IMPORTANT INFORMATION FOR LANDLORDS AND TENANTS
The Provincial Liberals have introduced Bill 144 which has already had first reading in the Provincial Legislature. Among other changes, this bill will further the existing rent controls to include new tenants leasing existing condos, apartments or houses as the existing tenants leave. This means that Landlords will no longer be permitted to increase rents up to the market rate when their tenants leave. They will only be able to charge the same rent as the old tenant was paying plus the allowable yearly rent increase.
Proposed Changes to Rent Controls:
5 Section 113 of the Act is repealed and the following substituted:
Lawful rent for new tenant
113 Subject to section 111, the lawful rent for the first rental period for a new tenant under a new tenancy agreement is,
(a) any amount that is equal to or less than the last lawful rent charged or that ought to have been charged to the previous tenant if the rental unit was previously rented in the last 12 months;
(b) with respect to a rental unit that has not been rented in the last 12 months, an amount that is equal to or less than the sum of,
(i) the last lawful rent charged or that ought to have been charged to the previous tenant,
(ii) all increases to the rent that the landlord would have been permitted to make under this Act if the rental unit had been occupied, and
(iii) all decreases to the rent that the landlord would have been required to make under this Act if the rental unit had been occupied; or
(c) the rent first charged to the tenant if the rental unit was not previously rented.
On the surface, this may sound like cause to celebrate for Tenants in Ontario and this is certainly true for those renting in purpose built apartment buildings. However, for many of those who are renting condominiums be prepared for your landlord to advise you that the apartment is being sold and to an end user meaning you have to find another place to live. Particularly if interest rates increase this year and as of January 17, 2018 that has already happened. Landlords are going to see costs increase without the ability to increase rents which will result in the sell off of rental condominiums in the City of Toronto. The real challenge for tenants whose landlords decide to sell will be finding another place to live. With this shrinking of the rental inventory at a time when demand is exploding it is going to be very tough for those seeking a new rental home to find one. I expect the concept of “key money” may come into play whereby would be tenants will have to pay thousands of dollars to have the opportunity to secure a rent control apartment which will soon be vacant and which is being leased “off market”. New rental condos just being completed will not fall under rent control guidelines for the initial rental period when the rent is set for the first time so we can expect that number to be very high in an environment where supply is so scarce. I can see 500 square feet one bedrooms going for $4000.
The only conclusion which can be made with respect to this new law is that it will be bad for landlords, bad for tenants (except those living in purpose built rental apartment building with the intent to stay in their apartment for the rest of their lives) and bad overall for the supply of housing in the City of Toronto. The people most affected by this new bill will be renters as the rental supply in Toronto shrinks beyond what is already historically low numbers.