Page 1

regional edition

London

The regional market perspective for the London rental housing industry


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FOREWORD

Produced by RHB Inc., creators of RHB Magazine, RHB Newsreel, RHB TV, Perpetual Media Group (PMG) and Boldtv and in collaboration with the Canadian Federation of Apartment Associations (CFAA), theANNUAL delivers a complete market perspective for the rental housing industries of Ottawa, Hamilton, Waterloo and London. Developing a standalone resource guide with vital and practical information is never an easy undertaking. There are reasons why in-depth analysis and forecasting isn’t done in this form and on this scale for our industry! Time, resources and industry knowledge are required to deliver a comprehensive report respecting individual regional apartment owners and managers while allowing them to respond to market needs, size and competition. What you'll find in theANNUAL Regional Editions is: •

The State of the Industry Report, an in-depth look at the individual cities’ market conditions, based on CMHC and Stats Canada data.

Realty Check, a look at multi-family sales and purchases in each of the four regional markets, with a special showcase of notable transactions and analysis from industry experts.

2 – theANNUAL London

Association Report, from our friends at HDAA, LPMA, WRAMA and EOLO, an overview of what we need to know about each city and association. Hot Neighbourhoods, information and stats you need to know showing what makes them hot! Legislation, which this year is Joe Hoffer’s take on Ontario’s new rental legislation. Five Things You Should Know, some interesting tips and tools for managing the physical elements of your buildings. The industry’s first vetted report of the Top Owners, Managers and REITs for each area.

This has been a labour of love. As Canada's national voice for the apartment industry, RHB Inc. prides itself on always delivering the latest news and information that helps our industry maintain a competitive advantage. Therefore, we'd like to acknowledge the following people and companies for their help gathering the information and data which enabled us to deliver this comprehensive guide: John Dickie, CFAA and EOLO; Arun Pathak, HDAA; Lisa Smith, LPMA; Andrew Macallum, WRAMA; Mike Milovick, Royal LePage - Grand Valley Realty; David Montressor, CBRE Limited – National Apartment Group; and Brenda Davidson, Keller Williams – Lifestyles Realty. RHB Inc accepts responsibility for accurately delivering relevant news to the rental housing industry. As well, we always want to hear from you, the people who make up the rental housing industry. Let us know your thoughts on what you've read and what you'd want to see next year in theANNUAL, both at the National and Regional levels. All the best, Debbie Dollar-Seldon Associate Publisher

Co-Founder, Principal Juan Malvestitti Associate Publisher Debbie Dollar-Seldon Contributing Editor John Dickie, President CFAA Director of Sales Nishant Rai Regional Sales Executive Ranjna Bhardwaj Office Manager Geeta Lokhram Design Wendy Tabor

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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 the written permission from the publisher. P.O. Box 696, Maple, ON L6A 1S7 416-236-7473 Produced in Canada All contents copyright © RHB Inc. Canadian Publications Mail Product

INC.

Welcome to the inaugural Regional editions of theANNUAL. The National edition of theANNUAL, now in its fourth year, is a special, industry specific periodical, delivering relevant, timely information and data with a single minded approach; "What the rental housing industry needs to know!” With that as our goal, our research team reviewed extensive data from numerous sources to bring you the regional editions of theANNUAL. From CMHC, Stats Canada, association executives, Government sources and apartment owners, managers & REITs, we bring you the most complete and thorough industry guide that delivers regional specific information and data.

Co-Founder, Principal Marc Côté

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Table of Contents 2 – Foreword

State of the Industry – 8

15 – Realty Check

Association Report – 21

4 – theANNUAL London


theANNUAL London – 5


Table of Contents

29 – Hot Neighbourhoods

Top 10 – 35

47 – Rental Legislation

5 things you should know – 55

6 – theANNUAL London


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Brooke, Warwick & Metcalfe

Thames Central Middlesex Centre AVR: 1.8% 2BR: $885

AVR: 1.8% 2BR: $885

4

3

2 8

1 6

5

AVR: 2.5% 2BR: $982

AVR: 1.9% 2BR: $1057

AVR: 1.8% 2BR: $885

London South Strathroy-Caradoc

Southwold AVR: 1.8% 2BR: $885

London Zone Statistics

9

Central Elgin AVR: 1.8% 2BR: $885

1. Downtown North: AVR: 2.2% 2BR: $1364 2. Northeast: AVR: 2.6% 2BR: $842 3. North London: AVR: 1.3% 2BR: $1174 4. Northwest London: AVR: 1.0% 2BR: $1108 5. Southwest London: AVR: 1.2% 2BR: $1043 6. Central South London: AVR: 2.0% 2BR: $1074 8. South London: AVR: 1.9% 2BR: $1057 9. St. Thomas: AVR: 1.4% 2BR: $855

AVR= Average Vacancy Rate at October 2017 2BR= Average Rent of 2 Bedroom Suite

average rent in senior’s rental housing in 2017

AVERAGE RENT IN SENIOR’S RENTAL HOUSING (INCLUDING MEALS) IN 2017

8 – theANNUAL London

$3209

per month


64,980 rental households in London

44,470 apartment units in London

7,403 condominum units in London

FULL TIME EMPLOYMENT % CHANGE YTD 2017/16 BY AGE GROUP

15% 12% 9% 6%

$36,419 average household income after taxes

15-24

3% 0 -3%

25-44

Total

-6%

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State of the Industry London (CMA)

London’s Rental Market Universe 50000

40000

30000

20000

10000

0 44,470 – Apartments 3,655 – Townhouses 15,370 – Rented Houses, doubles, duplexes and accessory suites 2,296 – Rented Condos

Student housing supply was up to 1242 beds

3,325

24.7%

London households include at least 1 senior

Immigrants landed in London between ‘06-’11

theANNUAL London – 11


State of the Industry Important things to know about London’s primary rental market

Important things to know about London’s secondary rental market

3,655 townhomes & 44,470 private apartment units as of October 2017

7331 condo units in 2016 and increased to 7403 in 2017

21.8% of London’s condo units are in London South.

Most of the apartment buildings with 50-199 units are located in London Northwest.

15,370 rented houses, doubles, duplexes and accessory suites round out the secondary market.

