Vol. 11 No. 2 May 2018
Canada’s #1 most widely read publication for Apartment Owners, Managers and Association Executives
The official publication of:
Where can your tenants smoke ‘em when they get ‘em?
The impact of rising mortgage rates on housing affordability
Learn about the standard lease from your association
What to expect from CFAA RHC 2018
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Editor’s notes A special time By the time this issue goes to press, we will have celebrated my daughter’s First Communion. It’s a special time in her life, and our lives as well. She’s taking a step and achieving a new milestone, and while it does not change much for her (except when she goes to church), it will make a big difference in mine. That is, it is a reminder that she is getting older and moving away from childhood. It’s both happy and sad, in a way. But more happy, because it’s a celebration that I get to share with my daughter. And it give me more reasons to hug her tight (not that I need a reason), and perhaps forget (but never forget) the tragic events we’ve had to deal with over the past couple of months. This issue of RHB Magazine takes a look at how different provinces and territories will handle the new marijuana legislation when it comes into effect this summer. It will have significant ramifications for landlords and property managers, as the provincial and territorial governments get to determine the legality of growing and smoking recreational marijuana in the home, which includes rental properties. You can read about what’s going on at CFAA-RHC 2018, which takes place on May 14 – 16 at the Coast Coal Harbour Hotel in Vancouver, BC. Learn about the different sessions and find one or more that are right for you. Learn how rising mortgage rates will impact housing affordability, the changes to the mortgage stress test and the shelter-cost-to-income ratio. Have a read through CFAA’s newsletter, National Outlook. Pay close attention to the Regional Association Voice, as LPMA provides some key information on the standard lease. As usual, we enjoy hearing from our readers and support two-way communication. If you have any comments or questions, send them to email@example.com. I look forward to hearing from you.
Enjoy the issue! David Gargaro Senior Editor
4 | may 2018
Marc Côte firstname.lastname@example.org
Juan Malvestitti email@example.com
David Gargaro firstname.lastname@example.org
John Dickie, President CFAA email@example.com
Director of National Sales Nishant Rai
Regional Sales Executive (RAV) Ranjna Bhardwaj
Office Manager Geeta Lokhram
One year $49.99 Cdn Two years $79.99 Cdn Single copy sales $9.99 Cdn 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 6967, Maple, ON L6A 1S7 416-236-7473 Produced in Canada All contents copyright © RHB Inc. Canadian Publications Mail Product Sales Agreement No. 42652516
CFAA Rental Housing Conference 2019
Spring 2019 The Canadian Federation of Apartment Associations (CFAA) invites you to join us next at Canadaâ&#x20AC;&#x2122;s Rental Housing Conference in Toronto in Spring 2019 www.CFAA-RHC.ca Thanks to Principal Sponsor:
With special thanks to:
For more information, or to receive email updates, emailrentalhousingbusiness.ca firstname.lastname@example.org| 5
VOL.11 NO.2 2018
contents Mortgage rates impact housing affordability Rising interest rates, large mortgages & high debt – plus an uncertain economy – are setting the stage for dangerous times.
Getting ready for marijuana madness While the federal government prepares to legalize recreational marijuana use this summer (medical marijuana use has been legal since 2001), the provinces and territories are scrambling to come up with legislation that fits for their constituents.
RHB’s forum for rental housing associations to share news, events and industry information
Hot topics: WRAMA had a capacity crowd for its meeting on March 14, 2018 pg. 45 LPMA helps to make standard lease easier for landlords to use pg. 49 Promoting Code Compliant, Affordable, Safe, Clean and Healthy Rental Housing discussion paper pg. 53 EOLO still believes that the multiresidential tax ratio should be reduced to 1.0, so that tenants pay the same tax rate as homeowners pg. 57
In a single-family home, what is done usually affects only the occupants of the home. In an apartment building, what is done in one apartment often affects other tenants. Units are not hermetically sealed and the second-hand smoke and odours of budding plants will enter other apartments where the tenants do not want to smell them. - John Dickie, p. 47
The Member Associations
Regional Association Voice Regional Association Voice features the latest industry news from four member associations.
CFAA RHC 2018 – What should I expect? The unprecedented rate at which technology is developing and advancing today will further transform the multi-family industry.
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Suite Count 2017 was a robust year for the Metro Vancouver Apartment Market.
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presidentâ&#x20AC;&#x2122;s corner As reported in the last issue, the current federal government plan for corporate tax reform is an improvement over what the government proposed in July 2017. However, it will still negatively affect many small and mid-sized property management firms and rental industry suppliers, as well as real estate companies which employ between six and about 15 fullâ&#x20AC;&#x201C;time employees, and are thus able to treat rental income as active business income. Companies with $150,000 or more of investment income will lose their access to the small business tax rate. CFAA is still working with the Coalition for Small Business Tax Fairness to try to get the federal government to revise the reforms to reduce their negative impact. In addition, we are encouraging the provinces not to follow the federal lead on the corporate tax reforms.
Nova Scotia, Saskatchewan and BC are making provision for landlords in dealing with cannabis legalization. For more details see page 41. CFAA Rental Housing Conference 2018 is taking place on May 14, 15 and 16 in Vancouver, British Columbia. The CFAA Rental Housing Awards 2018 are being presented at the Awards Dinner on May 15. All proceeds of CFAA-Rental Housing Conferences go to support CFAAâ&#x20AC;&#x2122;s federal lobbying efforts on behalf of the rental housing industry! For more information, see page 24 or visit www.CFAA-RHC.ca. Plan now to join your colleagues at CFAARHC 2019 in Toronto in May!
Housing policy is another area of activity. CFAA is a founding member of the Housing Roundtable which will work with CMHC and the government to encourage a positive rollout of the National Housing Strategy. The Strategy promises support for new for-profit rental development that includes mixed income residents, energy efficiency and accessibility features. CFAA is working to make that goal a reality. The Strategy also promises $4 billion for housing benefits to help low-income tenants afford to pay their rents in full and on time. The roll out of that program requires provincial support and funding. CFAA is working with our provincial landlord association partners to achieve that. As this goes to print, the federal legislation to make marijuana consumption (and limited growing) no longer a crime is still before the Senate. Provinces are taking a whole variety of positons with respect to consumption or growing cannabis in rental units. Manitoba and Quebec are banning all home growing.
8 | may 2018
John Dickie, CFAA President
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In this issue of... National Outlook CFAA Member Associations 35. CFAA celebrates excellence in the rental housing industry CFAA recognizes the winners of its third annual Rental Housing Awards Program at the CFAA Awards Dinner on May 15.
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
38. Rental Housing Conference Sponsors Thank you to all of the 2018 CFAA Rental Housing Conference Partners, Sponsors and Exhibitors
41. LandlordBC achieves a lobbying win on cannabis Better than any other province, BC has announced rules to position BC landlords fairly for the new federal Cannabis Act
To subscribe to CFAA’s e-Newsletter, please send your email address to email@example.com.
