VOL.9 NO.4 • SEPTEMBER 2016
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WITH REGULAR INSPECTIONS
INCLUSIONARY ZONING & THE RENTAL HOUSING INDUSTRY
Canada’s #1, most widely read publication for Apartment Owners, Managers and Association Executives
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From the Editor’s Desk
e greatest place
Co-founder, Director Juan Malvestitti firstname.lastname@example.org
y family and I went to Disney World for the first time at the end of August. Despite being tired and dealing with rain (which we prepared for), it was an amazing experience. We had a great time at all four parks, which we liked individually for very diﬀerent reasons. Disney knows how to run a park and a business. e “cast members” were great at their jobs and made it even better, as they were attentive to needs and quick to adapt. I highly recommend doing it at least once, as children will love every moment (except all the walking) and adults will get to relive their childhood – and hug a wookie! I went to Disney World knowing full well that it was rainy season, and was well prepared for the weather. You should do the same – that is, prepare your buildings for the winter weather that is to come. is month’s RENTT panel focused on preparing rental properties for fall and winter. Our panel members discuss budgeting, how fall maintenance diﬀers from spring maintenance, making preparations, getting both the interior and exterior of your building ready for winter, and more. We have two very diﬀerent and interesting articles in this issue. One is on the importance of conducting regular property inspections, which illustrates what could happen if you don’t visit units regularly, your rights, and how to make it a better experience for you and your tenants. e other is on the topic of inclusionary zoning, which mandates developers to include a certain number of aﬀordable properties and units in new projects. Ontario is currently pursuing legislation on inclusionary zoning, so make sure that you know what’s involved before it becomes law. Registration for FRPO’s MAC Awards (which takes place on December 1, 2016 at the Metro Toronto Convention Centre in Toronto) opens in October this year. is is your opportunity to join your peers in recognizing excellence in the rental housing industry. We hope to see you there.
! e u s s i e h t y Enjo David Gargaro Senior Editor 4 | september 2016
Co-founder, Publisher Marc L. Côté email@example.com
Editorial David Gargaro firstname.lastname@example.org
Contributing Editor John Dickie, President, CFAA email@example.com
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Design Maria Arangio
Oﬃce Manager Kayla Clark
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Opinions expressed in articles are those of the authors and do not necessarily reflect the views and opinions of the CFAA Board or management. CFAA and RHB Inc. accept no liability for information contained herein. All rights reserved. Contents may not be reproduced without written permission from the publisher. P.O. Box 6967, Maple, ON L6A 1S7 416.236.7473 Produced in Canada All contents copyright © RHB Inc. Canadian Publications Mail Product Sales Agreement No. 42652516
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VOL.9 NO.4 SEPTEMBER 2016
your 26 Protect investment with
regular inspections In addition to move-in and move-out inspections, you should be conducting regular inspections of your rental properties.
zoning 28 Inclusionary and the rental housing industry
On The Cover: Getting ready for winter
e Ontario government is working to make inclusionary zoning part of its aﬀordable housing strategy, which will aﬀect developers of rental housing in the province.
35 National Outlook
Find out more about CFAA’s two major successes this summer, namely the CFAA Rental Housing Conference and the new CFAA Rental Housing Awards Program, and read the Economic Update from renowned CIBC deputy chief economist, Benjamin Tal.
60 One Last ing
A summary of industry topics and headlines.
6 | september 2016
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President’s corner T
his is the third issue of RHB Magazine with Regional Association Voice (RAV). CFAA and RHB came together with the landlord associations in London, Waterloo, Hamilton and Ottawa to provide readers across Ontario and Canada news on what they are doing. See page 43 for this issue of RAV. As time goes on, CFAA and RHB look forward to adding regional content from other provinces, to help bring landlords together across Canada. CFAA Rental Housing Conference 2016 went extremely well. See the reports in National Outlook, following page 35. Mark your calendars for CFAA Rental Housing Conference 2017, which is to take place at the Westin Prince Hotel in Toronto on June 6, 7 and 8. June 6 will be the Building Innovations Tour, June 7 and 8 will be the education sessions, with the CFAA Awards Dinner on June 7 and Benjamin Tal’s economic update on June 8. RHC 2017 will feature keynote speakers, and more than 30 education sessions, covering rental investment, rental executive, marketing, leasing, human resources, employee management, revenue management and building science topics. For updates, email CFAA at email@example.com so you won’t miss out next year! e federal government is in the middle of a major consultation to create a National Housing Strategy. CFAA has taken a leading role in both the Expert Roundtables (held Sept 7, 8 and 9) and in the Key Stakeholder consultation (held on Sept 19). CMHC is also consulting with the provinces and territories, so that the product can be a truly national strategy, not a federal strategy. Everyone recognizes that conditions are diﬀerent in diﬀerent provinces and indeed within most provinces. Vancouver and Toronto rents are twice what rents are in New Brunswick or small town Quebec, and new supply is needed in the former but not in the latter two. In other areas, the situation falls between those two extremes. In the consultation, CFAA is promoting the elimination of HST on new rental construction and repairs. To encourage new rental supply, we are also supporting low cost financing, either long-term (to reduce interest rate risk), or for construction (since that is the more expensive financing), or as an equity substitute to raise the rate of return by lowering the capital investment required. As well, we are promoting expanded housing benefits, paid to low-income renters, to pay their rents in the private rental market, as the best solution to aﬀordability concerns.
John Dickie 8 | september 2016
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WATER MATRIX AD
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In this issue...
Record turn out at CFAA conference 2016 CFAA’s Annual Rental Housing Conference enjoyed a record turnout this June in Toronto. Turn to page 35 to read about the highlights and what is to come in 2017.
CFAA Rental Housing Awards - new in 2016
Benjamin Tal’s Economic Update
CFAA celebrated the rental housing industry by the inaugural CFAA Rental Housing Awards 2016. Applications were received from all across Canada. Turn to page 37 to find out the winners.
Wondering about how world markets may aﬀect your business in Canada? Benjamin Tal, the renowned CIBC economist and speaker, gives his Economic Update on page 40.
NATIONAL OUTLOOK – DIGITAL EDITION available at www.cfaa-fcapi.org
CFAA Member Associations Eastern Ontario Landlord Organization (EOLO) www.eolo.ca P: 613-235-9792 Federation of Rental-housing Providers of Ontario (FRPO) www.frpo.org P: 416-385-1100, 1-877-688-1960 Greater Toronto Apartment Association (GTAA) www.gtaaonline.com P: 416-385-3435 Hamilton & District Apartment Association (HDAA) www.hamiltonapartmentassociation.ca P: 905-632-4435
10 | september 2016
Investment Property Owners Association of Nova Scotia (IPOANS) www.ipoans.ns.ca P: 902-425-3572
Manufactured Home Park Owners Alliance of British Columbia (MHPOA) www.mhpo.com P: 1-877-222-4560
LandlordBC www.landlordbc.ca P: 1-604-733-9440 Vancouver Office P: 604.733.9440 Victoria Office P: 250-382-6324
Professional Property Managers’ Association (of Manitoba) (PPMA) www.ppmamanitoba.com P: 204-957-1224
London Property Management Association (LPMA) www.lpma.ca P: 519-672-6999
Saskatchewan Landlord Association Inc. (SKLA) www.skla.ca P: 306-653-7149 Waterloo Regional Apartment Management Association (WRAMA) www.wrama.com P: 519-748-0703
The Canadian Federation of Apartment Associations represents the owners and managers of close to one million residential rental suites in Canada, through 11 apartment associations and direct landlord memberships across Canada. CFAA is the sole national organization representing the interests of Canada’s $480 billion rental housing industry. For more information about CFAA itself, see www.cfaa-fcapi.org or telephone 613-235-0101.
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Be Ready for Fall! H&S provides the Property Management industry the right product at the right price. With over 14, 000 maintenance products in stock daily, choose us as your one stop source for all your needs.
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R E N TA L E X E C U T I V E S N AT I O N A L T H I N K TA N K
GETTING READY FOR WINTER This monthâ€™s issue brings together the RENTT panel to discuss fall inspection and maintenance, including budgeting, how it differs from spring maintenance, making preparations, getting both the interior and exterior of your building ready for winter, and more. 14 | september 2016
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Randy Daiter Vice President, Residential Properties, M&R Holdings, Toronto, ON
Nicolas Denux Owner, Groupe Denux, Vancouver, BC
Damien Roussin Managing Director, Dorset Realty Group, Vancouver, BC
Blair Haverstock Property Manager, Macro Properties, Prince Albert, SK
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RHB: Welcome to RHB Magazine’s RENTT panel. We appreciate the time you’ve taken to participate in today’s discussion and share your experience. Our readers will definitely learn a lot from your insights. Today we’d like to talk about fall inspection and maintenance.
