Ontario guidelines for rent increases please nobody
As housing prices continue to rise, more and more potential buyers are opting to rent, fueling a bit of a rental shortage in some urban centres. And then there's all those people who couldn't afford to buy a house no matter what.
One factor driving people to rent is an uncertain job market. Despite low mortgage rates, people are reluctant to get tied down in a mortgage if they don't know where they'll be working next.
To ease the squeeze on tenants facing maximum rent hikes of 3.1 per cent next year, residential rent increases would be capped at 2.5 per cent starting in 2013 under legislation proposed this week by the Ontario government.
Click here for a historical view of previous rent increase guidelines. The average from 2004 to 2011 was 1.89 per cent whereas it was 3.17 per cent from 1993 to 2003.
Not surprisingly, landlords are already starting to howl: “The government is unilaterally imposing a cap without any discussion with an entire industry and is initiating a policy that will be particularly devastating for small landlords," says Vince Brescia, president of the Federation of Rental-housing Providers of Ontario.
Landlords are concerned that such price caps could replicate the devastating housing market conditions seen in Ontario 25 years ago, when fixed rent controls were out of step with rising housing costs.
Tenant groups, of course, don't see it that way at all and are slamming the government for not doing enough to help renters.
“In the real world, tenants are losing their jobs, facing demands for wage freezes and rollbacks or living with a 1 percent increase in their social assistance cheques, says Kenn Hale, spkesman for the Advocacy Centre for Tenants Ontario.
Nor is there adequate protection in place for those who move around: "In the real world, when tenants move there is no limit on the rent increases that a landlord can charge an incoming tenant in any private-market building,” he adds.
1.3 million households in Ontario rent their homes, accounting for 29 per cent of all households in the province. Of those, one in five spends more than 50 per cent of their income on rent.
Are the proposed rent caps reasonable? Or do such caps keep properties off the market and deter new construction?
By Gordon Powers, MSN Money
Posted by: Melissa C | Dec 12, 2021 1:16:09 PM
As much as my liberal arts heart would like to applaud a rental increase cap, the reality is that I am a landlord and currently the rent from that unit hasn't covered the costs of that unit on an annual basis since I bought it (and I'm not including the mortgage in that). The reality is, that unless you could guarantee me a 2.5% increase cap on my ever-increasing property taxes, it is hardly fair to ask me to continuely go in the hole so that someone else can live in a house that I OWN!!
Posted by: Anonymous | Dec 12, 2021 4:12:56 PM
They should allow up to 5% increase at least to cover property taxes, maintenance and repairs. Price of labour, gas, and food already went up a long time ago. If the government puts a cap on rent, then they should put a cap on gas prices and CEO / Executive or even politician salaries.
Posted by: Anonymous | Dec 12, 2021 4:29:48 PM
It's about time for rent increases. Prices have gone up everywhere. What I really am puzzled about is tenants constantly complaining. Prices in New York City, Boston or Chicago are even worst if they can just imagine. Why do people think that they can get a Steak and Lobster on a hamburger and fries budget?
Posted by: Anonymous | Dec 12, 2021 4:31:48 PM
People people people, please do not insist on a Steak and Lobster dinner while on a Burger and Fries budget. It's just NOT going to happen
Posted by: FC | Dec 12, 2021 9:02:18 PM
Does this mean that cost increases affecting the ownership of a rental property are also capped.
Utilities, maintenance, manager's wages, mortgages, property taxes etc. etc.
It appears that the market place is actually taking care of the way rent increases happen.
After all the article states that the average rent increase has been 1.89% on average between 2004 and 20111.
On top of that; should a landlord actually make a return on his investment there is also the taxman to be paid.
Where is the landlord 'protection'?
Posted by: dj | Dec 12, 2021 9:12:38 PM
Sorry tenants-but if you want to make the rules you have to buy the property. As a landlord I have had to deal with more filth, human and animal waste left in my units than I care to imagine. Is it just a coincidence that for every tenant issue with the board there are 100 landlord issues? And the system is in favour of the tenant-if I want to take action I have to pay. If the tenant wants to take action against me it is free-as is their legal advice. Sorry, but rental units are pricate enterprise. it is a supply/demand system. If you want low rentals that you can beat the crap out of you should approach your local politician (that you elected) and ask them to provide housing.