The remainder of the London CMA

Middlesex Centre

Thames Central

Info

Central Elgin

Bachelor

Brooke, Warwick & Metcalfe

1 Bedroom

2 Bedroom

Southwold

3 Bedrooms +

Survey Date

Oct-16

Oct-17

Oct-16

Oct-17

Oct-16

Oct-17

Oct-16

Oct-17

Average Vacancy

1.3%

Average Rent

$894

$885

12 – theANNUAL London


Info Downtown London

Survey Date

Oct-16

Oct-17

Oct-16

Oct-17

Average Vacancy

N/A

N/A

2.7%

1.7%

2.7%

2.6%

N/A

N/A

Average Rent

$608

$613

$872

$926

$1,200

$1,364

N/A

N/A

Survey Date Average Vacancy

Oct-17

Oct-16

Oct-17

Oct-16

Oct-17

Oct-16

Oct-17

0%

N/A

3.2%

3.3%

2.8%

3.6%

N/A

0%

$555

$529

$691

$716

$786

$809

$816

$791

2 Bedroom

3 Bedrooms +

Oct-17

Oct-16

Oct-17

Average Vacancy

N/A

N/A

1.0%

2.1%

1.9%

3.0%

N/A

N/A

Average Rent

$588

$589

$713

$731

$818

$842

$1,004

$1,029

Survey Date

Bachelor

Bachelor

1 Bedroom

1 Bedroom

2 Bedroom

3 Bedrooms +

Oct-16

Oct-17

Oct-16

Oct-17

Oct-16

Oct-17

Oct-16

Oct-17

Average Vacancy

.7%

1.2%

.8%

1.1%

1.3%

.9%

.6%

.9%

Average Rent

$698

$800

$871

$917

$1,079

$1,108

$1,174

$1,243

Survey Date

Bachelor

1 Bedroom

2 Bedroom

3 Bedrooms +

Oct-16

Oct-17

Oct-16

Oct-17

Oct-16

Oct-17

Oct-16

Oct-17

Average Vacancy

.8%

N/A

1.6%

2.5%

3.5%

1.2%

0%

N/A

Average Rent

$618

$646

$721

$783

$84

$1,074

$1,286

$1,300

Survey Date

Bachelor

1 Bedroom

2 Bedroom

3 Bedrooms +

Oct-16

Oct-17

Oct-16

Oct-17

Oct-16

Oct-17

Oct-16

Oct-17

Average Vacancy

N/A

N/A

1.2%

1.3%

5.3%

2.0%

4.4%

N/A

Average Rent

$671

$682

$750

$811

$955

$1,057

$1,016

$1,127

Survey Date

Bachelor

1 Bedroom

Oct-16

Oct-17

Average Vacancy

N/A

2.2%

.7%

1.3%

Average Rent

$648

$667

$841

$858

Survey Date

Bachelor

Oct-16

Oct-17

1 Bedroom

Oct-16

Oct-17

Average Vacancy

N/A

3.2%

1.4%

1.1%

Average Rent

$673

$739

$855

$917

Info

StrathroyCaradoc

Oct-16

Oct-16

Info

St. Thomas

3 Bedrooms +

Oct-17

Info

North London

2 Bedroom

Oct-16

Info

London Southwest

1 Bedroom

Oct-17

Info

London South

Bachelor

Oct-16

Survey Date

Info

London South Central

3 Bedrooms +

Oct-17

Info

London Northwest

2 Bedroom

Oct-16

Average Rent

London Northeast

1 Bedroom

Oct-17

Info London East

Bachelor Oct-16

Survey Date

Bachelor

Oct-16

Oct-17

1 Bedroom

Oct-16

Oct-17

Oct-16

1.9%

1.1%

.6%

$1,052 $1,043 $1,125

2 Bedroom Oct-17

Oct-16

2.2%

1.4%

5.2%

$1,242 $1,174 $1,491

Oct-17

Oct-17

1.9% $1,539

3 Bedrooms +

Average Vacancy

N/A

0.0%

1.6%

.9%

1.7%

1.7%

N/A

N/A

Average Rent

$469

$484

$680

$687

$871

$855

N/A

N/A

1 Bedroom

Oct-16

1.6% $1,102

3 Bedrooms +

Oct-16

2 Bedroom

Oct-17

Oct-17

Bachelor

Oct-17

3 Bedrooms +

Oct-16

Info

Oct-16

2 Bedroom

2 Bedroom

Oct-16

Oct-17

3 Bedrooms +

Survey Date

Oct-16

Oct-17

Oct-16

Oct-17

Oct-16

Oct-17

Oct-16

Oct-17

Average Vacancy

0.0%

9.7%

N/A

N/A

1.4%

2.3%

N/A

N/A

Average Rent

$550

$579

$738

$755

$939

$982

N/A

$894

theANNUAL London – 13


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14 – theANNUAL London


Realty Check

The transactions of note in:

London

London Surrounding areas Brooke, Warwick, Metcalfe Strathroy-Caradoc Middlesex Centre Thames Central Southwold St. Thomas Central Elgin

theANNUAL London – 15


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Multi-Housing

Specialist


London

Realty Check The red-hot housing market in Toronto last year had an impact on London’s rising rents and low vacancy rate. With the influx of Toronto-area buyers snapping up London homes and squeezing out London buyers, the average rent in London increased by 15.3 per cent and the vacancy rate remained below 2 per cent in 2017. The unemployment rate was below 6 per cent and remained on par with the national average. The London and St. Thomas Association of Realtors had a record of 11,293 sales last year which would indicate that a lot of renters were becoming first-time home buyers. However, that wasn’t the case, as a lot of the buyers were coming from the GTA. This made the market less affordable for London buyers as the average sale price of a home increased by 18 per cent. This caused a lot of potential first-time home buyers to give up the house hunt and continue to rent.