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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Hamilton & District Apartment Association (HDAA) www.hamiltonapartmentassociation.ca P: 905-632-4435 Investment Property Owners Association of Nova Scotia (IPOANS) www.ipoans.ns.ca P: 902-425-3572 LandlordBC www.landlordbc.ca P: 1-604-733-9440 Vancouver Office P: 604-733-9440 Victoria Office P: 250-382-6324 London Property Management Association (LPMA) www.lpma.ca P: 519-672-6999 Manufactured Home Park Owners Alliance of British Columbia (MHPOA) www.mhpo.com P: 1-877-222-4560 Professional Property Managers’ Association (of Manitoba) (PPMA) www.ppmamanitoba.com P: 204-957-1224 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
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Getting ready for marijuana madness A cross-Canada primer on cannabis legislation While the federal government prepares to legalize recreational marijuana use this July (medical marijuana use has been legal since 2001), the provinces and territories are scrambling to come up with legislation that fits for their constituents. At the same time, apartment owners and their respective associations are lobbying their governments to enable them to prohibit or limit marijuana growing and use in rental units. Thereâ&#x20AC;&#x2122;s a lot of uncertainty about what will be allowed and what wonâ&#x20AC;&#x2122;t be, particularly in rental properties. To follow is a summary of what you need to know about marijuana legislation by province and territory, which can differ from the federal legislation.
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British Columbia Provincial legislation is currently in place. The minimum age for buying and consuming non-medical marijuana will be 19 years, as it is with alcohol. The BC Liquor Distribution Branch will be the sole wholesaler. Retail sales of marijuana will occur through BC Liquor Stores (public subsidiaries) and private retailers. They cannot sell alcohol in the same establishment. Home growing of up to four cannabis plants per household will be generally allowed but the plants must not be visible from public spaces off the property. Landlords and strata councils (condominium boards) can restrict or prohibit home cultivation of recreational cannabis plants (medical marijuana users have the right to grow their own medicinal plants). On April 26 the BC government announced new legislation which will deem existing leases to prohibit the growing of cannabis. Smoking marijuana will be allowed in public spaces where tobacco use is already permitted. However, use of non-medical marijuana in areas with children, such as community beaches, parks and playgrounds, will be prohibited. The new legislation will deem existing leases with bans on smoking tobacco to ban cannabis smoking in rental units. In future leases and strata rules, landlords and strata councils can restrict or prohibit non-medical cannabis smoking at tenanted or strata properties.
Alberta Provincial legislation has been enacted. The minimum age for buying and consuming non-medical marijuana will be 18 years, as it is with alcohol. The Alberta Gaming and Liquor Commission will license retailers to sell cannabis and related paraphernalia; they cannot sell alcohol in the same establishment. The province will handle online sales.
Home growing of marijuana is allowed. Adults can grow up to four cannabis plants per household. Home cultivation of nonmedical cannabis is banned in properties that are used as daycares. No cannabis is allowed on hospital grounds, schools or anywhere that children gather, such as playgrounds, splash parks and sports fields. Landlords can use rental agreements to restrict or prohibit home cultivation of cannabis plants. Smoking marijuana will be allowed in private residences, as well as some public spaces where tobacco use is already permitted. It is banned anywhere that tobacco use is banned. Landlords have the right to restrict smoking (marijuana or tobacco) in their buildings, as long as the restrictions are imposed in their rental agreements.
Saskatchewan Provincial legislation is currently in place. The minimum age for buying and consuming non-medical marijuana will be 18 years, as it is with alcohol. The Saskatchewan Liquor and Gaming Authority will license retailers to sell cannabis and related paraphernalia; they cannot sell alcohol in the same establishment. The province will handle online sales. Municipalities and First Nations can opt out of having cannabis sold within their jurisdiction. Home growing of marijuana is allowed. Adults can grow up to four cannabis plants per household. Landlords can use amendments to the Residential Tenancies Act to restrict or prohibit home cultivation of cannabis plants. Smoking marijuana will be allowed in private residences. However, anyone who purchases non-medicinal marijuana must take it home immediately – they cannot (for example) go to the gas station or pick up their children at school first. Cannabis use is banned in public spaces, including schools and daycares. Landlords can use the amended legislation and tenancy agreements to either allow or ban smoking of marijuana in rental units.
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Manitoba Provincial legislation has not yet been enacted, but the policies have been announced. The minimum age for buying and consuming non-medical marijuana will be 19 years, although it is 18 years for alcohol. The Liquor and Gaming Authority of Manitoba (which will be renamed the Liquor, Gaming and Cannabis Authority) has licensed four private groups to sell cannabis online and in retail stores. All retailers must buy cannabis from the provinceâ&#x20AC;&#x2122;s Liquor and Lotteries Corporation. Until 2022, municipalities will have the right to allow a local vote on whether to allow marijuana sales. Home growing of marijuana is not allowed without a medical license, which applies to rental properties. There are no special rules for smoking marijuana in private residences. However, landlords can ban smoking of marijuana in rental units as part of the rental agreement (as with tobacco). Marijuana smoking is banned in most public places, which includesÂ parks, bars, restaurant patios and beaches, as well as some indoor public places.
16 | may 2018
Ontario Provincial legislation has been enacted. The minimum age for buying and consuming nonmedical marijuana will be 19 years, as it is with alcohol. The Ontario Cannabis Retail Corporation (a subsidiary of the Liquor Control Board of Ontario) will operate its own stand-alone stores, and the province will oversee online sales. The province will delay opening stores in municipalities that object to having a retail outlet, although there is no veto in place. Home growing of marijuana is allowed. Adults can grow up to four cannabis plants per household for personal use.Â This currently includes rental properties. However, landlords may be able to prohibit the growing of recreational marijuana in rental properties through terms in their leases or amendments to their Rules and Regulations. Smoking marijuana for recreational purposes will be allowed in private residences. Landlords may be able to ban marijuana (and tobacco) use on rental properties. What rules landlords can make, and what rules they can enforce, will be decided through decisions at the Landlord and Tenant Board over the next several months and years. Recreational marijuana use is banned in public spaces and workplaces.
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Quebec Provincial legislation has not yet been enacted, but the government’s policies are clear. The minimum age for buying and consuming non-medical marijuana will be 18 years, as it is with alcohol. The Société Québécoise du Cannabis (which is a unit of the Société des alcools du Québec (SAQ), which runs the province’s liquor stores) will manage all storefront sales; a provincial agency will manage online sales. Home growing of marijuana will not be permitted in any dwellings, so tenants cannot legally grow recreational marijuana in their units. Smoking marijuana will be allowed in public spaces where tobacco use is already permitted. It will also be allowed in all residences. However, apartments leases that prohibit tobacco smoking can also apply to smoking recreational marijuana, so landlords can ban marijuana smoking in their rental properties.
New Brunswick Provincial legislation has been enacted. The minimum age for buying and consuming non-medical marijuana will be 19 years, as it is with alcohol. The New Brunswick Liquor Corp. will set up a network of stand-alone stores under the brand CannabisNB to sell cannabis and related products. Home growing of marijuana is allowed. Adults can grow up to four cannabis plants per household. People who grow cannabis on private property must secure the operation, whether it is indoors or outdoors. Landlords can use the lease agreement to prohibit the growth of cannabis in rental properties. Smoking marijuana is banned in all public places, but it will be allowed in private
18 | may 2018
residences. Cannabis stored in a private home must be in a locked container or locked room to ensure that it is kept away from minors. Landlords can use the lease to implement smoking restrictions in rental properties, which can include marijuana.