Posted by: Landlord | Dec 12, 2021 9:24:52 PM
Dear tenants,
Let me clarify one thing for you...YOU ARE NOT MY RESPONSIBILITY. I have taken my hard earned money and have invested it in rental housing, if I hadn't done that you the renter would have one less option and the other landlords could then charge even more...in the free market this is called "supply and demand".
If a tenant can't afford the unit, move back home or find a room-mate to share the cost. You are not entitled to the same conveniences that you had when you left home.
My tenants all seem to have large screen TVs', computers, cell phones, game pads. Go on holidays, go out to dinner, get take-out on a regular basis, get their nails and hair done on a regular basis and then use this as an excuse as to why they don't have all the rent on time. Lets not forget the bars, the beer and the recreational drugs.
As a tenant it is your responsibility to learn the Landlord and Tenant Act as I did as a landlord. Put the game pad down get on your computer and look the Act up to better inform yourselves.
To further educate yourselves as tenants, go talk to a friend that has a house and find out what it costs to own and run a household.
If your apartment is truly a dump, call the health department, call the building department, be pro-active for yourselves and quit whining.
Posted by: Abdulla | Dec 12, 2021 10:41:41 PM
In Toronto, renting an apartment or Condo is one the most expensive things in decent-income people. I still cannot understand those who rule this province. They are probably corrupted by Landlords in the province by letting them set super high rental prices. The landlords spend miserable amounts for maintenance but claim millions in order to increase rent prices. What a corruption. Then the Ontario government claims it is the best province or place in the world to live in Ontario. That is true for those who work in government positions or as doctors or lawyers. But ordinary people like me will never be able to save due to incredible rent prices. "Even Camel and Elephant said enough but human being never said so". Therefore, Landlords would probably take easily-earned monies to their graves. Let them be so.
Posted by: darryl | Dec 12, 2021 11:24:05 PM
AS A PERSON THAT HAS RENTED FOR MOST OF HIS LIFE AND BOUGHT A HOUSE AT THE HEIGHT OF THE DOWNTURN IN 08 I WAS FORCED TO BUY AS RENTS SKYROCKETED.AS A OWNER FOR A FEW I CAME TO REALIZE IT WAS WAY CHEAPER TO RENT AS HOME PRICES DRP AND UTILITIES ARE OUT OF CONTROL.THIS IS RACE TO THE BOTTOM.WELCOME TO THE ALBERTA ADVANTAGE.
Posted by: Canadian Mortgages Inc | Dec 13, 2021 3:45:11 PM
Caps imposed by the Government can be a double edged sword. Yes, they can help the consumer by keeping prices under control, but can hurt the market by not allowing them to charge what they need to to cover costs and make a profit . At the same time, an increase of over 3 % in a year is excessive, considering the low interest rates for mortgages.
Landlords need to look into refinancing to see if it is a viable option to control their overall costs, while renters need to reevaluate to option of ownership vs renting.
Posted by: Landlord | Dec 14, 2021 11:01:36 AM
In response to "Canadian Mortgages Inc."
You are missing one important point. Rental housing is an investment opportunityty for some people. If we can't have free market opportunities then we will simply sell the rentals and the tenant looses. Why do you think there is such a shortage of housing, there is no incentive to build more by the private sector and the government can't afford to. As a landlord I have no control when interest rates go back up...remember the '80s and 20% interest rates. My commercial insurance on my properties went up 40% over the last year and I have never had a claim. Property taxes go up, water and sewage goes up, maintenance goes up...everything goes up and so must the rent.
The private sector is not a charity, it's a busines that needs survive. The rent is a product of supply and demand. No demand or low demand = lower rent.
You want cheep rent, share the cost with a room-mate and stop expecting others to pick up your tab...it's not going to happen.
Posted by: Dana | Dec 14, 2021 3:22:18 PM
I don't have personal experience in the Ontario market, but I have been a renter in Calgary for 7 years. I have never paid more than $550/month in rent; however, this cost includes utilities, cable, internet, phone etc etc. I have always lived with 1-2 roommates to share the total rent costs with. I have never lived in a disgusting or infested home. They have not been glamorous, but definitely reasonable.
The only time I can see rent being difficult to manage is when someone has a family. You need a two or three bedroom place for your children who don't earn income. In those cases, you can't get roommates, and you can't downsize.
Posted by: Lisa | Dec 20, 2021 4:33:40 PM
There should be a cap on rent increases. It's the tenant that is helping the landlord pay off his mortgage. So landlord should not complain.