There were 2,127 multi-unit housing starts last year, but the number of multi-family units this year has decreased and some of the projects started in 2017 are still not complete. The average London apartment rents for $980 per month. This is an increase over last year, however London is still ranked as the 15th most affordable city for tenants. The inventory of multi-residential properties for sale remained low and the average building sold contained 10 units. The largest building sold was 79 David Street, a retirement residence with 72 units, at a selling price of $8,820,000. The average sale price per unit was $134,880. Acquisition cap rates averaged 6 per cent. Into 2018, rising home prices and a steady stream of Toronto buyers will continue to keep vacancy rates low. Combined with a lack of multi-residential properties on the market, cap rates are expected to decrease. Brenda Davidson Real Estate Sales Representative Keller Williams Lifestyles Realty, Brokerage

Summary Table (Source summary table with rounding)

Building Size

Sale Price

Price per unit

Average

25

$2,620,761

$134,880

Low

3

$845,000

$79,255

High

72

$8,820,000

$330,000

75 High St.

Purchaser: M & R Suites Inc Stories: 6 Units: 48 Price/Unit: $110,417

Sold at

$5,300,000

theANNUAL London – 17


Realty Check 79 David St. (Retirement Residence) Purchaser: 2344280 Ontario Inc Stories: 1 Units: 72 Price/Unit: $122,500

Sold at

$8,820,000

104 Devonshire Ave.

St. John’s

116-133 Arbour Glen Crescent

Purchaser: Euro Properties Inc Stories: 2.5 Units: 18 Price/Unit: $105,556

Purchaser: 2555596 Ontario Inc Stories: 5 Units: 25 Price/Unit: $103,200

$1,900,000

Purchaser: 2386301 Ontario Inc Stories: 2.5 Units: 17 Price/Unit: $89,041

Purchaser: Skyline Real Estate Holdings Inc Stories: 7 Units: 55 Price/Unit: $82,000

18 – theANNUAL London

$2,580,000

Sold at

131 Elmwood Ave.

185 Berkshire Dr.

Sold at

Sold at

$4,510,000

Sold at

$1,513,700


Recent Realty Transactions 248 Wharncliffe Road S.

Purchaser: Private Corporation Stories: 3 Units: 13 Price/Unit: $146,153

74-93 Arbour Glen Crescent

Purchaser: Private Corporation Stories: 2 (Townhomes) Units: 20 Price/Unit: $97,500

$1,950,000

Purchaser: Private Corporation Stories: 4 Units: 27 Price/Unit: $111,111

Purchaser: Skyline Real Estate Holdings Inc Stories: 8 Units: 67 Price/Unit: $81,940

$1,900,000

Sold at

69 Grand Avenue

195 Berkshire Dr.

Sold at

Sold at

$3,000,000

Sold at

$5,490,000

1459 Trafalgar St.

Sold at

(Condo Apartment Bldg) Purchaser: 1459 Trafalgar Street Investments Inc Stories: 2.5 Units: 47 Price/Unit: $79,255

$3,725,000

theANNUAL London – 19


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Association Report

theANNUAL London – 21


Association Report

LPMA is a non-profit organization that has been offering reliable information and mentoring to landlords since 1967. We educate our members and advocate on behalf of large and small landlords at the municipal and provincial levels on issues that affect the rental housing industry. While many of LPMA’s 600-plus members are large landlords, more than 70 per cent own and manage 10 or fewer residential units. Our board is comprised of 16 volunteer directors and one full-time administrator who contribute a great deal of time individually and as a team to our members and to continually improving our organization. Other landlord associations view LPMA as a model and have asked us to lend our expertise to improving the way they operate. LPMA is one of the longest-standing landlord associations not only in Ontario but also in Canada. The organization was formed when LPMA’s founding members came together to share ideas and information on the price of electrical work and other services. As a result, large and small landlords learned about operating

22 – theANNUAL London

costs, dealing with tenants and addressing common issues in running their buildings. That sense of co-operation and desire to help other members continues to this day. LPMA member benefits: One of LPMA’s strengths is the willingness of our members to work together and share ideas. We hold monthly meetings from October to May in which we discuss important issues that arise at municipal meetings, alert members to changes that affect their businesses, and present guest speakers who address areas of interest to rental housing providers. Topics at recent meetings have included: the mandatory “standard lease” and what it means to members, fire code changes and how to deal with bedbugs. Members also benefit from access on our website to a list of tradespeople and service providers who are LPMA associate members, and they can find a wide range of other helpful information through links on our website. In addition, we are able to accept online payments for event registrations and for our legal forms. Education: LPMA’s strength lies in our mix of small and large landlords, and the exchange of information between the two — all for the price of a membership. There is an education component as part of each monthly meeting to


foster best industry practices and risk management. Special seminars are presented to members when major legislative changes, such as the introduction of the Rental Fairness Act and the Standard Lease Form, are introduced by the province. We also help support small landlords or those purchasing their first income property by staging Property Management 101 and 201, a series of informative seminars, in the fall. Speakers cover topics such as leasing, customer service, rent rules, and methods of dealing with problem tenants. Legal forms: LPMA has always led the industry in the development of rental applications, tenancy agreements and related leasing documents. Documents produced by LPMA have been used by large landlords and organizations such as the Federation of Rental-housing Providers of Ontario (FRPO), the Greater Toronto Apartment Association, and the Waterloo Regional Apartment Management Association, and are particularly valuable for small landlords. Even though LPMA is a non-profit organization, we generate income from the sale and licensing of the legal forms to cover the cost of creating and producing the forms and administering their use by the industry. Editorial projects: LPMA’s goals include educating and informing small landlords. We wrote and published our own 16-page newsletters for more than 10 years and we currently contribute regularly to RHB Magazine’s Regional Association Voice. Through RHB, we we are able to shine a light on our organization across the province. Trade show: LPMA hosts an annual trade show in April. It features 60 to 70 exhibitors who have information and services that are beneficial to the rental housing industry. Charitable activities: Our annual golf tournament, held in September, is our main fundraiser. Recipients of our donations have traditionally been housingrelated and include St. Paul’s Social Services, My

Sisters’ Place, Ronald McDonald House Charities Southwestern Ontario, and Merrymount Family Support and Crisis Centre. At our annual Christmas party, we ask that members bring a toy for the Salvation Army’s toy drive. We also contribute to the province-wide Spring Hope Food Drive held annually in April in apartment buildings across Ontario. Lobbying: As a powerful voice in London for rental housing, we have good working relationships with city officials, and fire and police services. We lobby the city over issues, such as landlord licensing, that affect small landlords. We also attend council meetings where new policies or bylaws that may adversely affect our members are on the agenda. Our goal is to watch for issues that may have an impact on landlords and how to represent their best interests. We are also an active member of FRPO and the Canadian Federation of Apartment Associations, and we support those organizations during policy discussions and decision-making.

