What causes Builders NOT to build Rental Housing

ONTARIO CANADA

Tenants may think the government is looking out for tenant interests, but if that was true there would be no pandemic housing shortage, multiple offers, outrageous selling prices, extremely low vacancy rates, high rental tenant property taxes and eight-year affordable housing wait lists.

Ontario’s recent “Rent Fairness Act” continues the brutal, gratuitous, dystopian, anti-landlord legislation meted out by short-sighted, vote-pandering politicians who have literally (not metaphorically) persecuted landlords for decades; all of it resulting in the national pandemic critical housing shortage. Examples:

• Of 46 offenses in the Residential Tenancies Act (RTA), 34 solely benefit tenants, 10 reciprocate with landlords, one benefits the landlord and one prevents landlords from kicking vote-canvassing politicians off their property.
• RTA and the Human Rights Code (HRC) have unintended discriminatory consequences, including:
  1. The broken Landlord and Tenant Board (LTB) and RTA make all people with no credit, work or rental history (single moms, foreign students and refugees) extremely high-risk tenants for landlords.
  2. Hoarders’ rights override the rights of all other tenants. Vermin, fire hazards and more ruin the lifestyle of neighbours and significantly negatively impact property value. Firefighters can refuse to enter a burning unit if they cannot turn 360 degrees with full respirator gear on. Landlords must accommodate challenged tenants to the point of a landlord’s undue hardship, which is not defined in legislation.
  3. The tenant qualification process of public agencies is not aligned with the needs of the landlord.
• Landlords submit 91 per cent of LTB applications. Seventy-five per cent are for tenants not paying their rent. The average LTB eviction is five months (versus 25 days in some other provinces), costing an average $5,200 that is rarely collected. LTB offers free, taxpayer-funded duty counsel service to tenants but offers nothing to landlords.
• A tenant can pay the sheriff full rent arrears on the day of their eviction and start the whole process again.
• Ontario spent billions on solar power programs. Result: average $217.33/kWhr in Ontario versus $67.89/kWhr in Quebec. Government then punished landlords by preventing landlords from passing on utility costs to the actual consumers (tenants) of that energy.
• The LTB won’t evict tenants who sign and then breach a no-smoking clause in their rental agreement. The whole health industry pushed for this change and the provincial government still denied it. Eleven per cent of Canadians smoke daily and 64 per cent don’t smoke.
• The HRC denies requests to teach landlords about landlord responsibilities but hosts free full-day seminars for tenants.
• The RTA and municipal bylaws require landlords to remediate mould caused by a tenant’s actions, even though it’s not caused by the building’s envelope.
• The rent of a tenant switching from a single bulk meter to an individual meter must be reduced by the cost of energy consumed over the previous 12 months. Therefore, the most energy-abusive tenants receive the greatest rent decreases while energy-conscious tenants are penalized.
• The RTA sets the practical limit on building repairs and maintenance: three per cent of property income for three years. The 270,000 Ontario social housing units have a $1.2 billion capital shortfall. Toronto faces $2.6 billion in building repairs and will close 400 homes in 2017 and 1,000 by 2018.
• Some municipalities charge tenants up to 2.5 times the property tax rate of condo and single- family homeowners.
• Rent control doesn’t benefit low-income tenants. Tenants who can afford to pay market rents receive the benefit of lower rents and successfully beat low-income tenants competing for tenancies in the government-created housing shortage.  Shrinking housing inventory forces buyers to stay in rental housing longer. There are 171,360 Ontario families waiting for affordable housing (2015), some for as long as eight years.
• The federal budget gave a $209.4 million bailout for social housing repairs but nothing to the private sector faced with the same issues.
• A tenant’s unpaid utility bill is added to the property owner’s property tax bill, even if the landlord proves that their tenant signed an agreement to pay their own utilities. This is like holding police responsible for all the crimes committed by the criminals they didn’t catch.
• Municipal bedbug and garbage bylaws hold landlords responsible for cost of cleanup even if the tenant caused the infestation or doesn’t sort their garbage.
• Housing shortages lead some tenants to illegally rent out a rental unit or portion at a higher rent.
• The LTB won’t hear cases where tenants who damaged a property moved out. Small Claims Court won’t hear any case involving a landlord-tenant dispute.

Society can’t exist without housing. Private sector landlords built homes for more than nine million Canadians, and relatively affordable housing to a subset of more than three million. Canada’s total social housing sector accommodates about 1.5 million Canadians.

Private sector landlords willingly accept extraordinary financial and legal risks to provide safe and healthy housing. Landlords are not social workers, financiers or otherwise an extension of government social housing programs, policies and other political agendas.

About 39,000 rental units were built in 1972 alone versus a net of about 22,500 units in the 25 years following. Look at the success of the housing programs of the 1960s and early 1970s and replicate that success.

Footnote: An anagram of “LandlordTenantBoard” is ‘Abandon Rent, Add Troll’.

Chris Seepe   Chris Seepe is a published writer and author, ‘landlording’ course instructor, president of the Landlords Association of Durham, and a commercial real estate broker of record at Aztech Realty in Toronto, specializing in income-generating and multi-residential investment properties. Call (416) 525-1558, send him an email, or visit his website.

This was published in a REM article July 2017 
I was disappointed to see such a litany of Landlord Rights Abuses I just published this in its entirety.

Peel and Toronto are both considering $1,000 annual licensing fees for Landlords.

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