How important is it to inspect and maintain your building in the fall? How do you budget for this work? Randy Daiter: It’s extremely important. With inclement weather patterns becoming more severe, flooding is becoming a growing concern. This is why it’s critical that area drains, trench drains, catch basins and storm sumps be checked and cleaned on a scheduled basis. Roof drains and drains leading to rainwater leaders and downspouts should also be checked and cleared. Positive grading should also be maintained and additional drains installed, where required. Roof and building condition assessments
16 | september 2016
are important ways to prevent leaks or water damage from occurring in the buildings. These reports are then used for capex planning, preventive maintenance, and budget and cash-flow forecasting purposes. Blair Haverstock: It is very important! It’s PM 101. During the fall season we have to get ready for the winter. Our winters are very cold. We are known to have temperatures in the -20 to -30s for several consecutive weeks. Since most of our assets are walk-up buildings, we don’t have larger complicated mechanical systems. However, we must execute fall maintenance season by getting a certified and reputable contractor to service our boilers. We also replace filters and necessary belts and motors where required. The main electrical panels are checked by our electrical contractor while our internal team checks tenant exterior (parking) electrical plugs to ensure they are all in working order. We also clean out the flat roofs and make sure eavestroughs are cleaned out.
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FALL & WINTER INTERIOR CHECKLIST
Heating and cooling system •
Centrifugal chiller – fall inspection & winter turnover (compressor, compressor oil system, motor starter, control panel, control system, evaporator and condenser, refrigerant system, purge system, leak test, unit) Cooling tower – winter shutdown & inspection (general maintenance, electrical and controls)
Cabinet hot water radiators (lobby & corridor)
Electric unit heaters (common area & service rooms)
Gas-fired boilers – fall startup
Vertical in-line pumps (heating & cooling circulation pumps, condenser water pumps)
Hydronic heating and cooling air-handling units (make-up air units)
Fans (garage, garbage room, common room, mechanical/electrical room ventilation fans, pressurization fans)
Dampers and operators (make-up air units, ventilation fans)
Domestic hot water system
Two-pipe fan coil units (lobby & common areas)
Hydronic heating units (common areas, service rooms, plenum hot water fan heaters)
DX fan coil / DX cooling units (elevator machine room, management office, library, kitchen, swimming pool, common area cooling units)
Domestic hot water tank (storage tanks)
Electric hot water heater (domestic hot water recirculation booster heaters)
Plumbing and drainage •
Pumps (domestic cold water booster pumps, domestic hot water boiler booster pumps, domestic hot water recirculation pumps, primary heating pump, pool circulation pumps, fountain circulation pumps, sump pumps)
Water treatment •
Automatic chemical feed and bleed system (cooling tower loop)
Air-cooled condensing units for split DX systems (elevator machine room, management office, library, kitchen, swimming pool, common area cooling units)
Closed loop chemical bypass feeder (heating & cooling loop pumps, primary heating pumps, condenser water pump)
Rooftop packaged gas heating and electrical cooling units (recreation area)
Pneumatic and electronic or DDC control systems (dry sprinkler compressed air system, boiler plant, chiller plant, make-up air unit control systems & panels)
Gas-fired boilers (domestic hot water boilers) •
Valves (heating/cooling circulation loops, domestic cold & hot water main loops, water treatment system)
18 | september 2016
General control systems
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FALL & WINTER EXTERIOR CHECKLIST Roofing •
Roof traffic (roof access points, walkways, mechanical units, membrane cuts & punctures, crushed roof insulation, trash & sharp objects)
Contaminants (mechanical units, kitchen exhausts, oil spills)
Drainage (mid-span of beams & joists, large rooftop units, roof drains, wall scuppers, gutters & downspouts, accumulated debris, visible deflection, discolouration of curbs & walls, loose sheet metal, cracked caulking)
Wind storm damage (roof perimeter, roof membrane surface, loose perimeter sheet metal, loose areas of roof membrane, buckled insulation, displaced roof ballast) Moisture infiltration (adjoining walls & parapets, large rooftop units, skylights, soft roof insulation, discolouration of walls, loose sheet metal flashings, missing weather seals, cracked or sunken caulking, roof membrane seams T-joints, entrapped moisture, base attachments parapets walls & curbs, roof edge, membrane bridging)
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Balconies and railings •
Inspect and clean balconies and railings
Walls, cladding and waterproofing • • • • • •
Leakages Anchor failures Spalling of brick Failed sealants Cracked or leaking cladding Concrete delamination
Garages and parking structures • • •
Check and clear catch basins and drains Inspect waterproofing system Service heated garage ramps
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RHB Magazine surveyed the RENTT panel on how they would rate different factors that affect fall maintenance projects. We used a non-scientific method to assign points to each participantâ€™s answers and calculated a score by percentage. 22 | september 2016
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Damien Roussin: Fall inspections and preventive maintenance are essential to ensuring an uneventful winter by minimizing tenant disruption and costly emergency repairs. Budgeting for this work isnâ€™t a challenge, as preventive maintenance is an affordable investment. Nicolas Denux: Being mostly based in BC, we try to ensure we are watertight for the winter due to our heavy rains. No particular budgeting, just preventive maintenance.
RHB: Are there any projects that provide a financial incentive if executed in the fall (e.g., more economical off-season contracts)? Damien Roussin: Fall is a great time to complete interior improvements such as lobby, amenity and laundry room upgrades. We find that contractors coming off busy summers can provide competitive pricing to keep work flowing though the fall. Randy Daiter: Yes, the completion of R&M items and the tendering of capex projects can be timed
during slower seasonal periods; resulting in lower prices. The completion of building condition assessments can also be awarded (to be completed when the consulting firm has down-time), resulting in discounts and savings.
Blair Haverstock: There are no incentives. Due to weather conditions in the west, deep freeze starts in October, and the time frame to complete major projects is limited. In fact, due to limited resources, fall planning is completed and awarded to external parties by March 15th to ensure the resources are secured.
Nicolas Denux: No, not really.
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RHB: How does fall maintenance differ from spring maintenance? How is it similar? Blair Haverstock: During the spring season we get ready for the water season. The rain and winter thaw generally create potential water problems. We have to ensure all the unmelted snow is either trucked away or relocated from the perimeter walls. We inspect the sidewalks and parking lots for winter damage. Hallway carpets need to be cleaned out from the winter season.
Nicolas Denux: Being mostly based in BC, we are lucky that we can do a lot outdoors in the winter, but we try to wrap up weather-sensitive projects that were started in the summer in the fall.
Damien Roussin: During fall, we’re preparing for more severe winter weather. Our focus is on tenant safety, comfort and protection from the elements, whereas during the spring we‘re improving buildings and resolving any winter wear. We take advantage of shoulder season pricing in both the fall and spring. Randy Daiter: Some of the specific punch-list items we service are different for the spring and fall. However, the similarity is that they are scheduled preventive maintenance items, which need to be attended to on a prescribed and seasonal basis.
RHB: What should you be doing to maintain these systems at this time of year?
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Randy Daiter: Some key fall items include checking and cleaning storm sumps, including elevator pits; ensuring garage catch basins and drains are clear after spring cleaning; cleaning debris from roof drains; blowing leaves off roofs; checking exterior finishes and eavestroughs; checking exterior brick and mortar joints and voids; winterizing the landscaping; and checking weather stripping on doors.
Nicolas Denux: We are more worried about waterproofing in anticipation of the wet season. Blair Haverstock: It’s a repetitive process – a constant monitoring of the systems and more importantly the execution of the process is a must do venture. Our property managers are expected to ensure we have a viable and executable preventive program in place. Furthermore, we ensure on an annual basis a replacement capital program is reviewed, taking into consideration the lifecycle process of the mechanical systems.
RHB: What should owners be doing to help prepare their buildings for fall/winter? Damien Roussin: Get ahead of typical winter issues like roof leaks, heat disruption, fallen tree limbs and ice. Owners should have their roofs inspected and repaired, heating plants serviced, window seals checked, trees trimmed, de-icer stocked and irrigation winterized. Preparing ahead of time will keep your tenants comfortable and save you money.
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Nicolas Denux: Check roofs for deficiencies. Ensure central heating boiler has had its annual tuneup or cleaning. Randy Daiter: In addition to what I said earlier, you also want to call the service company to take care of sprinklers, bleed and shut off hose bibs, service and fill snow blowers with gas, adjust timers, ensure that snow melting equipment is operating, review maintenance for the heated garage ramps, and check your salt inventory and logbook.
RHB: Historically, what exterior areas should you focus on during fall/ winter maintenance inspections?
Nicolas Denux: Roofs and balconies. RHB: Thank you everyone for your participation and responses.
Leading Canadian Manufactu t rer and Installer of Windows, Doors, Railings and Cur tainwall
Damien Roussin: We look for places that water could get in and heat could get out. In Vancouver, the winter weather is moderate, but the rain is not.