LPMA’s Mission Statement LPMA’s purpose is to provide education that helps landlords operate their businesses professionally, mitigate risk, and attract and retain good tenants. Our membership rates are affordable and they include monthly meetings where landlords learn from expert speakers, share ideas and obtain advice from others in the industry. We offer useful tools, such as access to legal forms and credit checks through our website, as well as mentoring and advocacy by representing the interests of property owners and managers at the municipal, provincial and federal level. Our membership culture is inclusive and welcoming, and we encourage members to be open to tenants from all backgrounds. Above all, we aim to help members compete successfully in London’s highly competitive rental housing market.

theANNUAL London – 23


Association Report “LPMA lobbied for a change and as a result of that effort, the government put a freeze on the disparity between the residential and multi-residential rates.”

Milestones Legislative input LPMA is known as an advocate for its members and for Ontario landlords. Lawyer Joe Hoffer was part of a legislative committee, along with fellow LPMA members Paul Cappa and Brenda Trineer, that made recommendations to the provincial government for two years in Toronto while the Tenant Protection Act was being drafted. They provided the government with the industry’s position and pointed out the practical implications of the implementation of the government’s policy. Rent control Introduced in 1975, the legislation united LPMA members and encouraged them to work together. Because there was no provincial rental housing association at the time, LPMA helped to unite other associations in lobbying the government to make the laws fairer for all Ontario landlords. The current vacancy decontrol/recontrol system has been influenced by years of intensive lobbying and support by organizations such as LPMA. It allows landlords to set rents on vacant suites based on what the market will bear which, in turn, permits landlords to upgrade their suites and command higher rents for them. Even today, LPMA continues to educate its members about rent control legislation and to lobby the government on making it more equitable. Property tax LPMA was involved in trying to ease the gap in the property tax rate for single-family property

24 – theANNUAL London

owners and owners of multi-residential properties; the disparity was particularly unfair to London tenants who were being taxed at twice the rate of private homeowners. Because the government made it illegal for landlords to pass the increase on to tenants as a separate charge, tenants had no idea their rent was climbing as a result of municipalities shifting more of the tax burden to them. LPMA lobbied for a change and as a result of that effort, the government put a freeze on the disparity between the residential and multi-residential rates. The freeze went into effect in 2001, which prevented municipalities from shifting the tax burden to multi-residential tenants.

Recent political issues Standard lease When the province drafted its standard lease, LPMA suggested changes to streamline it and make it easier for landlords to complete while decreasing their chances of committing errors that could lead to more disagreements with tenants at the Landlord and Tenant Board. LPMA, through a 20-person committee, made four submissions in response to the drafts the province released. As a result of our recommendations, the province streamlined the document significantly and included details that assisted landlords. LPMA also pressed the province to allow landlords to include additional terms and conditions to reflect their specific operations and clientele. An LPMA committee compared the standard lease to its own lease, which lawyer Joe Hoffer originally drafted in the early 1990s, and created the permitted additional terms and conditions which incorporated crucial provisions that are not in the


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Association Report province’s standard lease. To further help landlords, LPMA retained IT specialists to make the standard lease and the terms and conditions available as a pdf or electronically. Tenants can sign the lease from their smart phones or tablets. LPMA licenses the standard lease and the terms and conditions as part of a 27-page package to other landlord associations for their members’ use. The documents that can be signed and completed electronically include the assignment and sublet forms, amended rental application, guarantee form and a twopage notice that landlords must give to tenants. Landlord licensing LPMA fought the attempt by some city council members to impose licensing fees on all rental properties. In challenging the issue, lawyer Joe Hoffer worked with legal counsel for the City of London, focusing on what the bylaw would mean to landlords who were required to pay a licensing fee to operate a rental property. The Residential Rental Units Licensing Bylaw was passed in 2009, but because LPMA fought so hard, the city restricted the fees to properties with four or fewer units and converted dwellings. Unlike other municipalities, the city has kept the licence fee at a moderate level.

Future issues: Cannabis We will be speaking to city councillors and lobbying the city to ban the home growing of marijuana in rental housing, which the City should be able

to do because of its authority to regulate land use. Our concerns include the growth of mold, high humidity, odour, health, safety and security issues, and high electricity use. The latter is particularly important to landlords since new laws under the Residential Tenancies Act make it impossible for landlords to request an above-guideline increase to compensate them for high electricity use. LPMA has a positive relationship with our current mayor and councillors, and we’re hoping for good communication with the next council following the municipal elections in October. Affordable housing London is in a better position than Toronto because there is enough affordable housing currently. In some situations, tenants move from older housing to newer, more luxurious buildings, making the older stock the more affordable option. However, even couples with a combined income are unable to buy a home, which leads them to rent. The same is true of tenants who earn $25,000 to $30,000 a year and can’t afford to rent a $1,000-a-month, one-bedroom unit in a new building. As a result, the stock is slowly shrinking for middle- and lower-income earners. One way of addressing the shortfall is for developers to include affordable units when they’re designing a new development. LPMA would like to see London maintain sufficient affordable housing.

Conclusion: One of LPMA’s strengths is our ability to provide small and medium-sized landlords with the guidance of some of the best and most knowledgeable business leaders in the industry. We’ve never lost sight of the smaller landlord, even though the industry is driven by multi-residential high-rises. Because property management techniques are skills that individuals learn on their own, membership in an organization such as LPMA is vital to filling in the gaps in information and ensuring the professional management of operations. 26 – theANNUAL London


theANNUAL London – 27


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Hot Neighbourhoods The latest information in London’s many neighbourhoods

theANNUAL London – 29


Hot Neighbourhoods

474,785 London’s total population 30 – theANNUAL London

195,060 total private households

64,980 rental households


Tenant Income distribution (before taxes) Less than $20,000 before taxes – 17,930 Less than $20 K bef ore t axe s $20K to $3 9,999 K be fore tax es $40K to $ 59,99 9K b efo re tax es $60K to $79, 999 Kb efo re ta xe s