Nova Scotia Provincial legislation has now been enacted. The minimum age for buying and consuming non-medical marijuana will be 19 years, as it is with alcohol. The Nova Scotia Liquor Corp. proposes to sell cannabis in its existing retail outlets that sell alcohol, and will also handle online sales. Home growing of marijuana is allowed. Adults can grow up to four cannabis plants per household. However, under new legislation enacted for this purpose, landlords can ban growing recreational marijuana in rental units, although they must give the tenants four months’ notice. When the landlord provides notice, the tenant has one month to give the landlord three months’ notice to terminate the lease. Home use of recreational marijuana will be permitted. However, landlords can amend their leases to ban the use of marijuana in units. Again, they must provide tenants with a four-month notice period.
Prince Edward Island Provincial legislation has been announced. The minimum age for buying and consuming non-medical marijuana will be 19 years, as it is with alcohol. The P.E.I. Liquor Control Commission will sell cannabis products in retail outlets, but not in stores that sell liquor. Its government online store will sell marijuana via Canada Post. Continued on page 22
A legal look at the marijuana situation RHB Magazine interviewed Emma Sims and Grant Haddock on the legal ramifications of recreational marijuana as they apply to landlords and rental properties. Emma represents landlords before the Ontario Landlord and Tenant Board and in Small Claims Court proceedings. She is a registered paralegal with the Law Society of Ontario. Since 2003, she has worked for the law firm Cohen Highley, which acts extensively for residential landlords. Grant acts for residential and commercial landlords, manufactured home community owners, developers, housing co-ops and strata (condo) corporations. Founded in 2001, Haddock & Company is a recognized leader in the housing industry sectors that they serve. RHB: What key legal issues are likely to arise regarding smoking marijuana in rental residences that landlords should be aware of, and what should they do? Emma Sims: It is likely that there will be a spike in residential tenants smoking marijuana in rental units after the Cannabis Act comes into force. This may result in complaints from neighbouring units about the smell of the cannabis smoke. Landlords should investigate any complaints received and, although use of cannabis
20 | may 2018
in rental units will not be a crime or a provinical offence, landlords will need to address complaints. This may mean that they will need to speak to tenants requesting, for example, that they smoke near a window, smoke on a balcony, consume cannabis in other ways, so as not to substantially interfere with other tenants’ enjoyment of their rental units. Grant Haddock: Other tenants may complain about the smell and smoke. Get prepared to deal with your community over the issue. Marketability is another concern. Do you want your rental property to be a haven for users such that non-users or persons with children will refuse to consider your property? You also need to consider damage to rental units because of smoke and smell, and the cost to remediate. RHB: What about legal issues regarding growing marijuana in rental units? Emma Sims: The damage that can be caused by growing marijuana could include mold and property damage caused by moisture inside rental units. In addition, if tenants use grow lamps, increased hydro usage and charges may adversely affect landlords where hydro is included in the rent. There may also be security concerns arising from tenants growing marijuana in units. If landlords discover that tenants are growing marijuana in their rental units after the Cannabis
Act comes into force, landlords should inspect the unit to ensure that it is in compliance with the residential use permitted under the lease agreement and applicable building standards. Grant Haddock: I would think that if a tenant sticks to four plants, there’s probably not a lot for the landlord to be concerned about. Water damage and electrical consumption would likely not be problems in most units. The real problem will be policing tenants. How do you enforce the limit on the number of plants allowed to be grown? Get ready to exercise your right to inspect the rental unit. RHB: What should landlords do to prepare before the laws go into effect? Emma Sims: Landlords can ban smoking of cigarettes and/or marijuana in residential leases prior to commencement of the tenancy. Landlords should consider doing this to avoid any smoking in rental units. If the existing lease allows for rules, landlords could enact rules, by giving notice to tenants that the production and smoking of marijuana is prohibited. Grant Haddock: Engage tenants, both users and non-users, to ensure that everyone is on board and aware of expectations, especially around nuisance issues. Properties housing children will be especially thorny problems.
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Continued from page 18
Home growing of marijuana is allowed. Adults can grow up to four cannabis plants per household, although it must be kept away from children. This includes rental properties. People will be allowed to smoke recreational marijuana in their private residences, and some designated spaces. It is illegal to smoke marijuana in public spaces, such as in or near playgrounds, publicly owned sport and recreation sites, public trails, and provincial parks and beaches (except within a rented campsite). Landlords can update their leases to ban smoking of recreational marijuana on their rental properties. However, if it was legal to smoke tobacco in rental units, then it will be legal to smoke recreational marijuana.
Newfoundland and Labrador Provincial legislation has been enacted. The minimum age for buying and consuming non-medical marijuana will be 19 years, as it is with alcohol. The Newfoundland and Labrador Liquor Corp. will oversee distribution and license the selling of cannabis through privately run retail outlets. There are plans to allow private stores to sell cannabis products. Home growing of recreational marijuana is not allowed. People will be allowed to consume marijuana products on private residences and in their private homes only (no public consumption). There are no restrictions on people living in rental properties.
22 | may 2018
Northwest Territories Territorial legislation has not yet been enacted, but the government’s plan is in place. The minimum age for buying and consuming non-medical marijuana will be 19 years, as it is with alcohol. The N.W.T. Liquor Commission will handle the sale of cannabis through its liquor stores or through an online mail service. Home growing of marijuana is allowed. Adults can grow up to four cannabis plants per household. Smoking marijuana will be allowed in private residences. However, landlords can choose to allow, restrict or ban the growing and smoking of marijuana in their rental properties.
Yukon Territorial legislation has not yet been enacted, but the government’s plan is in place. The minimum age for buying and consuming non-medical marijuana will be 19 years, as it is with alcohol. The Yukon Liquor Board will handle the sale of cannabis through its liquor stores and will sell online as well. However, it might offer a mix of public and private outlets in the future. Home growing of marijuana is allowed. Adults can grow up to four cannabis plants per household. Smoking marijuana will be allowed in private residences. However, landlords can choose to restrict the smoking of marijuana in rental units.
Territorial legislation has been announced. The minimum age for buying and consuming non-medical marijuana will be 19 years, as it is with alcohol. The Nunavut Liquor Commission will sell cannabis via online sales.
While some decisions have been made on marijuana legislation, there are many issues that remain in limbo. How the legislation affects landlords and tenants is also up in the air, and can change over time. Make sure that you are informed so that you can make the best decisions for your tenants and properties. Contact your local landlord association to keep abreast of provincial rules, and get involved in the process to lobby your provincial or territorial government to ensure that your rights are protected.
Home growing of marijuana is allowed. Adults can grow up to four cannabis plants per household.Â Home cultivation of non-medical cannabis is banned in properties that are used as daycares. Landlords can restrict the growth and consumption of recreational marijuana on their properties.