Randy Daiter: Grading, drains, roofs, irrigation systems, snow blowers, weather stripping, exterior finishes, brick and mortar joints, etc. Blair Haverstock: Roofs, siding, windows, perimeter foundation, parking lots, sidewalk, and fall lawn care.
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PROTECT YOUR INVESTMENT with regular inspections If you don’t remember the last time you inspected a rental unit, then it’s already been too long. In addition to doing move-in and moveout inspections, you should be conducting regular inspections on a semi-annual or more frequent basis. It’s vital to protect your investment, and to prevent damaging or dangerous situations in your rental properties. Regular unit inspections will provide both short-term and long-term benefits for you and your tenants.
Understand the risks If you are not conducting regular unit inspections, then you leave yourself open to a wide range of risks. Tenants could engage in activities that contravene the lease, such as smoking in the unit, keeping unauthorized pets, housing more occupants than allowed, or subletting the space (through AirBnB, for example). The tenant could also engage in illegal or dangerous activities, such as running a marijuana grow operation or chemical lab.
When the owner is not visible at their “properties, these uses could be encouraged,” said Jamie Reid, President, A.P. Reid Insurance. “We've seen damages for continued seepage or leakage, which is not insured, because a tenant failed to report a leak and just let it go. We've seen tenants smoking in non-smoking buildings causing a fire, and far too many units are used as either drug labs or distribution centres.
Failure to regularly inspect rental units can also lead to issues that would have been caught during a regular inspection schedule. For example, an inspection could have identified a water leak that the 26 | september 2016
tenant did not observe or care to report. This can cause significant damage to the unit as well as neighbouring units and the building.
can help you to identify and address “otherInspections situations, such as obvious damage to the unit or tenants preparing to leave without proper notice,” said Jim Garnett, President, GV Inspections Ltd. “You could also uncover unreported damage that originates in an unrelated unit in the building in the process of regular inspections.
Know your rights Every province has its own Residential Tenancies Act. Most legislation gives the owner (or their representative) the right to conduct regular inspections of rental units for the purpose of dealing with damages or preventing illegal usage. You can use inspections to validate insurance coverage, which might have expectations with respect to conducting regular inspections.
Real estate investments represent the largest “single investments that owner/investors will have in their portfolios,” said Garnett. “It is their responsibility to conduct proper due diligence to protect their investments, as well as the investments of their neighbours who might be affected by issues arising out of their units.
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As a landlord, you have a right to enter the premises upon giving proper notice. You are allowed to monitor tenants’ actions as they relate to the treatment and use of the rental property. You are entitled to document evidence of regular violations, misuse of the property, and any tenant behaviour that can be used in related arbitrations with the Residential Tenancy Board. Make regular inspections part of the lease agreement, and ensure that new tenants know that you will be doing so.
Take the right approach It is key to listen to your tenants. You can learn a lot through casual conversation about their current or future behaviour. For example, they might complain about neighbouring units, numerous boxes being packed or unpacked, accumulation of garbage in or around the unit, and so on. Maintain a record of these conversations, as well as conducted inspections, so that you have a point of reference for future incidents and demonstrate that you did your due diligence. Show that you are committed to unit inspections by establishing an inspection or visitation schedule. Brand these inspections as “safety visits,” which you can promote as a value-add service for tenants. It will include checking safety items, such as smoke detectors, handrails, stairways and so on. This will appeal to safety-conscious tenant prospects and keep away those who might have something to hide.
28 | september 2016
We advise tenants up front when they make “application for tenancy that we do regular inspections,” said Bruce Robinson, President, Hugh & McKinnon Realty Ltd. “We provide advance notice and use professionals with a background in policing and/or construction.
When doing the safety inspection, ask the tenant if they are having issues with appliances, plumbing or electrical fixtures. Faulty appliances or non-functional electrical fixtures are damages waiting to happen. Also check taps and windows, as leaks can cost a small fortune.
and flagging these areas for repair “willIdentifying save you money, possibly enough to pay for the entire inspection process,” said Reid. “While there, the unit inspector should have a checklist for verifying the residents in the property, and look for unapproved uses.
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Some tenants might take offence at having their unit inspected after they’ve been living there for a while. Publishing an inspection schedule and promoting the safety visits can lessen adversarial feelings. Checking all units in a building at the same time, or on a regular, rotating inspection schedule, will ensure that you are not unfairly singling out specific tenants. Tenants are less likely to be hostile in front of their neighbours when all units are being checked. However, it can be time consuming to inspect every unit in a large building.
You can hire an independent third party firm to conduct “inspections, which will insulate you from hostile or volatile tenants,” said Garnett. “A third party can serve notices relating to rental issues and tender related evidence at arbitrations. This enables you to remove yourself one step from the process, and employ a professional who has no monetary or emotional investment to the tenants or in the property.
you stay on top of maintenance and repair issues, and prevent illegal situations from occurring or getting out of hand. You have a right to regularly inspect units with notice, so ensure that tenants are properly informed of your intent. Following an inspection schedule will help to make the process go more smoothly, and ensure that you maintain your investment. — By David Gargaro, in collaboration with Jim Garnett of GV Inspections Ltd., Jamie Reid of AP Reid Insurance and Bruce Robinson of Hugh & McKinnon Realty Ltd.
CONSU C ONSUL LT TING TIN GE EN NGINEERS GINEERS
Another approach is to inspect often at the beginning of a tenancy, say monthly, and then scale back the frequency of inspections as you gain confidence that the tenant is not abusing the unit. In using that approach, begin with the same frequency for all new tenants to avoid allegations of discrimination. Then back off the inspections based on evidence of proper tenant behaviour. For ongoing tenants who are behaving well, many landlords would cut back to semi-annual or even annual inspections.
Some tenants are considered low risk, “which would require only annual inspections, and some might be considered high risk, where quarterly inspections may be more appropriate,” said Robinson. “Under the Residential Tenancy Act of British Columbia, you are entitled to do monthly inspections.
Conclusion Conducting regular inspections of your rental units is essential for maintaining the value of your investment. It will ensure that
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INCLUSIONARY ZONING & THE RENTAL HOUSING INDUSTRY
All levels of government have been working on finding ways to make housing more affordable. Inclusionary zoning is another strategy being proposed to achieve this goal. The Ontario government is updating its Long-Term Affordable Housing Strategy by making inclusionary zoning part of its legislation. This is not a new concept, as inclusionary zoning and related housing practices have been in place in the US for several decades, and to varying degrees in several Canadian cities.
30 | september 2016
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What is inclusionary zoning? Inclusionary zoning is a land use planning concept that refers to Official Plan policies, zoning by-laws and land use programs, which require development proposals with residential units to include “affordable housing units.” Those housing units must be maintained as affordable over the long term. The goal is to compel private sector developers to include below market rate rental and homeowner housing in all new and infill residential developments. Inclusionary zoning has been effective in increasing the stock of affordable housing in a number of cities. It has also increased the variety and diversity of affordable housing, and has helped to create integrated and mixed-income communities.
Ontario’s plan for inclusionary zoning Ontario’s Bill 204, which received First Reading in May 2016, is one part of Ontario’s Affordable Housing Strategy. It proposes to allow municipalities to decide where and how inclusionary zoning will apply. It will also provide them with the power to implement those decisions through Official Plan policies and zoning by-laws, subject to any constraints imposed by the Bill. “Appeals of such Official Plan amendments and zoning by-laws by way of the Ontario Municipal Board will be prohibited, unless the appeal is taken by the province,” said Joe Hoffer, Partner, Cohen Highley LLP. “Developers who believe a municipality has exceeded
Affordable housing: By the numbers Average market rent (AMR) is usually based on existing rents for units of a certain size in the community. Depending on the government plan, affordable units are rental units that rent for a percentage of the AMR. Most inclusionary zoning plans want affordable units to rent at 80 per cent of AMR. Developers typically build new rental units for the top end of the market, with rents at 130 to 200 per cent of AMR. Scenario: Let AMR be $1,000. A developer plans a project of 100 units to rent at $1,500 per month. Total gross rent is $150,000 per month. An inclusionary zoning requirement requires 10 per cent of units to be at 80 per cent of AMR ($800 per unit). Total revenue falls to $143,000 per month. To make up the shortfall, rents for market units are now $1,575. Subsidy of $775 per month ($1,575 to $800) comes from other renters. Rental subsidy alternative: A unit renting for $1000 receives a $200 subsidy to reach the $800 for affordable housing (instead of $775 per unit under inclusionary zoning). The subsidies come from tax dollars, which are paid by all taxpayers, including homeowners. 32 | september 2016
its jurisdiction will likely have to resort to Judicial Review applications for recourse.” Bill 204 will require municipalities to include procedures in their land use documents that ensure inclusionary zoning units remain affordable over time. This applies to owners of inclusionary zoning units who enter into agreements with the municipality with “restrictive covenants,” which will be registered on title to such units requiring that they remain affordable over the long term. Bill 204 will prohibit municipalities from accepting offsets (e.g., cash in lieu), land exchanges or donations, and off-site affordable housing construction as alternatives to including affordable housing units in a proposed development. It would also restrict municipalities from using density bonusing (which is currently allowed under the Planning Act) to offset the imposition of affordable housing units in a development. “In our view, flexibility in the form of offsets should be permitted,” said Hoffer. “New York City has had inclusionary zoning programs for decades and they are implemented with developers because they are voluntary, and offsets are permitted plus reduced development charges. Without flexibility, the province is handcuffing municipalities and developers from achieving construction of affordable housing because the costs, including marketability of the product, far outweigh the benefits.”