$20,000 to $39,999 before taxes – 21,755 $40,000 to $59,999 before taxes – 12,820 $60,000 to $79,999 before taxes – 6,145 $80,000 to $99,999 before taxes – 3,295 $100,000 and over before taxes – 3,040

40.3% of rental households include at least 1 person with activity limitations

The age cohort most likely to rent is age

25-34

London population – by immigration status Immigrant demographic Includes: Recent immigrants (landed 2006-2011) – 3.4% Landed 1996 to 2005 – 4.3% Landed before 1996 – 12.2% Immigrant Non-permanent resident

22.1%

19.8%

2.4%

Non-immigrant

77.7%

of private rental households have at least 1 child under 18

theANNUAL London – 31


Hot Neighbourhoods Neighbourhoods Neighbourhoods

32 – theANNUAL London

Neighbourhoods

Starts (Actual) Completion

Under Construction

*numbers are the total of starts (actual), Under construction, and completions in 2017

Byron & Riverbend

Hyde Park

Byron & Riverbend

East London

Strathroy-Caradoc

West London


Totals

Stoney Creek, Stoneybrook & Upland

Byron & Riverbend

200 row houses 179 apartments

Hyde Park

165 row houses

Stoney Creek, Stoneybrook & Upland

149 row houses 751 apartments

Totals

Stoney Creek, Stoneybrook & Upland

West London

Byron & Riverbend

121 row houses 179 apartments

Stoney Creek, Stoneybrook & Upland

130 row houses 987 apartments

East London

299 apartments

West London

74 row houses 334 apartments

Totals

Stoney Creek, Stoneybrook & Upland

Strathroy-Caradoc

58 row houses 31 apartments

Stoney Creek, Stoneybrook & Upland

121 row houses

West London

15 row houses 333 apartments

theANNUAL London – 33


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34 – theANNUAL London Each Dryer Vent Wizard franchise is independently owned and operated.


Top 10 London’s top ten private landlords by size

theANNUAL London – 35


Top 10

Owners, Managers & REITs

Drewlo Holdings

Category:

Owner

Website:

drewloholdings.com

Number of suites

3882

Homestead

36 – theANNUAL London

Category:

Owner

Website:

homestead.ca

Number of suites

2587


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Top 10

Owners, Managers & REITs

The Minto Group Category:

Owner

Website:

minto.com

Number of suites

2326

Boardwalk REIT

38 – theANNUAL London

Category:

REIT

Website:

bwalk.com

Number of suites

2210


theANNUAL London – 39


Top 10

Owners, Managers & REITs

CAPREIT

Category:

REIT

Website:

caprent.com

Number of suites

2102

Timbercreek Asset Management

Category:

REIT

Website:

timbercreek.com

Number of suites

1959

Sifton Properties

40 – theANNUAL London

Category:

Owner

Website:

sifton.com

Number of suites

1600


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Top 10

Owners, Managers & REITs

Tricar

Category:

Owner

Website:

tricar.com

Number of suites

1513

Norquay PM

Category:

Manager

Website:

ndev.ca

Number of suites

1000

London Property Corporation

42 – theANNUAL London

Category:

Owner

Website:

lpcorprentals.com

Number of suites

720


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44 – theANNUAL London

Honourable Mentions

Skyline Group of Companies

QResidential

Northview REIT

Killam Apartment REIT

CLV

Centurion Asset Management

Briarlane

Bradel Properties Ltd.

Berkshire

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Owner, Managers & REITs


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46 – theANNUAL London


Rental Legislation

theANNUAL London – 47


Rental Legislation FOREWORD We’ve seen some important changes this past year affecting our industry, starting with fundamental changes to the Residential Tenancies Act (RTA), made by the Liberal government, to the election of a new Progressive Conservative government, led by Rob Ford. For this inaugural Regional edition of theANNUAL, we wanted to make sure our readership obtained a full and detailed analysis of what has happened, what you need to know and what to look for throughout the year. In order to examine what it all means, we reached out to Joe Hoffer and the team at Cohen Highley, one of Ontario’s premier legal resources for residential landlords and property managers. theANNUAL is pleased to be able to bring you their perspective on the recent changes to the RTA and what they all mean. Time will tell what changes the new government will bring.

Ontario’s Change in Government Does Not Mean a Change For Landlords Ontario’s “Rental Fairness Act, 2017”, amended provisions of the Residential Tenancies Act, 2006 (RTA) that were perceived by tenants and the Province as advantageous to landlords. While Ontario has recently experienced a change in government, there is no expectation by the industry that there will be any changes to restrictions imposed by Ontario’s 2017 changes to the severe revenue restrictions imposed by the RTA. A summary of major changes that small landlords and investor landlords in condo rentals should be aware of are as follows:

Changes to the rules relative to possession for “landlord and purchaser’s own use” including new penalties for landlord breaches of the provisions.

New penalties relative to possession for “substantial renovation” or for conversion of use.

The mandatory “Prescribed Lease” required for use in most residential tenancies.

Loss of “New Construction” exemption and imposition of Rent Controls on new builds (Notices given on or after April 20, 2017 are limited to the Guideline and/or other rent increase rules).

Changes to Rules for “Above Guideline Applications”: removal of right to apply for extraordinary cost increases in “vital services”.

Landlords’ Own Use Changes Which Will Affect “Small Landlords” and Rental Investors Prior to amendments, s. 48 RTA permitted a landlord to regain possession of a rental unit at the

48 – theANNUAL London

end of a term of the tenancy in circumstances where the landlord required possession for use by the landlord or a member of the landlord’s immediate family or for a caregiver who would provide care services to a member of the landlord’s immediate family, where the care recipient lived in the same residential complex”. The main legal requirement was that Notice of Termination be in the proper form and be given in “good faith”. There were some judicial precedents to support the position that the Notice could be given by a corporation, even though a corporation is incapable of “living” in the rental unit. There were frequent instances of abuse by owners of small rental properties giving tenants notice to vacate based on landlord’s own use; however, subsequent to the tenant vacating, the owner might move in for only a short time and/or would renovate the unit; rent it out for a much higher market rent; and then operate or sell the property which itself would have a much higher value due to the more lucrative rental income generated by the asset. The notices were in fact not given in good faith, but tenants would often vacate having no reason to doubt the bona fides of the landlord, or even if they learned later that the notice was not given in good faith, they may not have been inclined to initiate proceedings. The new rules for landlords own use: Section 48 has now been amended to insert additional protections and remedies for tenants who move in response to a “landlord’s own use” notice. First, the Notice may not be served unless the Landlord bona fide requires (and asserts) that occupancy is required for