By David Gargaro
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CFAA RHC 2018 – What should I expect? The CFAA Rental Housing Conference (RHC) has established itself as being at the forefront of current issues – as well as what is expected for the future – in Canada’s rental housing industry. This annual event brings together rental executives, regional managers, property managers, key rental employees, hands-on landlords, apartment association leaders, and many others involved in the rental housing industry. The conference provides networking opportunities, discussions on key topics from great speakers, information on important issues and insights into new and useful techniques and technologies. 24 | may 2018
rentalhousingbusiness.ca | 25
CFAA-RHC 2018 takes place on May 14 to 16 at the Coast Coal Harbour Hotel in Vancouver. Choose among 20 sessions with more than 60 speakers, as well as the Suppliers Council Showcase, Building Innovations Bus Tour, Networking Reception and CFAA Awards Dinner. What should YOU attend to get the most out of your conference experience?
EDUCATION DAY 1 For all attendees The morning keynote speech from Benjamin Tal, the Deputy Chief Economist of CIBC World Markets, is filled with insight and humour. He provides an economic update, with some eye-opening information on the near-term future of interest rates, rental demand, the housing market and the job market. The Executive Roundtable brings together some of the top executives from Canada’s leading landlords to discuss the future of rental housing. Todd Cook of Northview REIT, Brian McCauley of Concert Properties, Philip Fraser of Killam REIT and Anthony Lanni
26 | may 2018
of QuadReal will address questions such as: Can the government incentivize or clear the way for new rental housing construction? Does new rental construction make sense? What is the impact of the secondary rental supply, both on the market and on political issues? What challenges face the rental industry? What opportunities are available? During lunch, you can learn how for-profit landlords can play a role in the new National Housing Strategy, as delegates hear from Derek Ballantyne, the new CMHC Chair (who takes office April 29). Follow this up by learning how to build a state-of-the-art operations system, and understanding what key modules can do for you. If you’re into technology, or being pushed to adopt technology, then learn about how to surmount barriers to adopting new tech at the Technology Roundtable, or attend one of three other tech sessions.
For small or medium-sized landlords If you’re a small or medium-sized landlord (with fewer than 1,500 units), you wear multiple hats in your business. At “Virtual and Augmented Reality: leasing made easy.”
rentalhousingbusiness.ca | 27
Photo: The Skyline Living team celebrating Beatrice Clivet’s win as Off-site Employee of the Year in the 2017 CFAA Rental Housing Awards
learn how to make the leasing process easier, or in another session discover what is new in building science.
For property managers Property managers may be most interested in the Operations Roundtable, where panel members discuss the operational challenges they face, such as staffing and new government regulations, as well as the implementation of technology. Managers should also be interested in “On-line reputation: looking both ways,” which will cover both tenant reviews of landlords and landlords looking at social media to screen tenants.
For rental executives Rental executives may benefit from attending the session on CMHC’s new Rental Construction Financing Initiative, discussing the new direct lending program for mixed-income housing. Later in the afternoon, rental executives can learn about “Affordable Housing Development in BC and across Canada.” Great other choices are any of the five technology sessions.
28 | may 2018
EDUCATION DAY 2 For all attendees, large or small With new recreational marijuana legislation coming into effect within the next few months, many attendees will want to attend the session “New marijuana rules in BC and across Canada.” You can learn about the new corporate tax regime as it affects the rental industry. At the session on “Privacy and leasing issues,” Maureen McMahon explains how best to continue to screen tenants in the face of the new guidelines from the Office of the Information and Privacy Commissioner.
For property managers There are two breakout sessions that will particularly interest property managers. You can either check out “Energy and Water Conservation in 2020,” or you can take in “Employment law update for landlords.”
For rental executives Take in the panel discussion on rental development issues across Canada, which
will cover the demand for new rental housing, the forces which are holding it back, and how developers and municipalities can work to facilitate rental development.
For BC landlords Since the conference is taking place in Vancouver, CFAA is providing the BC Regional Forum, with many sessions of particular interest to BC landlords. The British Columbia Roundtable will include insights and updates on the latest BC issues, brought to you by David Hutniak of LandlordBC, Al Kemp of the MHPOABC, Jason Fawcett of Kelson Group and David Sander of Hollyburn. Later in the afternoon, learn about recent BC Building Sales, hear an update on changes to the Residential Tenancies Act, and the session on “Privacy and leasing issues.”
to offer. Unless you attend with colleagues or family members, you can’t take it all in, but you can maximize your learning experience by choosing the sessions that apply most to you and your interests. The networking opportunities and Suppliers Council Showcase are also of great value because of the people you can meet and the opportunities to grow your network. Whether or not you attend this year’s RHC, plan to attend CFAA RHC 2019 in Toronto, which takes place next year in May. CFAA will present new topics of importance and interest for rental executives, regional managers, property managers, key rental employees and hands-on landlords. Plan to learn a lot, attend the CFAA Awards Dinner and have a great time!
By David Gargaro
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Rising mortgage rates impact housing affordability Rising interest rates, large mortgages and high consumer debt – combined with an uncertain economy – are setting the stage for dangerous times for Canadians. Although housing prices have dropped in some areas, the cost to own a home is still high compared to average income, and many prospective homebuyers will not pass the new mortgage stress test. This is forcing some people to consider less expensive options, such as condos and townhomes, which is driving up the cost of these properties. Canadians are worried A December 2017 Ipsos survey revealed some staggering findings: more than 40 per cent of Canadians believe that, if interest rates keep going up, they will be in financial trouble – and about one third of respondents fear that they will have to declare bankruptcy. Interest rates have already gone up once this year, and more increases are expected within months. The survey also found that one third of Canadians cannot cover their monthly bills and keep up with debt repayment, and almost half are within $200 of not being able to meet their financial obligations. Even with these fears, Canadians are continuing to take on more debt. About half of the people who responded to the poll said that they will go deeper into debt to cover their expenses. Younger Canadians are at particular risk, as they have lived with very low interest rates and have developed the habit of financing many purchases. According to a Leger poll conducted at the beginning of 2018, young Canadian households (who often look to rentals for their first place of residence) are feeling the financial stress even more than their older counterparts. The survey showed that 20 per cent have credit card balances larger than their savings account, 21 per cent overspent during the holidays and six per cent are receiving calls from bill collectors.