Exclusionary housing practices in major Canadian cities While exclusionary zoning does not yet exist in Canada as it does in the US, Montreal, Vancouver and Toronto have enacted inclusionary housing policies. All three policies are designed to provide mixedincome housing in developments that would normally contain only market housing. Montreal’s strategy, adopted in 2005, has a goal of providing 30 per cent of the new units in major residential developments as affordable units, evenly split between social housing and affordable rental or affordable ownership. It is applied to developments with 200 or more units because these types of projects can usually accommodate a mix of housing. Vancouver’s housing policy originated in 1998, and is most straightforward. It requires developments to provide sites that can accommodate at least 20 per cent of the units as social housing, half of which must be suitable for families. Toronto’s policy, which came into effect in 2006, is least developed, and has not yet been used. It applies to residential development on sites generally greater than five hectares. When the developer seeks an increase in already permitted height and/or density, there must be a provision for 20 per cent of the additional residential units as affordable housing. “There is generally flexibility in terms of offsets such as donation of land or fees in lieu of construction, where money generated from
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such fees can be used to build units on donated land or city-owned land,â€? said Hoffer. â€œMontreal has been more restrictive as it does not permit cash in lieu and also requires 30 per cent set aside for affordable housing, whereas the standard is 20 per cent in Vancouver and Toronto.â€?
be explored. Inclusionary zoning has been effective in increasing the stock of affordable housing in some municipalities. However, flexibility (such as the ability to offer offsets) should be included in the program to make it more palatable for developers. Without this flexibility, the provincial government will handcuff municipalities and make it more difficult to build and market affordable housing.
Affect on the rental housing industry â€” By David Gargaro, in collaboration with Joe Hoffer of Cohen Highley LLP
A key downside of inclusionary zoning is that it will inhibit construction of rental apartments. While homes and condos can bear the subsidy cost of inclusionary zoning (i.e., through a charge or tax), rental properties are much more vulnerable to fixed rental rates due to demographics and constraints on annual increases. Renters are less likely to be able to afford the cost of subsidizing affordable units in their building. Therefore, the developer will likely have to carry these costs, and there will be long-term restrictions on affordable versus market units.
THE HOME OF
360 DEGGREE PROTECTION
Inclusionary zoning could drive development costs up, as homeowners and purchasers will have to take on the cost to subsidize affordable units. This will then negatively impact marketability of units and increase uncertainty for developers. Removing the ability to provide offsets could also negatively affect inclusionary zoning. Bill 204 also enables municipal bureaucrats to create their own positions with respect to zoning approvals. This will increase costs for taxpayers to support the salaries of bureaucrats involved in the approval process. While inclusionary zoning will occur in high-demand markets, it will also increase the risk and cost for developers. Markets that do not have the same demand as large cities will face less new construction of rental housing and a higher cost of home ownership. â€œA far better way to achieve inclusionary zoning is to reduce the cost of rental apartment developments,â€? said Hoffer. â€œA case in point is London, Ontario, where there is an abundance of construction of new rentals, which, in turn, increases supply and inhibits rental rates and increases. A recent survey showed London as one of the most affordable rental markets in Ontario, if not the country.â€?
Conclusion Any strategy that can provide more affordable housing options (particularly rental units) should
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Record turnout at CFAA Conference 2016
andlords arrived in record numbers to the three-day rental housing conference, which was held at the Westin Prince Toronto from June 7 to June 9, 2016. Many new people attended from across Canada, and many dedicated conference-goers returned again.
The education sessions featured more than 70 speakers from many areas of the rental housing industry, across Canada. The sessions addressed subjects such as leadership, employee management, marketing, leasing, human resources, revenue management and investment issues.
CFAA Rental Housing Conference 2016 saw the addition of a Networking Reception after the first day of education sessions. That was followed by the CFAA Awards Dinner, which was the culmination of the inaugural CFAA Rental Housing Awards 2016. See the article on the awards. A number of delegates said the Awards Dinner was the highlight of their Conference experience. Both new events were very well received. On June 7, the Building Innovations Bus Tour showcased two exceptional, award-winning Toronto buildings, One32 by Concert Properties, and The Heathview by Morguard. Both buildings offer top level amenities and excellent environmental sustainability.
Benja The format of the sessions varied from round tables to panels or single presenters with interactive presentations, with a mix of experienced, forward-thinking rental executives and outside experts. Feedback on the conference was overwhelmingly positive. One delegate said, “The presenters are amazing and insightful.” Others said they most enjoyed “the new and different ideas”, and “the variety of speakers.”
This year’s keynote speakers were the Leadership Expert and NHL Commentator, Greg Millen; Marketing Expert, Alicia Whalen; and the everengaging Senior Economist from CIBC World Markets, Benjamin Tal. As usual, Benjamin Tal gave an insightful and entertaining talk on the future of the world’s economies, and the likely impact on the Canadian rental housing market.
In 2017 CFAA Rental Housing Conference will return June 6 to 8, at the Westin Prince Toronto. Watch www.CFAA-RHC.ca for more information, and plan to attend Rental Housing Conference 2017 as part of your education program!
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CFAA Rental Housing Awards - new in 2016 On-Site Employee of the Year recognizes an individual front-line employee, nominated by their employer, who has demonstrated excellence and professionalism in the rental housing industry. Helen Howard of Skyline Living The judges selected Helen because she was “exceptionally good at fostering relationships and building a solid community. By her strong management Helen overcame a problem in the community and produced a great reduction in arrears and in vacancy rate.”
This June, CFAA held its first Annual Awards Dinner to recognize excellence in rental housing across Canada by bringing together the regional winners from Ontario, Manitoba and Nova Scotia, to compete with direct entries from other provinces. CFAA’s Rental Housing Awards are judged by independent and experienced landlords. Here are the finalists and winners, with some of the judges’ reasons.
landlord. This product increases convenience and improves customer service.” Finalists: Honest Renter Surveys by Honest Renter, Place4Student’s Mobile App, and National Efficiency System’s Automatic Call Scoring System
Finalists: Corey Barton of CAPREIT, and Stephen Thornhill of Vertica Resident Services
Off-Site Employee of the Year recognizes an individual off-site employee who has demonstrated excellence and professionalism in the rental housing industry. Kim Hamelin of Timbercreek Communities ”Kim Hamelin is an exemplary leader. Kim’s management has improved the NOI in every role she has undertaken with Timbercreek. Besides managing operations, Kim takes on many extra responsibilities, including initiating creative and cost-effective environmental and marketing campaigns.” Finalists: Jessica da Silva of Hollyburn, Andrea Rocheleau of Skyline Living, and Michael Vezina of Vertica
Rental Housing Supplier Innovation of the Year recognizes a rental housing supplier who has launched an innovative and useful product or service. ZipSure.ca’s Mobile Tenant Insurance “ZipSure.ca has solved an important challenge for landlords and tenants alike, eliminating the need for landlords to turn new tenants away on moving day for not having insurance. Tenants can obtain insurance on site, and share the confirmation directly with the
Supplier Innovation of the Year - Jamie Reid of ZipSure.ca
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Renovation of the Year recognized a company which has achieved excellence in the renovation of an existing rental-housing building. CAPREIT – 44 Stubbs Drive (Co-Winner) “The lobby renovation was completed beautifully, very modern and bright. The costs were kept to a minimum and the timeframe for completion was very quick, ensuring the least amount of disruption to the residents. CAPREIT used eco-friendly materials, keeping the original design, which minimized product waste and reused original framework. The new look offers a competitive advantage again newly developed condo product.” Association Achievement of the Year (2011) - John Puderak, Ron Anspach, Hillary Sayed, Jamie McDougald of SKLA
Association Achievement of the Year recognizes an apartment association which has: successfully launched an innovative initiative of great usefulness to landlords, or successfully opposed a detrimental government proposal.