Joe Hoffer Partner, Cohen Highley LLP a period of at least one year by the designated person for whom the notice was given. Section 48 (5) has been enacted to specify that a landlord cannot give the Notice unless the landlord is an individual and the rental unit is owned in whole or in part by an individual: a corporate owner cannot give the Notice. If it is necessary to apply for an eviction order then the landlord must now confirm in an affidavit submitted to the Board that possession is required by the designated person for at least one year; furthermore, the landlord must pay the tenant a penalty of one month’s rent compensation or offer another unit acceptable to the tenant. If the landlord does not pay the rent compensation the tenant may apply for recovery of same years later as the usual one year limitation period within which to file an application does not apply. “Section 48 has now been amended to insert additional protections and remedies for tenants who move in response to a ‘landlord’s own use’ notice.” In circumstances where the designated person does not occupy the rental unit “within a reasonable time” after the tenant vacated, or if the landlord lists the unit for rent or the building for sale during the one year period, there is a new provision in the legislation that creates a presumption that the landlord has acted in bad faith and at a hearing the landlord will have to lead evidence to prove good faith. The effect of the section is to impose a “freeze” on transactions involving the building for at least 14 months (60 days’ notice plus one year), although the “presumption of bad faith” is rebuttable (ie: death, or life’s vagaries can be used to displace the ‘reverse onus’). If the landlord does not comply with the “freeze” period, or the designated person does not occupy at all, then the tenant has a menu of harsh financial penalties to apply for as against the landlord (rent differentials, moving expenses, abatement of rent, and an administrative fine of up to $25,000, plus a breach is a Provincial Offence subject to a $25,000 fine.

“Purchaser Own Use” Changes If the property is a “residential complex” with no more than 3 residential units, then a Landlord (vendor) may give Notice of Termination on behalf of a prospective purchaser of the rental unit or the residential complex (s. 49 RTA). The agreement of purchase and sale must be in place before the Notice of Termination is given and must be effective on the last day of a term or rental period. The Notice is to be given for occupation of the rental unit or “residential complex” by the landlord or member of the family or designated caregiver. Prior to the recent changes to the RTA, a prospective purchaser and vendor would sometimes improperly give the notice in bad faith; secure possession of the rental unit; renovate the unit (or units); and, either flip the property or rent it out for a much higher market rent. In other cases, a vendor landlord may have given the notice in good faith only to learn after the fact that the purchaser never moved in and instead rented the vacant unit out for a higher rent. Under the RTA changes, it is the vendor landlord who can be seriously penalized even though the purchaser may be the one who made the false representation that possession was required for personal use. Unlike the situation where a landlord seeks possession for own use, where the notice is served on behalf of the purchaser, there is no requirement to pay one months’ rent compensation to the tenant or that the purchaser reside in the rental unit for at least a year; however, if the purchaser or designated person does not move in within “a reasonable time”, then a former tenant may apply for an order against the vendor landlord within one year of the date the tenant vacated. The remedies that may be ordered against the vendor landlord are the same as those against a landlord under s. 48. Landlords should ensure that if they give a notice on behalf of a prospective purchaser, there is a provision in the agreement of purchase and sale which survives closing to

theANNUAL London – 49


Rental Legislation protect the vendor from liability if the purchaser or designated person does not move in within a reasonable time.

Substantial Renvoations and the Tenant’s “Right of First Refusal” Before the RTA changes, if a landlord gave a tenant notice to vacate at the end of a rental period or term based on the landlord’s intention to renovate the rental unit so substantially as to require vacant possession, then the Notice of Termination (Form N13) required the landlord to pay compensation for the time the tenant was out of possession (maximum 3 months) and give the tenant the right to re-occupy the rental unit after renovations with rent payable at the old rent. Any time prior to the tenant vacating, the tenant was required to notify the landlord of the tenant’s intention to re-occupy after the renovations were completed.

“The liability and remedies are subject to a one year limitation period from the time the tenant vacates the rental unit.” The Notice of Termination form made it clear the tenant has the right to re-occupy the rental unit at the old rent following renovations; however, some landlords failed to notify the vacated tenant that the unit was ready for reoccupation at the old rent. The result was that the tenant was unable to exercise the right of first refusal to re-occupy and the landlord rerented the unit for a much higher rent. New penalties and remedies have now been enacted to address situations where the Board determines that a landlord has “failed to afford the former tenant a right of first refusal”. There are also new remedies for tenants if the landlord fails to “renovate or demolish or convert use… within a reasonable time” of the tenant vacating the rental unit. The liability and remedies are subject to a one year limitation period from the time the tenant vacates the rental unit. On the issue of payment by the landlord of up to three months’ rent compensation due to renovation, demolition

50 – theANNUAL London

or conversion of use, there is no limitation period for recovery because of a new provision in the RTA removing the limitation for recovery of such payments. Investors in recently renovated rental units should require a warranty that survives closing, confirming that there are no tenant compensation payments outstanding.

The “Standard Form of Lease” Under the RTA, a tenancy agreement “means a written, oral or implied agreement between a tenant and a landlord for occupancy of a rental unit…”. There used to be a requirement that the landlord provide written notice to a new tenant, within 21 days of commencement of a tenancy, of the “legal name and address of the landlord to be used for giving notices and other documents”. Tenant advocacy groups contended that the lease forms were confusing and contained “illegal clauses” and that oral or implied tenancy agreements left tenants open to abuse. They also complained that the font size was too small and the lease was too long (four pages “legal size” paper in most cases). Demands were made for a “standard form of lease” which would govern all tenancies in Ontario; would be easy to read; and which would prevent landlords from incorporating “illegal terms and conditions” in their leasing documents. The Province amended the RTA (s. 12.1) to include a requirement that all landlords use a “prescribed form” of lease (it is 13 pages long!) making it mandatory for landlords of most kinds of “rental units” (i.e. condos, houses, apt buildings, secondary suites) to use the “Standard Form of Lease”. It must be used for residential tenancies entered into on or after April 30, 2018, except for for “Care Homes”, Mobile Home/Land Lease tenancies, tenancy agreements for member units in non-profit housing cooperatives, and tenancy agreements which are generally governed by “social housing” exemptions in the RTA. The Standard Lease Form must be signed on or before the day Tenant is entitled to occupy the rental unit and applies to tenancy agreements “entered into” on or after April 30. Any tenancy agreements that were entered into prior to that