32 | may 2018
Interest rates and borrowing power There is not always a direct correlation between an increase in general interest rates and mortgage rates. Usually, as interest rates rise, the chartered banks raise their posted mortgage rate – but a rate increase does not always mean a matching mortgage rate increase. For example, in January, the overnight interest rate went up by 0.25 per cent, but the fiveyear conventional mortgage rate increased by 0.15 per cent. This raised the five-year mortgage rate reported by the Bank of Canada to 5.14 per cent. When the mortgage rate does increase, it also reduces borrowing power (or affordability). Increasing the interest rate from 4.99 per cent to 5.14 per cent reduced borrowing power by about 1.68 per cent. This means that, if a household was earning $100,000 per year, then the amount that they would be allowed to borrow toward a mortgage dropped from $534,594 to $525,577 – a decrease of $9,017. That difference in borrowing power means that the household must raise more funds to get the house they want… or find a less expensive place to buy. With the increased interest rate comes more interest paid on a long-term mortgage. According to the Canadian Real Estate Association (CREA), the composite aggregate benchmark price (i.e., the price of a typical home in Canada) was $600,300 in December. Buying with a down payment of 20 per cent would mean a mortgage of $480,240. Getting a mortgage at a fixed rate of 4.99 per cent would result in $446,795 in interest over 30 years. If you waited until the fixed rate was 5.15 per cent, the interest costs would be $462,700 – or an additional $15,905 over 30 years. Mortgage stress test Stricter mortgage rules will prevent some potential homebuyers from purchasing a new home, and might make it difficult for current homeowners to renew their existing mortgages. Under the new mortgage stress test, buyers will have to show
that they can keep up with payments if the mortgage rate increased by two percentage points. Assuming a down payment of 20 per cent and a 2.99 per cent five-year fixed mortgage rate (with 25-year amortization), potential homebuyers of the average single-family home in various cities will need the following down payment and annual income:
homeowners were spending at least 30 per cent of their income on paying their shelter costs. At the same time, there were 4,452,875 renters (both subsidized and not) in Canada. Of those, 795,935 renters (or nearly 18 per cent) had a shelter-to-income ratio of 50 per cent or more. Another 979,635 renters (or 22 per cent) had a shelter-to-income ratio of 30 to 50 per cent. So, about 40 per cent of renters were spending at least 30 per cent of their income on paying their shelter costs.
Down payment Annual Income
The changes in the mortgage stress test are already keeping prospective homebuyers out of the home ownership market. In turn, that will increase the demand for rental units from what we have seen in recent years. Rents are already rising sharply in Toronto and Vancouver because of the various effects of sharply rising home prices. When they come, increases in mortgage interest rates will impact the rental market, as well as the market for home ownership.
Income is not the only factor that will affect the mortgage stress test. Non-mortgage debt, such as credit card payments and car loans, is also part of the equation. Lenders want to ensure that total debt takes up no more than 42 per cent of annual pre-tax income. Every $450 in monthly debt obligations will reduce the amount of mortgage a person qualifies for by about $100,000.
By David Gargaro
Shelter-cost-to-income ratio The most recent Statistics Canada data (2016 Census) paints an interesting picture of how much Canadians are spending to live in their homes. The shelter-costto-income ratio is the proportion of the average total household income that is spent on shelter costs. Shelter cost is defined as â&#x20AC;&#x153;the average monthly total of all shelter expenses paid by households that own or rent their dwelling.â&#x20AC;? For homeowners, shelter costs include (where applicable) mortgage payments, property taxes and condominium fees, as well as the costs of electricity, heat, water and other municipal services. For renters, shelter costs include (where applicable) rent and the costs of electricity, heat, water and municipal services. According to Statistics Canada, in 2016, there were 5,687,455 homeowners with a mortgage. Of this total, 497,310 (or 8.7 per cent) had a shelter-to-income ratio of 50 per cent or more. This means that they were spending at least half their income on paying their shelter costs. Another 811,465 households (or 14.3 per cent) had a shelter-to-income ratio of 30 to 50 per cent. This means that 23 per cent of
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CFAA Announces 2018 Finalists in its Rental Housing Awards Program On Tuesday, May 15, CFAA will recognize the winners of its third annual Rental Housing Awards Program at the CFAA Awards Dinner 2018 in Vancouver. The winners will include leading
landlords, rental employees, rental housing suppliers and an apartment association for achievement of the year. All the finalists are great examples of excellence.
Here are the finalists in the various categories.
New Product or Service of the Year This award recognizes a rental housing supplier who has launched an innovative product or service which has proved very useful to rental housing providers. This new service or product has demonstrated innovation, usability, and value for the rental-housing industry.
The Flowie Water Sensor is affordable and can be installed without a plumber or tools. It protects landlords against leaks, freezing pipes, running water and floods, by sending alerts to a cell phone, even during power outages.
The Certn Tenant Screening Platform uses artificial intelligence to infer personality traits and values of individuals from email, text messages, tweets and social profiles, as well as from risk relevant databases, to provide sophisticated tenant screening. Certn even works for people with little or no credit history.
Gryd XR App enables landlords to advertise their properties using experiential, next generation Virtual Reality/Augmented Reality technologies. Users feel as if they are inside a property, remotely from anywhere using a VR headset.
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Energized for Tomorrow 36 | nov 2017
Off-Site Employee of the Year This award recognizes an individual off-site employee, nominated by their employer, who has demonstrated excellence and professionalism in the rental-housing industry. Tracy Silliphant, National Leasing Representative at Killam Apartment REIT (Charlottetown)
Jack Cabral, Inside Maintenance Supervisor at Sifton (London)
Dawn Morrison, Supervisor, Landlord Tenant Department at Skyline (Guelph)
On-Site Employee of the Year This award recognizes an individual on-site employee, nominated by their employer, who has demonstrated excellence and professionalism in the rental-housing industry.
Property Manager of the Year This award recognizes a property manager, nominated by their employer, who has demonstrated excellence and professionalism in the rental-housing industry.
Dhaljit Dharival, Site Manager at CAPREIT (New Westminster)
Sam Rombough, Senior Property Manager at CAPREIT (Victoria)
Dana & Gheorghe Ardelean, Resident Managers at Hollyburn (Vancouver)
Caroline Armstrong, Property Manager at Devon Properties (Victoria)
Vijay Govindraj, Building Manager at Sifton (London)
Theresa LapensĂŠe, Operations Manager at Sifton (London)
Want to stay up to date with national outlook? Sign-up for CFAAâ&#x20AC;&#x2122;s National Outlook e-newsletter to receive up-to-date news on what is happening across Canada, as well as industry insights and insider information on CFAA happenings. Email firstname.lastname@example.org to start receiving National Outlook today!
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MAY 2018 Thank you to the sponsors of Rental Housing Conference 2018! The Canadian Federation of Apartment Associations would like to thank all the generous companies that sponsored CFAA Rental Housing Conference 2018 and helped make the conference a success!
Principal Conference Sponsor
For a full list of conference sponsors, including contact information, check your conference manual, or visit www.CFAA-RHC.ca.
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NATIONAL OUTLOOK Renovation of the Year This award recognizes a company which has achieved excellence in the renovation of an existing rental-housing building, or a building being converted into a rental building.
Village Green â&#x20AC;&#x201C; 40, 50 Alexander St & 55 Maitland Street, Toronto by Greenrock
201 Sherbourne St, Unit 1801, Toronto by MetCap
Jasper Heights â&#x20AC;&#x201C; 10049 103 Street NW, Edmonton by Starlight
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Rental Development of the Year This award recognizes a company which has achieved excellence in the development of a new rental housing project. Each finalist for this award has demonstrated outstanding design, curb appeal, amenities, environmental quality, efficient use of space and functionality.