Towers Realty – Royal Oak Court (Co-Winner) “Towers renovated the building systems, and all 29 suites, which were renovated using condo quality materials with a semi-open concept design. Towers created a competitive advantage by revitalizing all suites to a contemporary look within a historic property from the early 1900’s. “
Saskatchewan Landlord Association’s Tenant Assistance Process (Winner 2011) As a result of SKLA’s work, Saskatchewan did not bring in rent control, rent increases are still based on the agreement of the landlord and the tenant, and tenants are receiving help in finding suitable accommodation or rental assistance. Investment Property Owner’s Association of Nova Scotia’s Waste Cost Advocacy (Winner 2015) Halifax proposed to raise waste disposal charges by 40%. As a result of IPOANS’ work, landlords in Halifax are paying 20 to 40% less for waste disposal, waste disposal costs will not drive up rents, and the industry has built bridges with other groups and a reputation as problem solvers with its city government.
Association Achievement of the Year (2015) Jeremy Jackson of IPOANS
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SEPTEMBER 2016 complex in Regina's most affluent neighbourhood. This development exemplifies thoughtful construction, environmental excellence and forward-thinking planning. ” Finalists: The Ridge Apartments by Towers Realty, and Elata by Vertica Resident Services For more information about the CFAA Rental Housing Awards Program, please email firstname.lastname@example.org.
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New i Rental Development of the Year recognizes a company which has achieved excellence in the development of a new rental housing project The Heathview – Morguard (Co-Winner) “Morguard's The Heathview was selected for its striking aesthetics, hotel-quality amenities, best-in-class sustainability practices, and substantive use of sophisticated marketing tactics. It is a prime They can also bemonumental used for housing example of a landlord overcoming obstacles assistance to develop aw high-end property, while taking every measure to mitigate community disruption.” Sterling Manor – Altern Rentals (Co-Winner) “Featuring a mix of amenities that cater to a wide range of demographics, Sterling Manor by Altern is a customer-focused
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Benjamin Talâ€™s Economic Update Chart 2
Around the world in 2016 Eight years into the recovery from the Great Recession, the new normal is not normal. Interest rates in the US are very near zero. In Europe and Japan interest rates are negative and central banks are printing money. Despite this, inflation is minor and growth is modest. Japan has been trying to stimulate growth for 22 years, and failing. The Bank of Canada is tweeting about cutting interest rates again. The central banks want to return interest rates to normal, but each time they raise rates they run up against a decline in business confidence, and reverse course. Everyone knows the price of oil has fallen dramatically but other commodity prices have fallen substantially as well. That has resulted in large transfers of wealth and GDP growth from resource producing countries to resource consuming countries. As Benjamin predicted last year, Chinese economic growth has slowed but not entered into a downturn, while the United States has experienced good economic growth. However, even in the US productivity growth is weak. See chart 1.
40 | september 2016
The fall of the Canadian dollar will eventually increase exports and moderate imports. However, that impact will be slow and modest because of the low share of final goods in Canadaâ€™s exports compared to the EU average or the US. See chart 2. Also limiting the benefit of the lower dollar is that fact the in Canada the economy is dominated by services, but services make up a very modest portion of Canadian exports, much smaller than the service component of exports across the OECD countries generally. See charts 3 and 4. Chart 3 - Share of Services
Chart 4 - Share of Services Exports in Gross Exports
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Here is Benjamin Tal’s economic forecast updated early September. Benjamin is a worldrenowned economist, with a broad and deep knowledge of Canada’s housing markets. He delivered the economic update at CFAA Rental Housing Conference 2016 on June 9, and has kindly updated it for readers of CFAA’s National Outlook.
Rental demand in Canada The strength of the US economy, and thus of US demand for Canadian exports, is a major factor in employment in Canada, which in turn drives household formation among young people, and rental demand. For years we have been told that Canadians are not reproducing at a rate which will result in population growth. Much emphasis has been placed on the need for immigration both for the economy and for rental demand. Those points are true, but Canada is in the middle of a mini-baby boom, as the boomers’ children have children. See chart 5. That is good for landlords and home builders. Chart 5 - Average Annual Change in Demographic Based Household Demand
Due to population growth and family formation, and perhaps also to home builders who pay closer attentionLto the market than American home builders did, Canada has seen little overbuilding. See chart 6. That is good for home builders, landlords and the economy. Chart 6 - Ratio of Housing Starts to Household Formation
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Benjamin continues to express his view that the outlook for the Canadian economy is reasonably good, and the outlook for rental demand is very good, despite the slow growth in Japan and Europe, the low price of oil, and the slowdown in the demand for many commodities.
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Golf Classic Raises
for Interval House 2016 Golf Tournament held at Rattlesnake Point Golf Club on July 25th
to our event sponsors
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Worlds apart, right next door
DAA (Hamilton and District Apartment Association) covers a large area and our members come from Hamilton, Burlington, Brantford, Mississauga, Oakville, St. Catharines and the Niagara Peninsula. Every city in the Golden Horseshoe has its pros and cons for owning rental properties. You can own two similar properties in the same city and have drastically different tenants and rental incomes. But the challenges a landlord faces can also depend greatly on the cities in which their rentals are located. Take Hamilton vs Burlington as an example. These two cities are worlds apart even though they are right next door and a landlord who has a property in each faces vastly different issues. The obvious difference that everyone thinks of is the income variance of the two cities. The median earnings of a Hamiltonian was $28,933 at the last census while the median earnings in Burlington was $35,113. The percent of people with low income before tax in Hamilton was 18 per cent while Burlington was only 9.5 per cent. The staggering difference in available money for rent is one reason why you could rent a one-bedroom unit in Hamilton for $950 while a similar one in Burlington – not 10 minutes away – will cost you $1350. Hamilton’s higher percentage of people on social assistance and the difficulties that arise from poverty create vastly different tenant profiles. The 2016 census results will be available early 2017. With all the interest in Hamilton over the past few years, it will be exciting to see how it has changed the income of renters. Has the interest in Hamilton been enough to change the median earnings, and how does that affect the low-income earners? The vacancy rate also has a big impact on the rents. Burlington is currently 1.5 per cent, which has consistently been lower than Hamilton’s current 4 per cent (Source: CMHC Rental Market Report 2015), but those numbers might start to change as well with the recent influx of people from Toronto to Hamilton and the rise of the Millennials (people who became adults in year 2000 or later). They are now the largest generation group in Hamilton, according to a
new demographic analysis of the city produced by the Social Planning and Research Council of Hamilton (SPRC). The proportion of Millennials in Hamilton (27.58 per cent) is higher than the provincial average (26.84 per cent), which means they are moving to Hamilton, they are young, and more than likely renting and starting families. Millennials will help drive the economy and population growth, much as Baby Boomers did in the years following the Second World War. Hamilton may be an old city, but it has a young population, while Burlington has recently been nominated one of the top towns to retire in. How the two cities deal with affordable housing is also drastically different. Burlington has introduced a second unit pilot program to help create secondary units, while Hamilton is still trying to bring in licencing and has enforcement programs in place to discourage secondary suites. The large student population in Hamilton has its own specific problems that might be the reason there is such a different approach to secondary units, by-laws and zoning between the two cities. Purpose-built rental units are again being constructed in Hamilton and Burlington after a gap of around 30 years. This is exciting for both cities because it ensures the long-term survival of the industry. Both cities have great reasons to have rental properties. Hamilton is a wild card with all its changes and the influx of interest over the past few years. There are many opportunities to invest and grow, and the net cap rate in Hamilton is currently around 5 per cent. There are road blocks that are unique to Hamilton, such as poverty, limited new construction, the possibility of licencing and a large student population, which make Hamilton a city that is still trying to reinvent itself, as well as an exciting place to invest. Burlington rentals might give you a lower cap rate but the stability and tenant profiles might be of more interest to your risk level.
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HDAA news June 14, Golf Tournament – SOLD OUT!
Trial memberships available: All our Associate members are able to provide a six-month trial membership to their landlord customers. This program is a one-time offer all HDAA associate members can provide to landlord customers. Give your customers a reason to join!
Landlord survey: Most Hamiltonians know little about the situation, motives, and concerns of landlords. Dr. Richard Harris & Larissa DiBartolo of McMaster University are undertaking an online survey of landlords located in the Hamilton area. Please help support this important research by taking the survey.
HDAA had another great golfing day for their annual HDAA tournament in June. We are proud to announce that we sold out for the first time ever and had excellent feedback about the great time everyone had. We would like to congratulate all the raffle draw winners and mini-game winners. The tournament championship went to Hough Electric (Andrew Coutts, Colin Hough & Luke Ingham pictured). The winner of 86 bottles of wine was the Mark Loeffler Team who split it three ways. The Longest Drive winners were Sue Crowley & Josh McConnell. The Closest to the Pin winners were Sue Crowley (AGAIN) & Luke Ingham. The A.P. Reid Putting contest gave away a new putter to Tim Krukoski. The Multilogic
Past Events... April 14, Night at the Races Thanks to everyone who came out to our first “Night at the Races” on April 14. It was a blast! We had a full night of horse racing and excellent food; there were even a few that played the slots after the races. If you missed it this year, make sure you attend next year!