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Rental Legislation

date, even if the commencement date of the tenancy was long after April 30, 2018, and even if the tenancy agreement is “oral or implied”, are “grandfathered”. The Standard Form of Lease has a permissive provision which allows landlords to add “Terms and Conditions” but it is up to individual landlords as to whether they choose to add terms and conditions. A signed copy of the lease must be given to the tenant within 21 days of the tenant signing it and the agreement must be signed before the tenant is entitled to occupy the rental unit. The London Property Management Association has drafted standard terms to be added to the mandatory government form and the terms are leased to regional landlord associations and landlords throughout Ontario. If the Standard Form of Lease is not used for a tenancy agreement that is entered into on or after April 30, 2018, then the tenant of the affected rental unit may demand “in writing” a signed copy that complies with RTA from the landlord (only once during tenancy). If the landlord does not give a signed copy within 21 days, the tenant may withhold rent payments “that become due” after expiry of 21 days (ie: the next month’s rent), the tenant may withhold a maximum of one month rent. If the landlord complies within 30 days of the date rent is withheld, then the tenant must repay the withheld rent but if there is no compliance, then after 30 days the tenant can keep the rent that was withheld. In addition, if the landlord does not provide the Standard Form Lease within 21 days after the tenant’s written request for same, the tenant has the option to give a 30 day notice to vacate,

52 – theANNUAL London

regardless of what the fixed term of the lease is. If the landlord does provide the signed Standard Lease, then the tenant still has the option, within 30 days of receipt of same, to either sign the document or refuse to sign and give 60 days’ notice to terminate, again regardless of the lease term. If the tenant is given the document and does nothing within the 30 day time frame, then the tenant is bound by the previous non-standard tenancy agreement which may be “written, oral or implied”. Note that if a tenant and landlord properly entered into the Standard Form of Lease, and a signed copy was given to the tenant within 21 days of occupancy, then the landlord is not required to respond to the tenant’s written demand for same at a later date (although it is recommended that the landlord do so anyway). The bottom line is that landlords who are very disorganized and operationally (or out of ignorance of the law) incapable of producing a signed Standard Form of Lease in timely response to a tenant’s written demand for same, stand to lose one months’ rent and have the tenant break a fixed term lease on 60 days written notice. It is not an “offence” for a landlord to fail to use the Standard Form of Lease.

Removal of “New Construction” Exemption From Guideline Rent Control Units that were in a building which was not occupied for residential purposes prior to November 30, 1991 were exempt from most rent control provisions of the RTA, including the restriction on giving notices of rent increase by an amount that was no more than


Joe Hoffer Partner, Cohen Highley LLP the annual “Guideline”. Notices were to be given on the Notice of Rent Increase Form N2 and could be for any amount of increase. The principle behind the new construction exemption was to allow landlords to quickly lease up a new building to “take out” the more expensive construction financing and put long term financing in place. Low rents were used to achieve sufficient “lease up” status to secure less expensive long term financing and the exemption from the Guideline restriction would then allow the operator to achieve market rent levels over time through annual rent increases. The problem with the rent control exemption was that some Landlords would use it to secure an “economic eviction” of tenants so that the unit could be re-rented for a higher amount in a rising market. Now, all rental units which are subject to the RTA are subject to the rent control Guideline.

Changes To Rules Permitting “Above Guideline Rent Increases” (“AGI’s) Landlords who made major capital investments in their rental buildings or who incurred “extraordinary operating cost increases” in utilities or property taxes/municipal charges could previously qualify for AGIs if they met prescribed criteria set out in the RTA and regulations. The policy behind permitting AGIs for qualifying capital work was to encourage ongoing investment into rehabilitation of existing rental housing stock to ensure it remained in a good state of repair. The policy behind permitting AGIs for “extraordinary” operating cost increases for utilities such as water rates; hydro; natural gas, etc. was based on the recognition that certain vital services consumption charges were beyond the control of the building operator: the same policy principle applied to property tax increases. The ability to increase the rent above the Guideline encouraged investment in housing stock through qualifying capital expenditures and helped offset substantial increases to vital utility services and municipal charges so that ultimately rental revenue would pay for the increases. The inability to pass on all or part of such costs would, for all practical

purposes, result in a substantial deterioration ofhousing stock and other forms of cost cutting measures by landlords (ie: maintenance and repairs or the supply of vital services) to offset losses. The Province has now repealed provisions of the RTA which permit a landlord to apply for an AGI based on “extraordinary operating cost” increases, with the exception of extraordinary increases in municipal property taxes and “municipal taxes and charges”, (ie: landlord licensing fees). The effect of the change is that substantial increases in hydro, water and fuel costs will have to be absorbed by the landlord. One positive effect of this may be to encourage landlords to install energy conservation components or to transfer the cost risk to tenants by sub-metering electricity and water consumption and passing payment obligations on to new tenants under new tenancy agreements. There are, however, strict RTA rules around submetering electricity and there is virtually no ability to transfer responsibility for payment of same to existing tenants. The Province has also amended the RTA to provide the LTB with expanded jurisdiction to disallow capital expenditures which under the old rules would have qualified for an AGI. The expanded jurisdiction is based on “prescribed circumstances” and as of the date of writing this article, the regulation listing the prescribed circumstances has not yet been enacted. With a new government now in power, there may be no implementation of further restrictions on the definition of capital expenditures, which is a small bright spot for landlords following the change in government.