The Duke – 333 East 11th Ave, Vancouver by Edgar Development and Woodbourne Capital
The Residences at Grasslands – 4830 Gordon Rd, Regina by Altern/Deveraux
Maple – 1583 Hollis St, Halifax by Southwest Properties
Association Achievement of the Year This award recognizes an apartment association which has successfully launched an innovative campaign or initiative of great usefulness to rental housing providers, or successfully opposed a government proposal detrimental to the rental sector. Conclusion CFAA thanks the many applicants, and judges, who made the CFAA Award Program possible. For more information about CFAA or its Awards Program, contact: Jeremy Newman at 613-235-0101.
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NATIONAL OUTLOOK Cannabis changes best addressed in BC
federal submission), the BC government introduced legislation on April 26 to take a similar approach. All existing leases that ban tobacco smoking are deemed to ban cannabis smoking. All existing leases are deemed to ban cannabis growing.
Different provinces have taken different approaches to the legalization of cannabis as explained in detail starting at page 14. However, the province which has best respected the interests of landlords regarding cannabis is British Columbia.
Nova Scotia has enacted legislation to allow landlords to amend their leases to prohibit smoking and growing cannabis, but tenants will have the right to end their leases. In Quebec, landlords can amend their leases, but if they do, tenants may be able to back out. Saskatchewan has also given landlords new power to ban cannabis.
By John Dickie, CFAA President
Under the division of powers in Canada, the federal government makes criminal law, while the provinces legislate concerning property and civil rights, including landlords’ and tenants’ rights and obligations. In making cannabis legal, the federal Parliament is making it no longer a crime to possess small amounts of cannabis, or to grow up to four plants per dwelling. However, just because those acts are no longer crimes does not mean they can be done anywhere and anytime, regardless of other rights. All across Canada, landlords can make rules about how tenants use their rental units and what tenants do in their rental units. The enforcement of those rules is easier in some provinces than others, and there can be limits on the making of new rules. In the background too is the fact that most landlords do not currently have rules against smoking or growing cannabis, because the criminal law banned smoking and growing cannabis. The rules were in place, but not found in the landlords’ leases. As CFAA stated months ago, the ideal provincial add-on to the legalization under criminal law, would be to amend residential leases to ban smoking and growing cannabis. That was the situation before legalization, and so that change would best respect peoples’ existing obligations and rights. Then when new leases are made, the tenant and landlord can agree on the cannabis rules that will apply to their new agreement. Thanks to the skillful lobbying of LandlordBC, and consistent input from MHPOA (using CFAA’s
In Quebec, as well as Manitoba, all home growing is being banned. CFAA certainly accepts that approach, although home growing in owner-occupied single family homes is not a major concern for us as rental housing providers.
The Cannabis Bill at the Senate In recent committee hearings at the Senate of Canada, CFAA has lined up with other groups who favour a complete ban on home growing, since that seems to be the only way we might still get a Canada-wide ban on growing cannabis in rental units. Before CFAA presented, the Centre for Addiction and Mental Health (CAMH) told the committee that “the current [Cannabis] Bill includes the provision for home growing and cultivation, as if this was a necessary endeavour to legalize cannabis and make legal consumption available. ...It is a misguided element that ... [should] be scrapped from the law.” CFAA agrees wholeheartedly that being able to buy marijuana in retail stores or by postal orders through the internet will make it readily available to both recreational and medical users, so that home growing is unnecessary. CFAA also made the point that whether or not home growing is allowed, the Bill needs to be amended to impose a limit on the amount of cannabis that can be stored in private dwellings, in addition to limiting possession in the public sphere, as the Bill does now.
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RHBâ&#x20AC;&#x2122;s forum for rental housing associations to share news, events and industry information
Hot topics: WRAMA had a capacity crowd for its meeting on March 14, 2018 pg. 45 LPMA helps to make standard lease easier for landlords to use pg. 49 Promoting Code Compliant, Affordable, Safe, Clean and Healthy Rental Housing discussion paper pg. 53 EOLO still believes that the multiresidential tax ratio should be reduced to 1.0, so that tenants pay the same tax rate as homeowners pg. 57
The Member Associations
In a single-family home, what is done usually affects only the occupants of the home. In an apartment building, what is done in one apartment often affects other tenants. Units are not hermetically sealed and the second-hand smoke and odours of budding plants will enter other apartments where the tenants do not want to smell them. - John Dickie, p. 47
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President’s corner The annual WRAMA Trade Fair took place April 11, 2018 with many industry vendors connecting with landlords who are always looking at ways to improve their properties and business. Among the many exhibitors attending were representatives from the Region of Waterloo Public Health Department sharing information and resources for Smoke-Free Housing Ontario. More information about moving residential rentals to smoke-free status can be found at https://smokefreehousingon.ca/We are looking forward to the next WRAMA meeting on May 9, 2018, when we welcome guest George Dube, Partner, Canadian Tax CPA, CA at BDO Kitchener-Waterloo. On June 7, 2018, Ontario voters will head to the polls and cast their ballot for a new provincial government. My consistent response to landlords whose frustration is a result of ill-informed and poor provincial policy is to get informed and vote. Rent control, the provincial mandatory standardized lease, terrible experiences with the Landlord Tenant Board, lack of provincial planning in marijuana legalization, and continued demonization of landlords are all reasons why informed, strong leadership is needed to deal with the challenges that exist in rental housing provision. Mark the date on your calendar. – Andrew Macallum, President WRAMA MEETING WRAMA had a capacity crowd for its meeting on March 14, 2018, as two highly anticipated speakers joined us to present their expertise on the upcoming
WRAMA Trade Fair took place April 11, 2018
implementation of the Province of Ontario’s mandatory standardized lease (MSL) and the Canadian Federal Government’s impending legalization of marijuana this summer. As WRAMA’s mission is to actively and positively develop and sustain the integrity of its members’ business – the provision of private residential rental accommodation – in the Golden Triangle, this essential presentation of information will help rental housing providers to plan for and address the many challenges that will inevitably surface. WRAMA past-president Lars Sterne and administrator Sandy Knapp have been working feverishly to ensure that the new industry lease is available for WRAMA members. We’d like to offer them great thanks for spearheading this timely and important work. WRAMA members can find the most recent information about the industry lease and rental forms at www.wrama.com.
Mandatory standardized lease Joe Hoffer, lawyer and partner with Cohen Highley, provided insight and details about the MSL, resulting in even more questions from the standing-room-only audience. Audience members wanted to know the difference between the “provincial mandatory standardized lease” and an “industry lease.” The provincial MSL (numbering at 14 pages) provides standard agreements and terms and provides for additional terms. The industry lease provides additional support and is a key element of the MSL but takes the entire document to about 28 pages.
Smoke-Free Housing Ontario from the Public Health Department
Vendors and landlords abound at the WRAMA Trade Fair
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“Some of the provisions of the standard lease are positive for the landlord,” said Hoffer. “For example, the landlord can require that the tenant have insurance, and they can impose smoking rules.” On the question of where landlords could access the industry lease, Hoffer stated that apartment management associations, including Waterloo Region, London, Hamilton and Greater Toronto, have been working to ensure that landlords and property managers will have access to electronic and PDF versions of the industry lease for April 2018. Any landlord or property manager who is not a member of a local association should seriously consider becoming a member for further support. Attendees learned of the impact for landlords who fail to use or provide the prescribed lease: Tenant may demand “in writing” a signed copy from the landlord (only once during tenancy).