Hamilton and District Landlords Since 1960, the Hamilton and District Apartment Association has grown significantly. Our member landlords and property managers manage in excess of 30,000 units throughout Hamilton, Burlington, Brantford, Guelph, Mississauga, Oakville, St. Catharines and into the Niagara Peninsula. e association is a highly respected organization, sought out regularly by government, industry, media and the public. To join, submit the application form available at www.hamiltonapartmentassociation.ca, or contact HDAA at 289-208-5445. 46 | september 2016
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Energy Ball contest gave team Hough Electric another win with four VISA gift certificates. HCS Contracting “Nailed It” competition was so much fun that we will have to do it again next year; the female winner Brenda Jackson from Jackson Roofing showed up the rest of her family with her hammer skills. There was a tie-breaker competition for the male winner but in the end Damien Palus took the prize with an amazing two-hit win!
UPCOMING MEETINGS & EVENTS October 12, 5:45pm – 9:00pm Repositioning your building and its impact on affordable housing – We have landlords talking about the challenges and impacts of repositioning your buildings with points of view from triplex owners to large apartment building owners. We also have the City of Hamilton speaking about affordable housing and what they are doing to help landlords improve their units.
October 19, 9:00am – 11:00am AODA Information morning: Learn how to be compliant before it’s too late! – The clock is ticking; in 2017, all organizations with 20+ employees will need to file an online compliance report with the government to confirm their continued compliance with the AODA. This morning information session will help make sure that you and your employees know what needs to be done to be compliant.
November 9, 5:45pm – 9:00pm New purpose-built construction & changes in Hamilton – Hamilton is finally starting to see new construction after almost a 30-year gap. This meeting will talk about new building construction and upcoming projects within Hamilton.
HOW TO REGISTER for Meetings & Events: Phone: 289-208-5445 Email: email@example.com Web: www.hamiltonapartmentassiciation.ca
Hassle-Free Laundry Rooms For more information, contact us today! 1.877.755.5302 ■ firstname.lastname@example.org ■ www.coinamatic.com
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New rules requiring landlord confidentiality
he Ontario legislature has enacted Bill 132, The Sexual Violence and Harassment Action Plan Act, which is aimed at helping victims of domestic abuse. This new legislation amends the RTA to allow people who state that they are victims of sexual violence or domestic abuse to terminate their tenancies early, on 28 days notice, regardless of a lease. Bill 132 came into force on September 8, 2016. As a landlord, you may receive a new Landlord Tenant Board notice, Form N15: Tenant’s Notice to End my Tenancy Because of Fear of Sexual or Domestic Violence or Abuse. An N15 form is submitted by a tenant who has been abused by, or fears abuse from, another person. The Act lays out very strict confidentiality provisions to protect the identity of the victim from everyone, and to protect against disclosure of the fact that an N15 has been submitted.
If you receive an N15 from a tenant, you must keep it strictly confidential. Do not mention the N15 to anyone, or in front of anyone, including: • Employees or colleagues • Other tenants in the building • Other tenants of the rental unit Do not say anything about Form N15 to (or in front of) any other tenant. Do not give any notices that refer to or reveal the existence of the notice. Do not give a notice of pre-termination inspection.
A landlord is allowed to: • Get legal advice about the notice from a lawyer or paralegal • Inform “a superintendent, property manager or any other person who acts on behalf of the landlord with respect to the rental unit, if the person needs to know that fact or requires the notice or accompanying documentation or the information for the purposes of performing the person’s duties on behalf of the landlord with respect to the rental unit” • Inform certain LTB or Ministry of Housing people about the notice Other than that, you must keep the notice confidential. If you think the notice has been given to you improperly (when there is in fact no domestic abuse), you can report the situation to the Rental Housing Enforcement Unit of the Ministry of Housing. You can find out more at http://www.mah.gov.on.ca/Page142.aspx, or in the article at page 58. However, if the notice has been delivered with the required statement or with a court restraining order, it will generally be effective to end the tenancy, regardless of whether the statement is true. (The exception is that if a tenant gives notice to end their part of a joint tenancy, and does not actually move out, then the notice is void.) Tenants who are prosecuted and convicted of giving a false notice face fines of up to $25,000. Individual landlords face a similar fine for breaching the confidentiality rules. Corporate landlords could be fined up to $100,000. EOLO members were sent a warning about these new rules before September 8. LPMA addressed the issue in the last issue of Regional Association Voice.
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EOLO defending landlords in the City of Ottawa water rate review In the last two issues of RHB Magazine’s Regional Association Voice, EOLO reported on the City of Ottawa’s moves to reform the way it charges for water, sewers and storm drainage. The City is moving toward a charge for storm drainage, and a fixed charge for water and sewer, as well as a volumetric rate, which could undo some of the benefit of past water conservation measures. While landlords want to avoid increases in their water bills, EOLO works to make sure that City staff and Councillors realize that the water costs are costs of operating rental buildings, and as such, those costs are ultimately borne by the residential tenants through their rents (or sometimes directly). Tenants use water in exactly the same way as homeowners. Therefore, the City should treat the multi-res sector the same way it treats homeowners and not lump the multi-res sector in with the Institutional-Commercial-Industrial (ICI) sector, as the City is sometimes inclined to do. The water rate review report will likely be issued in draft in late September, and be considered at the Environment Committee on October 18, starting at 9:30 am at City Hall. The plan to issue a draft report is a new approach by city staff. EOLO has been in touch with City staff and key councillors to try to make sure nothing detrimental to landlords (and tenants) is in the report or adopted at the Committee or Council. EOLO will continue to represent landlords’ interests on that file up to and at the October 18 meeting, and the subsequent consideration by City Council.
building, CJM Property Management (“CJM”) decided to replace the elevator. Aware that many of its elderly or disabled tenants could not use the stairs, CJM spent more than $50,000 to effect a temporary elevator repair, and to mitigate the effect on the tenants by making “runners” available to help the tenants on the stairs. Between the initial breakdown and the replacement project, the elevator was out of service for a total of 96 days over one year. Based on the parties’ agreement, the LTB found that: • CJM performed satisfactory preventive maintenance prior to the breakdown. • CJM had acted reasonably to mitigate the problem throughout the repair and the elevator replacement. • The breakdown was caused by a hidden defect.
Abatement relief for landlords from the Court of Appeal By John Dickie The law on rent abatements has been changed, in favour of landlords, by the recent Ontario Court of Appeal decision in Onyskiw v CJM Property Management Ltd., 2016 ONCA 477. The case may well be the most significant legal victory for landlords in the last 20 years. When the sole elevator broke down in a six-storey apartment
BECOME AN EOLO MEMBER NOW! EOLO invites Ottawa area landlords to join the organization. Have your interests and concerns heard, and benefit from EOLO’s support. As an EOLO member, you will: • Receive prompt email notification of relevant City rule changes • Be able to attend two networking receptions each year • Be able to attend two free education events each year 50 | september 2016
• Receive EOLO’s newsletter with more information about new issues and developments at the City and in provincial funding programs and landlord-tenant laws. To apply for membership, go to www.eolo.ca, download the membership application form and send it to us at the contact info on that website.
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However, the tenants believed they were entitled to an abatement under s. 20 of the Residential Tenancies Act. Jack Fleming explains the previous law in his textbook, Residential Tenancies in Ontario, 2nd Ed., 2011:” The landlord’s repair and maintenance obligations are not met, even if the landlord has acted reasonably and has not been negligent…When something goes wrong, someone has to bear the cost (financial or otherwise), either the landlord or the tenant; as the landlord has contracted to provide the rental unit [and all the services that go with it], it is the landlord who must bear the cost.” (p. 719) “If a rental [complex] is in disrepair despite the best efforts of the landlord, … there is breach of contract.” (p. 721) “[Even] if a landlord expeditiously takes all reasonable steps to meet its obligations, the tenant is nonetheless entitled to abatement of rent for loss of services or other inconveniences while repairs are carried out; the tenant is not getting the full value of the contract and is entitled to compensation for that.” (p. 722) That strict contractual liability was set out in Offredi v. 751768 Ontario Ltd. Section 20 requires the landlord to provide and maintain the complex in a good state of repair. Based on the law summarized by Fleming, the tenants interpreted s. 20 to mean that, as soon as the elevator broke down, CJM was in breach of its obligation to provide a functional elevator, thus entitling them to rent abatements. Ottawa lawyer and EOLO Vice-President David Lyman acted for CJM throughout the case. He saw things differently. The crux of his argument was simple: the law cannot be interpreted to require that landlords provide uninterrupted access to services when those services have to be shut down for maintenance, for repairs or for replacement. As a result of the facts, CJM’s care for the tenants and Lyman’s legal argument, the Landlord and Tenant board (“LTB”) dismissed the tenants’ application. The tenants appealed the LTB’s decision to the Divisional Court, lost, and then appealed that decision to the Ontario Court of Appeal. At the Court of Appeal, Lyman pointed out that interpreting s. 20
the tenants’ way was unnecessary because the RTA already offered mechanisms through which tenants could seek rent abatements when landlords unreasonably interfered with the tenants’ enjoyment of the rental premises (s. 22) or discontinued services (s. 130). Lyman argued that the tenants brought their application under s. 20 to circumvent the LTB’s duty to consider the reasonableness of the landlord’s conduct, which exists under sections 22 and 130. The court unanimously dismissed the tenants’ appeal, adopting many of Lyman’s arguments. The court agreed that the tenants’ interpretation of s. 20 would offend the legal principle that the legislature does not intend to enact requirements that are, in a practical sense, impossible to fulfill. The court held that it should not adopt an interpretation of s. 20 that would be inconsistent with sections 22 and 130 to exclude consideration of the landlord’s conduct from the LTB’s determination of whether the landlord has breached its repair obligation. The court stated that adopting the tenants’ interpretation of s. 20 would create disharmony within the RTA. Section 20 would require landlords to provide uninterrupted access to non-vital services, but s. 21 would allow landlords to interrupt access to vital services when reasonably warranted by circumstances. The CJM decision has re-written Ontario’s law on landlords’ maintenance and repair duties, and has brought common sense to that area of law. Now landlords will not owe rent abatements if they: • Perform proper preventive maintenance before breakdowns • Mitigate the disruption • Act properly to effect repairs or replacement with reasonable speed, even if the work necessarily takes months John Dickie is EOLO Chair and an Ottawa lawyer. John has practiced residential landlord and tenant law for more than 30 years, the last 15 years with David Lyman.