Summary The RTA amendments introduced over the past year by the Province will affect both large and small operators of multi-res housing and small investor landlords, including condo rental investors, who are particularly vulnerable to financial risk. Small landlords should familiarize themselves with the RTA rules that are designed to set them up for financial failure if they fail to comply.

theANNUAL London – 53


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5 things you should know

About: Roofing Insurance Tenant Inspection Dryer vents Windows & Doors Lighting

theANNUAL London – 55


5 things you should know Factors to Consider When Choosing Your Rental Property Insurance Policy When looking for an insurance policy for your rental property, you need to be alert to more than just the bottom line price. Many policies may be able to save you a few dollars, but when you need the policy the most – in the event of a claim – those policies may not be able to help you due to limitations or exclusions.

Prices

To help you with the process of finding the most suitable policy for your investment at a reasonable price, here is a list of 5 items you should consider when choosing the policy that is the best fit for you.

Look for Value in the policy and not the cheapest price because the cheapest policy many result in a lot of exclusions. Asking about policy fees and payment terms can reveal additional fees or higher

“Full coverage” may not be true to its word. Always read the fine print and check for things like the sublimits for items like the sewer backup coverage or equipment breakdown coverage.

Co-Insurance is a penalty you’ll pay in the event you report a value for your property that is less than the actual cost to rebuild the property. Make sure to advise your insurance broker of all specifics of your property as

Multi-policy discounts

accurately as possible to avoid paying a penalty in the event of a claim.*

Make sure to ask if there are any discounts for combining, your home, auto, business or investment property with the same company.

Exclusions & Extensions

Co-Insurance

Sub-limits

interests that increases cost in the long run.*

Review and educate yourself with what claims will not be covered by your policy, if you are willing to pay for these losses yourself, and what extensions are included in the policy in the event of a claim. Typically, extensions are included for no additional premium and could provide some extremely valuable coverage compared to other policies. Statistics and information provided by: Acumen Insurance Group

56 – theANNUAL London


Insurance, Windows & Doors Aluminum

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Important Things Owners Should Know about High Rise Windows and Doors Aluminum thermally broken windows are window frames that provide a thermal break preventing the penetration of heat/cold through the material of the frame itself. They have high durability allowing for a longer life span.

Fiberglass windows obtain a high R-value and low U-value (Insulation) and provide savings of approximately 20-40% in heating/cooling/energy costs over other window frame materials.

The most modern aluminum windows and doors for high rise apartments come with insulated sealed units. The thermal break of rubber or Styrofoam creates an insulation barrier from the exterior portion of the frame to the interior and enables Low-E and argon gas fills.

Unlike other frame materials, fiberglass framed windows can withstand and accommodate triple glazed sealed units.

Fiberglass window and door frames experience minimal expansion and contraction - Fiberglass frames reduce the likelihood of unit failure and caulking cracks and maintains superior performance with regard to air/water infiltration

The performance of a double glazed window/ insulated door significantly increases the energy efficiency and level of sound transmittance over a single glazed window.

Fiberglass windows and doors are highly recognized by those intending to reduce energy costs, increase the energy efficiency of a building or improve the sustainability of a building envelope.

Most existing apartment buildings today do not have these features.

FACTS TO KNOW 1. When replacing apartment windows and doors, it is important to address problems that may have been unforeseen to strengthen the building envelope's weather resistance (water and air) and maximize the functionality of the windows and doors themselves. 2. New window and door purchases might be eligible for government rebates depending on your area or recoverable in other ways. Make sure you ask your supplier to explain and go through all options available. 3. Life span of any new window and door is an opinion. Building owners may believe that the life span is 40 years, but in reality a window frame loses its efficiency after about 25 years.

4. Newly installed windows and doors will show improvement over previous units. Improvements can be experienced almost immediately after installation, when installed properly. Better room temperature comfort, less noise from outside and less drafts can be felt instantaneously. Other possible improvements are a reduction in heating/ cooling costs, which for some depending on area, could take some time to appear but over time can reduce energy costs.

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theANNUAL London – 57


5 things you should know Protect your real estate investment with thorough tenant inspections 5 risks that regular inspections mitigate

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Any one of these is a warning signs for property managers and owners to watch for and prevent fires: These important things will help extend the life of your dryer, reduce replacement costs, help prevent fires and eliminate mold issues.

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Machine is hot to touch

Clothes have a moldy smell after a dry cycle

Dryer repeatedly stops during a cycle

No lint visible on lint screen

Statistics and information provided by: Dryer vent Wizard of Southwestern Ontario

58 – theANNUAL London


Tenant Inspection, Dryer Vents & Lighting Brighten up your building, make it last with LED lighting Similarities Offered in variety colour of temperatures Effective for cycling on/off Easy to dim Renders colours well

INCANDSCENT

LED

Great CRI Ratings Maintains strong luminescence Cheaper to buy than LEDs Highly adaptable

Considerably longer life span No warm up time Much more diverse lighting system Energy efficient

“By taking advantage of local incentive programs, you can reduce the cost of your project by about 50%, and with an LED replacement, you can see overall savings of up to 70%. Also, by going further and ensuring that the colour temperature is correct for each room, your tenants will have greater enjoyment of the unit”

Statistics and information provided by: All Professional trades Inc,

theANNUAL London – 59


5 things you should know Roofing As-needed Approach v.s Preventative Approach

Makes patch repairs

Over a 20 year period, an as-needed approach will cost an average of $458,484* more in repairs •

Visual survey every spring & fall

Non-destructive moisture test every 2-5 years

Minor repairs based on findings

1,000,000

Conclusion

800,000

600,000

Over the course of a 20-year period, maintaining an aggressive preventative maintenance approach will cost an average of $367,500* whereas a fix-it-as-it-happens approach will cost an average of $825,984 in the same amount of time.

400,000

200,000

Statistics and information provided by:

0

*Cost based on a 100,000 sq. ft. building

60 – theANNUAL London

I.M.L. ROOFING & SHEET METAL SYSTEMS INC


Comfy living for tenants. Comfy energy bills for you. We’ll cover up to 50% of the cost when you upgrade to high-efficiency equipment The Affordable Housing Conservation Program provides financial incentives for high-efficiency space and water heating equipment, heat recovery, building automation systems and more.

Visit uniongas.com/affordablehousing to learn more.


INC. Canada’s One-Stop Source for the Rental Housing Industry

Profile for Juan  Malvestitti

theANNUAL London 2018  

theANNUAL, theANNUAL London, London, LPMA

theANNUAL London 2018  

theANNUAL, theANNUAL London, London, LPMA

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