With all the talk of late of the government’s recent request to change the provincial rent control laws to include buildings built after 1991 to the existing cap program*, it has some wondering what the outcome of the rental market in Toronto and its impact might be?
A few months back there were a few tenants who went to the media complaining that their rents were being doubled from $1660/month to $3320/month. What wasn’t spoken much about was that these units were owned by the bankrupted developer Urbancorp, and that their trustee company KSV, most likely were doing so to evict the tenants so they could sell the units to offset the millions of dollars owed to hundreds of people who were hit hard by Urbancorps bankruptcy.
Hundreds of thousands complain that Hydro rates have doubled; yet a few complaints come in and now we have new rental laws being enacted! That rant is for another day. J
One of the new rental laws is that rent increases will be capped at 2.5% on all buildings.
What will this mean to you if you are the owner of a condo that you have been renting and haven’t increased the rental rates in years? You were happy with your current tenant and although expenses have been increasing on your unit at least in the 5%-6% range (property taxes and maintenance fees aim between 2%-4% respectively at minimum to be raised) you’ve been nice (or lazy) and have not sent out increases.
Do you sell? Do you start to make scheduled visits to look further into whether your tenant has been maintaining the place? Do you hold off on replacing or repairing items in need but that isn’t an absolute necessity?
All valid points but let’s look at what most likely will happen.
For starters, I would suspect that everyone who can legally do so would send a notice to increase rents immediately. After all, you have to play catch up now in order so that you can maintain the value of your investment. Wear and tear is a reality. And as mentioned above, so are increasing taxes and maintenance fees.
Many will start considering cashing out on their investments as we all are starting to learn that when politicians act swiftly, there is no notice or phased in grace period anymore. When will the Federal Liberals enact higher capital gains taxes? Who knows? But you can be assured that if they do, it will be without notice and take affect immediately.
Those who want to keep their investment units may start to pay more attention and look for ways to legally evict a tenant for contraventions in the lease agreement. Have a no pet’s clause but discover one on your scheduled visit? More people living in the unit who aren’t on the lease?
There are so many scenarios that can play out. Whatever your course of action makes sure you are well versed in both your rights and your tenants right. The Landlord and Tenant Board website is a good resource http://www.sjto.gov.on.ca/ltb/ and place to familiarize yourself. If you have specific concerns or questions I encourage you to contact me so we can discuss what is the best course of action for you to take.
* The proposed changes will only become law if the bill passes final reading in the legislature and is signed by the Lieutenant Governor.