Future Directions on Rent Regulation and Laws affecting Tenants Shelter, Housing and Support Division February 27, 2004.

Future Directions on Rent Regulation and

Laws affecting Tenants

Shelter, Housing and Support Division February 27, 2004

Agenda1. Rental housing

situation in Toronto• Rents• Vacancy rate• Rental supply• Evictions

2. Key parts of the TPA• Goals & Scope• Rent regulation• Landlord & tenant

matters / security of tenure

• Rental supply

3. Future Directions• New Liberal election

Platform• Council direction since

1998• Proposed Short & Long

Term Actions

4. Next Steps- RHAC, Ministry Staff,

other inputs- Report to Community

Services Committee- Timing of consultation

document & formal City response

Rental Housing in Toronto: Rents

Average Monthly Rent / Median Weekly WagesCity of Torotnto 1997-2003

751804

845

907951 970 961

561 555 578 599 602 602 624

400

600

800

1000

1200

1997 1998 1999 2000 2001 2002 2003

Average Rent Median Weekly Wages

Rental Housing in Toronto: Evictions

• Numbers of Evictions:• 28,555 eviction applications in 2003 • 84% due to rent arrears or non-payment• almost 6 in 10 are default evictions (no hearing)

• Process:– notice of termination(14 days)– application for eviction order (within 30 days of

notice)– landlord to notify tenant of eviction application, and

tenant has 5 days to dispute - or a default eviction

Rental Housing in Toronto: Vacancy Rates

• Vacancy rates for private rental apartments

0.8 0.9 0.90.6

0.9

2.4

3.9

0.0

1.0

2.0

3.0

4.0

5.0

1997 1998 1999 2000 2001 2002 2003

Rental Housing in Toronto: Supply

The Tenant Protection Act• Goals of the TPA

– Protect tenants from high rent increases and evictions

– Provide tenants with strong security of tenure– Improve building maintenance & rental

construction– Provide a “cheaper, faster, fairer” system

• Scope of the TPA– Combined all landlord-tenant legislation– Repealed RHPA

Main Features of the Tenant Protection Act

• Rent Regulation– Vacancy De-control– Guideline Rent Increases– Above-Guideline Rent Increases – Rent Reductions

• Landlord and Tenant Matters– Security of Tenure

• Rental Supply

Rent Regulation: Vacancy De-control

• When units turn over, the initial rent charged to the new tenant is not limited by law– after occupancy, the regulations apply to

future rent increases

• No controls on new rental units– first occupied after November 1991

Rent Regulation: Guideline Rent Increases

• annual percentage rent increase

• Increase permitted without need to justify amount

• calculated as: – operating cost inflation factor + 2%

• Capital expenditures– amortized capital expenditure costs permanently increase

rents– maximum capital expenditure allowance capped at 4% per

year, with carry-over– 2% justification requirement removed

• Utility costs, municipal taxes & charges– must exceed inflation factor used in calculating the

guideline– no cap on maximum allowance– Permanently increases to rents

• Increased cost for security services – capped at 4% per year

Rent Regulation:

Above-Guideline Rent Increases

Rent Regulation:

Rent Reductions

• Rent reductions allowed for:

– Withdrawn or reduced services or facilities– Charging illegal rents– Illegal rent deposits or charges– Municipal Tax Decreases – Property Standards & Maintenance

Rent Reductions: Municipal Tax Decreases

Calculation:2002 taxes – 2003 taxes x 100 = tax decrease %

2002 taxes

– Rent reduction = percentage tax decrease x 20%– Applies to rent of tenant in 2004 until they move out– Automatic reduction if tax decrease > 2.49%– If decrease < 2.49%, tenant must apply to Tribunal

Municipalities required to administer program

Landlords or tenants can apply to vary rent reduction

Rent Reductions: Property Standards and Maintenance • Landlord obligation to maintain property• Provincial Orders for Prohibiting Rent

Increases (OPRIs) eliminated• Violations of work orders made an offence• Municipalities permitted to pass vital services

by-laws • Municipalities may recover remedial work

costs through lien against the property

Landlord and Tenant Relationship

• Few changes from Landlord & Tenant Act

• Evictions process a significant concern– written dispute required within 5 days– default evictions

Rental Supply

• No Government Affordable Housing programs– Cancelled social housing construction programs

• TPA was to encourage new supply by:– No rent controls for new rental units– Vacancy de-control

• Rental Housing Protection Act repealed – Security of tenure

Liberal Platform• Rent Regulation: provide “real” protection for tenants

within 1 year.– Linking rent regulation to vacancy rates– Rent Reductions

• Landlord and Tenant Matters– Security of Tenure: rent bank

• Rental Supply – Match federal funding (20,000 units) & Rent Supplements– Allow municipalities to control demolitions or condo

conversions

Council direction since 1998

• Rent Regulation

– Remove Vacancy De-control– Guideline Rent Increases too high– Above-Guideline Rent Increases unfair– Rent Reductions too limited

Council direction since 1998

• Landlord and Tenant Matters– Security of tenure too weak, too fast, and

unfair

• Rental Supply– Restore municipal authority to preserve

rental supply– Help build affordable rental housing

Proposed Directions

• Principles and specific recommendations consistent with Council recommendations since 1998

– And reflect comments of Rental Housing Forum, and other submissions including FMTA, ACTO, and input of Rental Housing Advisory Committee

Proposed Directions• Rent Regulation: establish a fair system for tenants

and landlords that recognizes the need to maintain existing stock in good condition, while maintaining rental affordability.

– Long term (needs legislative change)

• Provide some form of rent protection on vacant units – but 3% vacancy rate approach is problematic

• Reduce the guideline• Above-Guideline Rent Increases must be reasonable• Improve Rent Reduction rules

– Short term (administrative changes) • Provide copy of AGI applications to tenants at no charge

Proposed Directions• Landlord and Tenant Matters: develop a dispute resolution

approach that is accessible and understandable to both landlords and tenants, and which recognizes the importance of preserving tenancies, where possible, through measures other than evictions.

• Long term (needs legislative change)– extend the timelines and simplify the process for tenants to

dispute eviction applications• Short term (administrative change)

– Develop & implement approaches to help tenants at risk of eviction such as linkages to appropriate community supports (e.g. housing help services, rent banks, and other eviction prevention support);

– Tribunal to improve clarity of forms, mailing out notices of eviction applications along with copies of the City funded CERA information package on evictions and in to all Toronto tenants subject to eviction applications

– Endorse ACTO submissions respecting necessary changes to the evictions process

Proposed Directions• Rental Supply: fund new affordable rental housing and restore

legal powers to municipalities to preserve rental housing – Long term (needs legislative change)

• Enact legislation to support municipalities wishing to preserve rental housing

– Short term (administrative change)• Follow through on promises to build new affordable housing

and rent supplements

• Transparency of Process: establish an adjudication system that is more open and accessible.

Next Steps• Consultation:

– Use Rental Forum input as basis, and other position papers

– Consultation with Rental Housing Advisory Group (includes organizations such as FMTA, ACTO, GTAA, CERA)

• City Response – Communication to province re: short term changes– Directions Report to Community Services

Committee April 2004– Written response to provincial consultation paper

for Council approval: date dependent upon provincial consultation process