lost a bet on this one…..

 

 

 

 

 

 

 

 

I had a client that said he was going to raise the rent for his condo tenants  by $100/month.  I explained about rent control…and he quite rightly came back and explained to me that rent control does not apply to rentals built after 1991.

 

article from The Star….

 

“We need action” to close condo rent control loophole, NDP says.

New Democrat Party housing critic Cheri Di Novo says the province should act quickly to close a “loophole” that donsn’t protect condo renters.

 

It’s a “loophole that needs to be closed.”

Politicians NDP MPP Cheri DiNovo and Toronto city councillor Adam Vaughan have come to the defence of condo tenants faced with skyrocketing rent and condo fee increases.

Responding to a Toronto Star story on Thursday morning, DiNovo said the issue of rent control loopholes has been raised in the Legislature before and she will keep pressing for change.

“We’ve raised this with the housing minister on numerous occasions,” she said. “This is a loophole that needs to be closed. We need action.”

The now-renamed Residential Tenancies Act sets out tenant protections for all rental units across Ontario, but rent control provisions only apply to buildings occupied before Nov. 1, 1991.

DiNovo, who is hearing from tenants who are “shocked” by this lack of protection, says condo renters shouldn’t be treated any differently than tenants who rent from other landlords.

“This was clearly a loophole that was overlooked by this government,” DiNovo (Parkdale-High Park) said.

McAllister was shocked last month to receive notice of an almost 10 per cent increase — $150 a month — on the downtown condo she and her boyfriend had been renting for $1,625.

Vaughan says tenants such as McAllister should have some form of protection but the issues that have emerged from the condo boom are “complex.”

“I’m advocating rental control,” he said. “I just think it needs to be modelled on the condominium market, not just cloned from the existing tenant act. It’s a unique market that needs a unique approach.”

He said the province needs to create a regulatory regime that is fair to all interests — tenants, owners, condo boards and developers.

“It’s a minefield out there. You’ve got some buildings that condominium boards want to kick all tenants out. You’ve got other buildings that want to pass all the costs on to tenants.”

Vaughan, who represents the riding of Trinity-Spadina, said that a condo study he initiated is close to being completed.

The results of that study will feed into the province’s review of the Condominium Actcurrently under way.

“The question is how do we get the right mix of legislation in place to protect the owners, protect the residents and protect the condo boards,” Vaughan said. “Finding the precise balance to protect the interests of everybody is a very tricky thing.”

Until change is enacted, he says, it’s somewhat a case of buyer beware and tenants have to know the law so they can protect their interests when they sign a lease.

“Don’t go in there assuming that the province or the government is going to protect you as a renter just because they do in multi-residential apartments,” he said.

McAllister was surprised to find out the hike — three times that allowed for most apartments under provincial rent controls — was perfectly legal.

“I thought this was wrong because we were protected under the Landlord and Tenant Act,” says McAllister, 27, who lives in a 700 sq. ft. condo near Adelaide St. and University Ave.

“I was shocked, and all my friends who live in condos were shocked, to find out that we are powerless,” said McAllister, who works for a Canadian mortgage rate comparison website.

That’s turned out to be great news for condo investors, allowing them to pass on escalating maintenance fees and other costs almost directly to their tenants.

But for a growing number of condo tenants, it’s making for an uncertain future.

Some in the hugely popular Maple Leaf Square area south of Union Station have seen rents for two-bedroom units spike from $2,000 to more than $2,500 per month in the last three years.

Downtown condo realtor Andrew la Fleur estimates condo rents in the core have jumped 10 to 15 per cent in the last year because of the perfect storm now hitting Toronto’s downtown.

Although there have been almost 32,000 new condo units built in the former City of Toronto over the last five years, it hasn’t been enough to keep up with demand from people, like McAllister, willing to pay a premium to live close to work and subway lines.

Tighter mortgage lending rules and out-of-whack house prices have forced many would-be buyers to rent longer, which is also contributing to a shortage of prime rentals.

Even the way new condo buildings come on stream is inadvertently contributing to big rent hikes.

New buildings occupy from the less desirable bottom to the top, so owners on lower floors tend to discount rents for the first year to entice tenants, says Sharon Golberg of DASH Property Management, which oversees more than 250 condo units for investors.

That can lead to a significant jump in rents when the lease is up a year later, to better reflect what’s being charged in the area. As well, maintenance fees can typically jump 50 to 80 per cent from those advertised by developers marketing the building three or four years earlier, notes Golberg.

The spike in investors’ costs — and rents they charge — can be particularly pronounced in buildings with pools as real operating costs kick in.

Katherine Paliwoda runs seminars for condo investors, who she says are generally shocked to find out the freedom they have to raise rents.

While she stresses that provincial laws are weighted in favour of tenants, she’s had condo investors ask if they can jack up rents to get rid of tenants they don’t like.

“There is no requirement (under the Act) to advise prospective tenants that their unit isn’t covered by rent controls. That is a sore spot with me,” says Paliwoda.

La Fleur calls the ability to impose rent hikes of anywhere from $50 to $5,000 a month an investor’s “secret weapon.”

“Wow. Let that sink in for a minute,” he says in a recent blog.

But that’s not quite true, says Kimberly Sears, client relationship manager at DASH, who alerted McAllister, by email and letter as required by law, that she was facing a rent hike because of increases in costs her condo owner was facing.

“We’re not trying to muscle people out of their places,” says Sears, who adds she’s had a number of tenants hand in their notice, only to revoke it two weeks later when they realize that high condo rents are now the norm downtown.

“We work very hard to keep good tenants” and are often open to negotiation, says Sears, who was, in the end, swayed to reconsider the hike by a six-point letter McAllister wrote, pleading her case.

McAllister stressed that she and her boyfriend had been among the most “calm, clean and responsible” tenants of the Boutique condos on Nelson St.

She even mentioned they were about to hire a cleaning lady.

“I could agree to $1,700 with the promise that the cleaning lady will be brought on for additional upkeep,” McAllister wrote.

Sears and the condo’s owner agreed.

“I might have to go through the same thing next year,” says McAllister, who’s now quietly hoping all those condos yet to sprout up downtown will help drive rents down.

Correction – April 25, 2013 : This article was edited from a previous version that incorrectly said almost 90,000 new condos were built in the former city of Toronto in the last five years.

Note – April 26, 2013: This article was edited form a previous version to include Kerri Lynn McAllister’s occupation.