by Larry Popofsky
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: