As most stakeholders involved in multi-unit
residential buildings will attest, our industry is perhaps
one of the most regulated in the Province. How we conduct
ourselves as owners and operators of apartment buildings
and townhouse complexes is largely a reflection of current
legislation. Changes to building and fire codes, environmental
legislation, and particularly the Tenant Protection Act
all have a significant impact on how we operate our buildings.
Regrettably, landlords are often political
cannon fodder for ill-conceived rental housing policies
which only serve to officially constrain how we operate
our buildings. Rather than let market forces prevail,
which are arguably the best arbiter and regulator of the
market, politicians in their zeal for re-election, impose
additional regulations and legislation that only serve
to expand government bureaucracy and stifle the compelling
influence of free enterprise.
As many of you are aware, the current provincial
government is entertaining changes to the Tenant Protection
Act to restrict above-guidelines rent increases for utilities
(AGIs). What is contemplated is the introduction of the
concept of "costs no longer borne" under which
tenants could apply for a rent reduction if it was found
that subsequent to the consent to a rent increase based
on an AGI, total energy costs were lower in one year compared
to the preceding one. The concept of "costs no longer
borne" for above-guideline increases harkens back
to the days of the draconian NDP initiated Rent Control
Act. Is it conceivable that other aspects of the Tenant
Protection Act could be "subject to review"
as well?
The Liberal opposition has recently announced
their housing policy in which they are offering "real
protection for tenants". If elected, they are advocating
the repeal of the Tenant Protection Act and have indicated
that they will bring back "real rent control that
protects tenants from excessive rent increases" and
will "get rid off vacancy decontrol which allows
unlimited rent increases on a unit when a tenant leaves".
While on the one hand the Liberal opposition
is advocating a return to "real rent control",
on the other hand in its policy, the provincial Liberal
party is challenging developers who have traditionally
opposed rent control "to build their way out of rent
controls by creating high vacancy levels" to a degree
in which rent controls are no longer necessary.
On October 7th, 2002, the Ontario government proclaimed
certain amendments to the Tenant Protection Act under
the guise of Bill 57. These amendments were intended to
correct an imbalance on the issue of rent abatement claims
by tenants who were inconvenienced as a result of a landlord
initiating major capital repairs or renovations to a multi-unit
residential building. However, what was intended to provide
a degree of balance has largely resulted in a potential
detriment to landlord and one's ability to conduct capital
improvements within buildings.
As Joe Hoffer of Cohen Highley clearly points
out in his recent Rent Control Bulletin that rather than
narrowing the scope and amount of potential abatement
claims available to tenants, the new regulations actually
expand them. While the Tenant Protection Act obligates
landlords to conduct maintenance and repair work in their
buildings, the same legislation also provides penalties
through rent abatement claims for those that attempt to
fulfill their maintenance obligations under the Act. Attempting
to correct this imbalance, the new regulations outline
fairly rigid criteria under which a landlord will be adjudicated
as to whether he/she has acted responsibly in carrying
out repairs, failing which landlord's liability claim
potential has actually increased!
The myriad of laws governing our industry
are complex and ever changing. One must continually be
astute in understanding existing laws, contemplated revisions,
actual changes and their impact on our industry. With
these circumstances, what should one do? My advice while
simple will place you in the enviable position of controlling
your own destiny to the extent possible under a overlay
of laws and regulations:
