Why rent increase rules may be an election issue

March 11, 2011
Mark Weisleder
Toronto MPP Cheri DiNovo wants to make changes to the way residential rents can be increased that will make it almost impossible for a landlord to raise the rent above the guidelines without the approval of the Landlord and Tenant Board.
DiNovo, who sits for the NDP in Parkdale-High Park, has introduced a private member’s bill that proposes three key changes to the existing law. As it stands now, a landlord can increase the rent by 0.7 per cent, or $7 for every $1,000 this year, in most cases. The landlord has to give you 90 days notice of the increase and it can only be increased once every 12 months.
There are some key exceptions to these rules:
• If the unit becomes vacant, the landlord can increase the rent as he wants as long as he find someone willing to pay it. This is why in some buildings, one apartment is rented for double than what a similar sized apartment is renting for in the same building.
• If the building was built after November 1, 1991, the rent can also be raised higher than the guideline, as long as the 90 days’ notice is given and it is at least 12 months after the prior rent was charged.
• If the landlord is providing a new service, such as parking or storage, then the landlord and tenant can agree to a fee for this service and it can be above the guideline; and
• A landlord can apply to the Board for an increase above the guideline if he can prove extraordinary increases in property taxes, utilities or if they make eligible capital improvements to the property.
Under Dinovo’s proposed Bill 112, things would change:
• Any building built after November 1, 1991 will also be required to comply with the rent guidelines;
• If a rental unit becomes vacant, the landlord must still use the prior rent as the basis for charging rent to any new tenant; and
• No rental increase can be made above the guideline based on an increase in utilities.
Here’s an example of how things can go.
In 2002, Marissa Price was paying rent of $179 per month. Her landlord raised the rent to $250 per month, without giving her 90 days’ notice. Two years later, Price applied to the Board for a return of the rent that she felt had been illegally charged,
In the original decision, the Board refused her application it came more than one year after the rent was increased. However, on appeal, the Ontario Divisional Court held that since it was proven that the required 90 days’ notice of rent increase was not given, then the increase was void to begin with, so Price could bring the application.
Even though the rental amounts in this case were relatively small, the principle is very important. It establishes a precedent where a tenant can challenge a rent increase even after the one year limitation period expires, in certain circumstances.
This case highlights the fact that anyone thinking about buying a rental property should make sure that:
• All rents have been lawfully increased;
• The 90 days’ notice has been given in each instance;
• Interest on all last month’s rent has been paid or added to the last month’s rent amount; and
• That the tenants have no existing claims against the landlord.
The buyer should ask for a signed statement from every tenant on the property confirming this.
Many landlord advocates argue that if this Bill 112 is passed into law, it will discourage new rental housing accommodation. This may also cause landlords to stop investing in their buildings, due to a limited ability to increase the rents if investments are made.
The City of Toronto has the highest concentration of tenants in the Province. Rest assured that the position of all political parties on the issue of how rents can be raised going forward is sure to become a key election issue in October, 2011.