landlords way of thinking:

“You are signing a one year fixed term lease from November 1st, 2011 to October 31st, 2012.”

It the landlords mind what this means is:

“You are moving into my property for one year at a set rent price.  So you move in on November 1st, 2011.  You have to move out in a year, on October 31st, 2012, unless you want to continue and I want you to continue.”

Except in Ontario things don’t work this way.

The landlord and tenant can also agree to renew the tenancy agreement for another fixed term period, or enter into a new lease.  If the landlord and tenant agree to enter into a new lease, the terms of the lease can only be changed in accordance with the Act.

The end of a fixed term tenancy or lease does not mean that the tenant has to move out or sign a renewal or new lease in order to stay.

The lease is renewed automatically on a month-to-month basis (if the rent is paid monthly) or week-to-week basis (if rent is paid weekly).  This means the landlord and tenant do not have to sign a new fixed term lease when the term of the lease runs out.  All the rules of the former lease will still apply to the landlord and tenant.

Security of tenancy

Tenants have security of tenancy.  This means that a tenant can continue to occupy the rental unit until:

  • the tenant decides to leave and gives the landlord proper notice that they intend to move out (see the Board’s brochure on How a Tenant Can End Their Tenancy for more information),
  • the landlord and tenant agree to end the tenancy, or
  • the landlord gives the tenant a notice to end the tenancy for a reason allowed by the Act, and
    • the tenant agrees to move, or
    • the tenant does not agree with the landlord’s notice, the landlord applies to the Board, and the Board issues an eviction order.

If the landlord gives a tenant notice to end the tenancy, the tenant does not have to move out.  The landlord must apply to the Landlord and Tenant Board (the Board) for an order allowing the eviction of the tenant.  The tenant has the right to go to a hearing and explain why they should not be evicted.

To read more click here

 

 

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