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City of Waterloo attempting to address density issues
here are growing concerns in the City of Waterloo that developers are using dens to circumvent the city’s density and parking rules. City politicians recently met with staff to discuss a proposed amendment to Waterloo’s zoning bylaws that would more clearly define what constitutes a bedroom. This amendment would then make it easier for bylaw officials to enforce noncompliance. In December 2015, the density issue came to the forefront when city politicians voted to defer a decision on a new condominium project. The proposed 16-storey, 92-unit building is positioned between two university campuses, and will be designed to house students. According to city rules, the project was at the maximum allowed density for the site. Each unit was supposed to include one bedroom, but 82 units also included dens. Several months before the project came before council, several politicians and members of the community raised concerns that the dens would later become used as bedrooms. This issue has occurred with other projects, where units described as “one bedroom plus den” would actually become two-bedroom units. This meant that there would be more bedrooms in the building than was permitted for the development. It is important to know the number of bedrooms that will be in a building, as this figure is used to calculate the required amount of parking that the project will require. A building that has more bedrooms than originally determined could lead to parking troubles for residents, as well as the surrounding community. A proper definition of what constitutes a bedroom is required for city staff to review and approve or reject plans. Developers also need a clear definition so that they can work with the city to meet city bylaws and make amendments where necessary. Establishing a clear definition of a bedroom will help with ensuring that development proceeds as planned and does not lead to higher levels of density than expected. The proposed definition of a bedroom in the City of Waterloo’s zoning bylaw is “a room that is habitable within a dwelling unit and is used, designed, equipped or intended for sleeping.” This definition specifically excludes other types of rooms, including living rooms and dining rooms that are open to all of the unit’s occupants, as well as kitchens, bathrooms, utility rooms, rooms without windows and
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rooms below a certain size. The updated bylaw combines existing wording from the City of Waterloo’s Official Plan, the city’s development charges bylaw, the city’s residential rental housing licensing bylaw, and the Ontario Building Code. The City of Waterloo has not yet approved the amended bylaw definition. It is waiting to hear from stakeholders and community members on the proposed definition. City politicians will hear recommendations at an unspecified date in the future.
City of Guelph releases plan for affordable housing The City of Guelph has released its Recommended Strategic Actions Report, which provides strategic recommendations for addressing the city’s affordable housing needs. The goal of the report is to help the city achieve its city-wide 30 per cent affordable housing target (27 per cent ownership and three per cent rental). The report also provides direction on monitoring achievement of this target and addressing affordable housing issues on the market side of the housing equation. The report has identified a number of affordable housing issues, including the lack of small units, the lack of available primary rental supply and the security of tenure within the secondary rental market (i.e., there is choice but the supply is not secure since owners can terminate tenancies for personal use). The housing market within the City of Guelph has met the annual 27 per cent affordable housing ownership target for the past seven years. In 2015, this worked out to about 304 ownership units that were priced at or below $327,000, and 34 rental units priced at or below $1003 per month. However, it only met the three per cent affordable housing rental target once over that same time – in 2012, with the development of a seniors housing project, thanks in part to financial incentives. According to the report, small units include mostly bachelor and one-bedroom units, which are suitable for single-person or onecouple (no children) households. It states that there is “a current disconnect between the number of bedrooms required by households and the supply available, amounting to a shortage of over 18,000
smaller units (bachelor and one bedroom).” There is a greater level of core housing need for one-person households (25 per cent of all households and 43 per cent of all renter households). The report also states that 45 per cent of Guelph’s rental housing market is made of secondary rental stock – one- or two-unit buildings that are rented out. This type of rental stock does not offer security of tenure compared to other types of rental units, as the property owner can simply remove the unit from the rental market by occupying it or selling it to a purchaser who will occupy it. However, accessory apartments are the most affordable type of rental properties, followed by purpose-built primary rental housing, rented condominium apartments and townhouses. The City of Guelph developed its Affordable Housing Strategy to address land use planning requirements for many types of housing, including affordable housing for low to moderate income households. This strategy complements the County’s Ten-year Housing and Homelessness Plan, which focuses on the low-market end of the housing market. The strategy will build on existing tools and approaches, connect with key corporate projects, and suggest actions that fit with the City’s roles and responsibilities. The Draft Directions Report assesses the potential of each draft direction in addressing the City of Guelph’s identified housing issues. Draft directions are combined into six categories: targets and benchmarks; planning regulations and processes; financial incentives; development charges; partnerships; and implementation/monitoring. Of the 24 draft directions, four were deemed as having the greatest potential to address affordable housing issues: maintain a “new multi-residential” property tax rate to incent new rental housing construction; monitor affordable housing targets and indicators to determine effectiveness of affordable housing directions; provide direct financial incentives for smaller rental units and primary rental housing; and support inclusionary zoning to promote the inclusion of affordable housing units in development applications. Under Planning Regulations and Processes, the report recommends reviewing zoning regulations for the purpose of assisting with the creation of affordable housing. The report provides the following examples: “consideration of regulations for accessory
Discover the benefits of being a member of our association: e mission of the Waterloo Regional Apartment Management Association is to actively and positively develop and sustain the integrity of its members’ business – the provision of private residential rental accommodation – in Waterloo, Kitchener, Cambridge, Guelph and surrounding areas. To view the full range of valuable property management resources we oﬀer our members, or to apply online go to http://wrama.com/, or contact WRAMA at 519-748-0703.
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apartments in townhouse units; consideration of pre-zoning appropriate sites for medium and high density residential uses; and exploration of a flexible low density residential zoning category that would permit both single and semi-detached dwelling units.â€? The final Approved Housing Strategy will be presented to Guelph City Council for approval in the fourth quarter of 2016. Upon approval of the strategy, city staff will roll out implementation of the strategic actions and monitor the results.
Presidentâ€™s message... Responsible members of our industry strive to provide accommodation that is functional and long lasting and that is still able to convey a sense of comfort and style. These factors are balanced with the desire to provide affordable accommodation by keeping building and operating costs as low as possible. Builders or designers, for example, might find ways to save costs, but in hindsight some of their efforts to keep costs low can negatively impact our operations over the long term. For example, in the 1930s, several municipalities in Sweden claimed that bathrooms for working people were an unnecessary luxury and housing costs could be kept low by having people use public baths. We cannot imagine considering this an option today but at the time it seemed reasonable. In our business, decisions we make today will affect us for years to come so we should consider each decision carefully. For those old enough, do you remember the decision to install shag carpets? I just thought of sharing this decision with you. Good landlording. â€” Lars Sterne
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Inconvenience to tenants is no longer enough to find landlords in breach of the RTA
ntil recently, landlords were usually held responsible if an event beyond their control occurred in their rental complexes, such as a transformer explosion knocking out power to their buildings or units being infested by bedbugs. In these types of cases, courts and tribunals compelled landlords to give tenants a rent abatement depending on the degree of inconvenience they experienced. However, landlords can feel a measure of relief now that compensation to tenants is no longer a given due to a June 16 decision by the Ontario Court of Appeal. The decision, Onyskiw v. CJM Property Management Ltd., is significant because it provides legally binding direction to Landlord and Tenant Board members when they are assessing the conduct of landlords who face allegations of breach of the Residential Tenancies Act. The case shows that challenges faced by landlords, and the reasonableness of the landlordâ€™s response to those challenges, may warrant exoneration of the landlord even if the tenants have been greatly inconvenienced in the process.