If no signed copy is given within 21 days, tenant may withhold rent “that becomes due” for up to one month. If landlord gives signed copy within 30 days of withheld rent, the tenant must pay the rent withheld.
If no copy provided, the withheld rent is no longer due to the landlord (giving the tenant a free month), but non-compliant lease is valid. If lease provided, tenant has 30 days to sign or refuse. If they refuse but stay, non-compliant lease is valid. Tenant has option to give 60 days’ notice to vacate if landlord does not comply within 21 days. The landlord’s exposure is the loss of one month’s rent and broken lease term but there is 60-day turnover. “The bottom line is that the tenant can break the lease on 60 days’ notice and, if the landlord is really disorganized, the tenant can then keep a maximum of one month’s rent,” said Hoffer.
If the landlord wants more information about the MSL, they can check with their local apartment management association. Landlords in Guelph, Cambridge, Kitchener, Waterloo and the surrounding townships should check for updates at www.wrama.com and follow on Twitter @WRAMAprez.
Impact of marijuana legalization John Dickie, President of the Canadian Federation of Apartment Associations (CFAA), discussed changing marijuana legislation, corporate tax changes and the efforts that CFAA has been undertaking on behalf of landlords at a federal level. In its efforts to maintain consistent pressure on government bodies, CFAA submitted a paper (February 27, 2017) specifying many concerns about marijuana growth and use in apartment dwellings. The paper included a series of concerns and recommendations that reflected much of the discussion that occurred at the WRAMA meeting. Marijuana growing in apartments, or rented dwellings, raises a number of serious issues. First of all, there are various safety hazards, such as excess electricity usage (existing wiring was not designed for the power draws), the risk of mold due to increased humidity (which can damage window frames and walls), and the affect on air quality due to CO2 being used up. It can affect other tenants, due
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to the skunky smell, safety concerns, possible damage to the building and the potential for excess growing, which could draw criminal activity to the building. “As to the growing of marijuana in apartments, a major landlord concern is fire safety,” said Dickie. “Most apartments were built more than 40 years ago. The electrical systems are already under heavy loads due to the expansion of electronics. Growing marijuana in the winter months will invite tenants to use grow lamps, and grow lamps will produce heat and risk electrical overloads, raising the risk of accidental fires.” There is also potential liability for the landlord, as well as risk to tenants and the mortgage holder. There can be issues with municipal remediation bylaws, and insurance company practices. The potential cancellation of building insurance or the calling of a mortgage can have financially disastrous results for building owners. Due to all of those problems, the CFAA urges the government to prohibit all marijuana growing in multi-unit dwellings, and in rented dwellings of any size. CFAA agrees with the Task Force on Cannabis that the government should prohibit the processing of marijuana in multi-unit dwellings, and in rented dwellings of any size The CFAA made several recommendations that go contrary to the Task Force, or that vary or add to the recommendations of the Task Force: •
Educate the public that the legalization of marijuana does not mean that it can be smoked anywhere at any time.
Allow landlords to ban the smoking of tobacco or the smoking of marijuana. Prohibit marijuana growing in multi-unit dwellings, and in rented dwellings of any size.
“None of the Task Force, the government and the House of Commons Committee really understood what sets apartments off from single-family homes,” said Dickie. “In a single-family home, what is done usually affects only the occupants of the home. In an apartment building, what is done in one apartment often affects other tenants. Units are not hermetically sealed and the second-hand smoke and odours of budding plants will enter other apartments where the tenants do not want to smell them.” The CFAA agrees with the following Task Force recommendations: •
Prohibit the processing of marijuana in multi-unit dwellings, and in rented dwellings of any size.
Take measures to enhance public education about the harms and risks of marijuana consumption.
Implement measures to limit access to marijuana by persons under 18, subject to provincial legislation increasing the age limit to 19 to parallel the legal drinking age in provinces where that is 19.
Establish a strict system for the production and distribution of marijuana, thereby addressing concerns about the quality, safety and potency of marijuana legally available.
Continue enforcement of laws and sanctions against possession, production and distribution of marijuana outside the regulated legal framework.
Ban smoking marijuana anywhere that smoking tobacco is banned. (The Task Force recommended the provinces and municipalities bring marijuana smoking under the rules which apply to smoking tobacco.)
Discover the benefits of being a member of our association The mission of the Waterloo Regional Apartment 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 managment resources we offer to our members, or to apply online go to http://wrama.com/, or contact WRAMA at 519-748-0703.
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48 | may 2018
President’s message — Looking back on a year of change
As I reflect on my first year as president of the London Property Management Association, I can honestly say that it’s been one of the most exciting. With the change to a government standard lease, LPMA amended its rental application and drafted terms and conditions that help to protect landlords if there is a dispute with tenants at the Landlord and Tenant Board. Many associations organized seminars to familiarize members with how to complete the lease and use it with the terms and conditions. Earlier this year, we held our annual trade show and we participated in the 19th Annual Spring Hope Food Drive, both of which were a great success. I’m looking forward to seeing everyone in September at our golf tournament! Have a safe and sunny summer and thank you for supporting the LPMA. – Lisa Smith, President
LPMA helps to make standard lease easier for landlords to use When the province drafted its standard lease, one of its goals was to reduce disputes at the Landlord and Tenant Board. And yet, the opposite outcome could have occurred had it not been for the feedback of stakeholders. One stakeholder, LPMA, suggested changes to streamline the lease 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 Board. “The province, to its credit, agreed with that,” recalled London lawyer Joe Hoffer, who made submissions to the province on behalf of LPMA. Hoffer said that the province’s original draft had too many blank spaces that were left to landlords to complete and too much cumbersome language that could have made landlords vulnerable to making errors. Through LPMA’s recommendations, the province streamlined the document significantly. “Then, when it came to the details, they included
language that ultimately was of assistance to landlords,” Hoffer said. LPMA, through a 20-person committee, made four submissions in response to drafts the province released from early October to the end of November. “We wanted to make sure the province got it right,” said Lisa Smith, President, LPMA. The standard lease, which most private landlords in Ontario must use for new tenancies as of April 30, applies to single and semi-detached houses, apartment buildings, condos and secondary units such as basement apartments. One important change that LPMA recommended centred on asking the province to include an option requiring tenants to obtain liability insurance and to provide the landlord with proof of coverage. “That gives the landlord much more leverage to enforce the insurance requirement,” Hoffer said. That’s important, he adds, because when tenants don’t have insurance and they experience a loss, they believe their landlord or the landlord’s insurer should compensate them. In the past, landlords whose tenants cancelled their insurance had to serve tenants with a notice of termination and take them to the Board. “Ultimately, if you do have to go to the Board, you can say, ‘It’s right there in the province’s lease and the tenant’s failure to do these things is an interference and the tenancy will be terminated unless they comply,’” Hoffer said. LPMA also pressed the province to allow landlords to include terms and conditions to reflect their specific operations and clientele. An LPMA committee compared the standard lease to its own lease, which Hoffer originally drafted in the early 1990s, and created the terms and conditions using valuable information that wasn’t in the standard lease. For example, the standard lease states that landlords are responsible for maintenance without explaining that tenants must notify the landlord in writing if they need to schedule a maintenance call. LPMA addressed the omission in the terms and conditions.
