Changing Landlord Rules

The Real Estate Espresso Podcast

Changing Landlord Rules

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Welcome to the Real Estate Espresso podcast, your morning shot at what’s new in the world of real estate investing. I’m your host, Victor Menasce.

We’ve become accustomed to hearing about legislative changes that advance tenants’ rights and make it more and more difficult for property owners to protect their properties, and perhaps even run a profitable business. This sometimes comes in the form of landlord licensing or rent controls, while the fact is there’s nothing that compels investors to make money-losing investments.

If an investment is sufficiently unattractive, investors simply will not invest, and then the country will experience an acute shortage of housing, which will eventually have the effect of pushing rent prices higher, the opposite of what government was hoping to achieve.

Well, this time, there’s an example of government creating incentives to build more housing and break down the procedural delays that make it more and more difficult for owners to get relief when tenants stop paying. Maybe other jurisdictions will take notice and perhaps follow suit when they see the results.

Well, in October of this year, the Ontario government introduced Bill 60, formally entitled Fighting Delays and Building Faster Act. While the legislation spans many areas, from transit and planning to municipal governments, one of the consequential parts amends the Residential Tenancies Act and makes significant changes to how landlords and tenants interact.

Proponents say that it will heat up housing construction and clear the backlog at the Landlord and Tenant Board. Critics argue it slashes tenant protections and weakens their security of housing.

As a backdrop, there are currently 42,000 cases in front of the Landlord and Tenant Board. That’s an improvement from the 53,000-case backlog a year earlier. Today, the average wait time for a case to be heard in front of the board is seven months.

Here’s a breakdown of some of what Bill 60 changes.

It reduces the notice period, currently at 14 days, for applying for an eviction due to unpaid rent. Bill 60 cuts that period in half, down to seven days. That change, the government argues, is about efficiency: a quicker resolution for non-payment cases.

Tenant advocates warn that the shortened window may not give renters enough time to access social services, rent banks, or other assistance. But again, let’s put this in context. There’s currently a seven-month wait to get in front of the Landlord and Tenant Board, so the legislation shaves a week off of that process. So maybe seven months becomes six and a half. That’s hardly not enough time.

Next, there’s an upfront payment to raise tenant issues at hearings. Bill 60 restricts a tenant’s ability to raise new defences at the Landlord and Tenant Board. Unless regulations provide otherwise, tenants might be required now to pay fifty percent of the back rent claimed by the landlord before they can argue the case.

Some critics call this a pay-to-play system that disproportionately hurts low-income tenants that have legitimate grievances. The counter-argument is this makes it less attractive for the professional tenants who stay in someone’s property for months and months without paying, all under the guise of made-up grievances.

Next, there is a reduced appeal and review time at the Landlord and Tenant Board. Bill 60 cuts the review period from twenty days down to fifteen unless the board decides otherwise. Of course, the tenant groups argue this is going to limit access to justice. With fewer days to appeal, many who have already stretched legal services, tenants might be cut off from any kind of recourse.

Now again, there’s numerous ways in which procedural delays have been used in the past to force a landlord to go back in the queue and wait several more months before a case can be heard again.

There are changes to the notice period if a property is going to be occupied by the landlord themselves. Under the current rules, if a landlord seeks to evict a tenant for themselves or a family member who wants to move in, they either have to pay the tenant one month’s rent or offer a suitable alternative unit.

The new legislation changes this. If a landlord gives 120 days’ notice, they’re not required to pay that compensation.

The Ontario government frames Bill 60 as a solution to two major challenges. It’s to reduce backlogs at the Landlord and Tenant Board, and it’s to increase housing supply and development. And while the legislation touches on many other domains like planning, transit, and infrastructure, the stated goal is to accelerate housing construction. More housing, as the theory goes, means more supply, and therefore ultimately lower prices.

Now, not all of the original provisions of the bill made it into the final legislation. Based on input from the public, the government did walk back or pause some of the proposals. For example, some of the early discussions talked about ending the security of tenure that’s part of the current legislation. That is the ability for tenants to stay in a unit indefinitely under a month-to-month lease.

Bill 60 was just passed in the legislature. This is something that may eventually make its way into other jurisdictions.

A few weeks ago, I sent the Premier of Ontario, Doug Ford, a text message to let him know that I supported his initiative and that he’s on the right track. He responded within a few minutes and thanked me for my message and thanked me for my support.

This is a story we’re going to want to follow closely and see if, indeed, the backlog of the Landlord and Tenant Board gets reduced over time. And will it, in fact, stimulate further housing construction in a province that’s seen tremendous growth in population without the corresponding growth in housing.

As you think about that, have an awesome rest of your day. Go make some great things happen. We’ll talk again tomorrow.

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