In Onyskiw, the only elevator in a six-storey apartment building in Kingston was disabled for 96 days during a one-year period in 2012 and 2013. The tenants contended that the landlord, CJM Property Management Ltd., was in breach of its obligations to provide and maintain a residential complex, and the rental units in it, in a good state of repair under section 20 of the RTA. The Board member who heard the case found that the landlord acted reasonably in the circumstances and was not in breach of its obligations, and thus the tenants were not entitled to an abatement of rent even though many were seriously inconvenienced. The case was appealed to the Divisional Court, where it was dismissed, and then to the Ontario Court of Appeal, which held that the Board member applied a proper â€œcontextualâ€? approach in his analysis of the issues. That approach focused on the broader picture: that the landlord paid more than $30,000 to a third-party elevator company to address the repair of the existing elevator; paid $15,400 in labour for runners to
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assist elderly or disabled tenants who had difficulty climbing stairs; and paid an additional $5,200 to obtain an evacuation chair for use in emergencies while the elevator was out of operation. The installation of a new elevator was also delayed by a province-wide elevator technicians’ strike, which was beyond the landlord’s control. After assessing the facts of the case, the Court of Appeal concluded that because the landlord had taken reasonable measures, it should not be penalized and it dismissed the tenants’ appeal. Joe Hoffer, a London, Ontario lawyer who specializes in residential tenancy law for landlords, says that binding judicial decisions in the past caused many Board members to believe that if there was a problem in a rental complex then, by default, the landlord was responsible. The courts also stated that the tenants were entitled to compensation if they were inconvenienced because they were paying rent in theory for a home and amenities that should function at all times. “I know a lot of landlords felt that was a very unfair view because there are things that happen that landlords have virtually no control over, such as a burst water pipe or flooding, or a transformer explosion,” explains Hoffer. “These are things that can be the result of something that is completely outside the landlord’s control and yet there’s an expectation that the landlord is almost like an insurer who has to compensate the tenants for whatever has happened to them.” In the past, Board members treated bedbugs in a building as a breach of the RTA and as if their presence was the landlord’s fault even though the landlord didn’t bring the insects in. Inconvenience resulting from balcony repairs that prevented tenants from using their balconies was also treated as a breach. In Onyskiw, Hoffer says that the Court of Appeal realized it needed to give direction to the Board, and to the lawyers and paralegals who act on behalf of landlords. The Court must also look at the broader picture when it interprets the statute to determine whether landlords were in breach of the RTA. “The case law up until this case really left a presumption that the landlord should be held responsible for everything bad that happens,” says Hoffer. “And the court said you need to look at the broader context of how this is occurring and you need to take into account
all of the factors that have come into play.” Hoffer adds that if a landlord acts reasonably in trying to minimize inconvenience to the tenants and in taking measures to remedy the problem, there is no liability on the part of landlords. Still, landlords need to act responsibly when problems occur in their rental complexes. “They still have to look after the tenants, but they’re not going to be blamed by default,” says Hoffer. “Landlords who listen to the advice of professional consultants and implement their recommendations are not to be penalized for that. That’s the bottom line.” To read the case in its entirety, visit the following website: http://www.ontariocourts.ca/decisions/2016/2016ONCA0477.htm.
Rental Housing Enforcement Unit: Helping landlords and tenants understand their rights and responsibilities Many small landlords get into property management as a way of earning a second income. However, a great number don’t study the legislation that governs the industry and don’t appreciate how problematic that is until a compliance officer from the Ministry of Housing’s Rental Housing Enforcement Unit contacts them. The unit responds to complaints from landlords and tenants about alleged offences under the Residential Tenancies Act (RTA). Under sections 233 to 235 of the RTA, there are 46 core offences that landlords and tenants can commit. Dave Grech, coordinator of investigation for the unit, says many reported problems centre on small landlords who don’t understand the RTA. “The larger landlords have property managers who take care of their properties and property managers generally know what to do and how to do it,” says Grech (who will be speaking at the October 11 LPMA members’ meeting). “It’s these smaller landlords that often
London Property Management Association (LPMA) is a non-profit organization, located in London, Ontario, Canada, that provides information and education to landlords. LPMA represents the interests of both large and small property owners. e association has more than 400 landlord members representing approximately 35,000 rental units.
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Membership is open to landlords and property management professionals who own or manage one or more residential rental units. Sign up online www.LPMA.ca, or call Brenda Davidson at 519-672-6999 for more information.
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lack understanding.” Grech, who also conducts investigations, trains police officers When the unit receives a complaint, a compliance officer on rental housing issues and gives seminars to landlord and tenant follows up with the alleged offender to get that person’s side of groups across Ontario to explain the unit’s role. the story. If it’s determined that an offence has been committed, “We want landlords to know that we’re not just here to help the officer informs the offender about his or her responsibilities tenants,” says Grech. “We are here to help landlords as well.” and tries to persuade the individual to comply with the RTA. Ninety per cent of cases are closed prior to reaching the investigation For more information, visit www.mah.gov.on.ca or call 1-888-772-9277. stage. “It’s a very effective tool,” says Grech. “We don’t want to prosecute landlords and tenants – that’s a last resort. Our goal is to have them comply with the Act.” If the individual doesn’t comply, the case is assigned to an The fall equinox is fast approaching and with it comes a full investigator who travels to the location of the offence to collect slate of interesting seminars and events for LPMA members. witness statements and evidence, and to execute search warrants. On September 21, lawyer Joe Hoffer will discuss upcoming If the investigator believes an offence has been committed by the changes to the Residential Tenancies Act and the Occupational end of the investigation, then he or she will recommend charges. Health and Safety Act, and the impact of those changes on Once legal counsel gives the unit the go-ahead to proceed, the landlords. individual is charged and the matter is dealt with in Provincial At the members’ dinner and meeting on October 11, Dave Grech Offences Court. of the Ministry of Housing’s Investigation and Enforcement Unit The maximum fine for an individual who is found guilty is will outline common mistakes landlords make as well as the unit’s $25,000 per count and $100,000 per count for a corporation. The role in helping landlords with tenants who are committing penalties are high enough to discourage others from committing offences under the RTA. Scott Andison of the Federation of Rentaloffences under the Act, Grech says. housing Providers of Ontario (FRPO) will cover provincial issues IIn 2014-2015, the unit’s contact centre received 20,299 calls. that affect landlords. The top three offences reported most often for landlords included LPMA is once again hosting Night at the Knights on October changing the locks, withholding vital services (such as heat, 21. Property Management 101 will take place on November 8 and electricity, gas or water), and entering rental units illegally. November 15. The first seminar will outline property management “Unfortunately, a lot of the time landlords will take the law into basics while the second will offer tools for resolving problems their own hands,” says Grech. “They’ll illegally evict tenants or with tenants. shut off vital services. Usually it’s because the tenant is in arrears More informationavailable is available at www.lpma.ca. Secure maximum incentive of rent.” O Disposal and recycling The most common offences reported for tenants are changing —Shirley Criger, Property Manager E the locks without the landlord’s consent, refusing entry to a Gateway Property Management Corporation landlord even when proper notice has been provided, and filing false information with the Landlord and Tenant Board.
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MAC Awards Gala Dec 1, 2016 5:00pm to 9:00pm, Metro Toronto Convention Centre - Hall F. FRPO will celebrate the 16th annual MAC Awards. This important event attracts 1000 industry professionals. Event registration will open in early October. Save the date as we celebrate our industry.
2016 PM Expo The 28th Annual PM Expo at the Metro Toronto Convention Centre on November 30th – December 2nd, 2016 will be held concurrently with Construct Canada, HomeBuilder & Renovator Expo and World of Concrete Pavilion in the South Building, and IIDEXCanada in the North Building.
CFAA Rental Housing Conference 2017 CFAA Rental Housing Conference 2017 will be held at The Westin Prince Toronto from Tuesday, June 6, to Thursday, June 8. Hear and meet industry leaders from across the rental housing industry, including renowned economist Benjamin Tal. For more information, visit www.CFAA-RHC.ca.
Enbridge Gas Distribution extends its energy savings opportunities until end of October From June 15 – October 31, 2016. Enbridge Gas is offering Heat Reflector Panels for an increased incentive of $0.40/m3 of gas saved—that’s four times the normal incentive. To gain deeper energy savings, along with Heat Reflector Panels Enbridge is offering free low-flow showerheads. Enjoy two energy savings measures that will improve your bottom line while enhancing the comfort of your residents.
National Housing Strategy On National Housing Day, November 22, CMHC and Minister Duclos, federal minister responsible for housing, will be addressing what they heard at the consultation on the National Housing Strategy, which has taken place this September and October. That may give a good idea of the directions the federal government will take on the NHS, which are to be announced in Budget 2017, to be tabled around March 2017.
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