rentalhousingbusiness.ca | 49
Shannon Kiekens, vice president of LPMA, said that a tenant might ask a building superintendent who is vacuuming the common area to deal with a dripping tap. If the superintendent forgot in the course of completing other duties, he or she could be found liable for not addressing the tenant’s concern. “The terms and conditions provide substantially more information and a lot more instructions to the parties on how this relationship, with these specific clauses, needs to be addressed,” Kiekens said. To further help landlords, LPMA retained Cohen Highley’s IT department to make the standard lease and the terms and conditions available as a PDF or electronically. For example, if landlords enter their name and the tenant’s name at the start of the lease, the program adds it at the bottom and in the terms and conditions. And if landlords add the rent for a partial term and the charges for parking and storage, the standard lease calculates the amount of the prorated rent automatically. “It just makes it easier for people who are filling out the lease electronically to ensure that the information they’re providing is consistent,” Hoffer said. Tenants can also sign the lease from their smartphones or tablets. The standard lease and the terms and conditions are part of a 27-page package that LPMA licenses 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 two-page notice that landlords must give to tenants. Smith said the scope of the project posed challenges. “We basically had a very short period of time to finalize the terms and conditions, and the rental application that goes along with it. It was a matter of putting it all together, ensuring we weren’t missing anything before we finalized it.”
Motivation helps determine new landlords’ success Small landlords who are just starting out usually fall into two categories: those who aim to build a portfolio of rental properties and others who hope to cash in after a few years of owning a property. It’s not difficult to predict which type of landlord will succeed. London lawyer Joe Hoffer says that the degree of preparation landlords take depends on their motivation. Landlords who are in it for the long haul assess the costs and the risk factors involved, and they seek legal advice so they’ll know which pieces of legislation they need to understand. Others charge rents below market value to attract tenants and erroneously look to the rent payments to cover their costs. “The vast majority of small landlords in my experience become landlords because they bought a property and they want to put a tenant in there to pay for the costs of that property. Ultimately, their return is based on the capital value of the property and not based on the rental income that they receive,” Hoffer notes.
Landlords need to conduct research so they know what the market will bear for their type of unit. However, Hoffer says one landlord based the rent for her new condo on the current condo budget and the amount of money she needed to pay the bills, including the mortgage, property taxes and utilities. The following year, the condo corporation revealed that the budget for the operating
50 | may 2018
costs of the building had increased by 15 per cent. That’s not unusual if the budget for the first year is set too low by the builder and is passed on to all of the unit owners. “That’s happening throughout the GTA, it’s happening in London,” Hoffer says.
Landlords also need to have a working knowledge of the Residential Tenancies Act, the Ontario Fire Code and the Ontario Human Rights Code, as well as municipal bylaws. If they don’t, they could mistakenly tell tenants they have to take care of their own maintenance. “They don’t realize that you can’t contract out of the maintenance obligations,” Hoffer says.
The condo owner was in a bind because she couldn’t cover the increase by raising the rent since landlords are limited by the guideline. “If the condo owner had understood how rent control works, and the limitations on your ability to increase rent from one year to the next, she wouldn’t have based the rent on what it’s going to cost to cover her expenses. She would have based it on what the true market price is for that unit,” Hoffer says. Screening prospective tenants carefully is critical and entails using a proper rental application and conducting credit and reference checks. Some landlords unwittingly attract professional tenants in a bid to fill their units quickly. “They’re the ones who need possession in a couple of weeks and who want a break on first and last month’s rent,” Hoffer says.
Landlords must also use the correct leasing documents and keep records for the inspections carried out in the unit, maintenance request forms and notices of rent increase, among others. Hoffer believes it’s in the best interests of new property owners to talk to other landlords through organizations such as LPMA, which offers monthly meetings with guest speakers and Property Management 101 seminars. “In Ontario, the laws and rules favour tenants so they had better learn what those rules are because if they’re offside on the rules, and they’re a small landlord, it can be devastating financially,” Hoffer says.
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. The association has more than 400 landlord members representing approximately 35,000 rental units. Membership is open to landlords and property management professionals who own or manage one or more residential rental units.
Sign up online or call Brenda Davidson. Ph: 519-672-6999 Web: www.LPMA.ca
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Comfy living for tenants. Comfy energy bills for you. Weâ&#x20AC;&#x2122;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.
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President’s message We have been working hard to share the ideas from the “Promoting Code Compliant, Affordable, Safe, Clean and Healthy Rental Housing” discussion paper created through a round table discussion with a group of stakeholders in Hamilton, facilitated by Maple Leaf Strategies. This collaborative “Made in Hamilton” solution has 25 recommendations that we believe this is an alternate course to take instead of licensing housing providers. For those who have not read the paper, here are the 25 recommendations:
Rental housing amnesty program 1) That a 24-month amnesty period be adopted during which time no zoning and property standards enforcement action can be taken against non-conforming rental properties, provided the City inspector and the landlord agree to and sign a compliance agreement with an agreed upon timetable to correct any and all deficiencies 2) That no charges or fines can be laid if the landlord can reasonably demonstrate that the compliance agreement is on schedule
Safe, healthy rental housing financial support program 3) That a formalized financial assistance and emergency housing program be developed to assist tenants who are displaced due to safety issues or code enforcement 4) That a support program be developed to prevent displacement of tenants by providing emergency loans and discounted fees to landlords who voluntarily agree to bring their rental units into compliance
Streamline process for secondary units 8) That Hamilton eliminate the current policies requiring re-zoning applications for the conversion of a single-family home to include secondary units as a right 9) That the City adopt reasonable fees and building permit costs for conversions of single-family homes to include a secondary unit as a right
Secondary suites public awareness campaign 10) That Hamilton develop a public awareness campaign explaining the provincial policies for secondary suites and the positive impact such suites can have on the affordable housing deficit
Off-campus student housing 11) That Hamilton apply and enforce the Lodging Home By-law to include off-campus student housing, as rooming houses
Extend and expand proactive property standards enforcement 12) That Hamilton develop a permanent proactive property standards enforcement program for all classes of properties including owner-occupied homes, rental and commercial properties in all City wards 13) That Hamilton continue to resource the proactive property standards enforcement program through the general levy 14) That Hamilton monitor and report annually on the efficacy of the program and any change in property values in the subject properties
Secondary units, in-law suites, granny flats as a right
Reporting non-conforming rental housing
5) That Hamilton adopt policies and by-laws that match provincial policies to give each homeowner the legal right to include a secondary dwelling unit within their home without a rezoning requirement, provided building permits are acquired and any minor variances are approved by the Committee of Adjustment
15) That Hamilton remove any policies prohibiting anonymous tips and adopt a new process by which citizens can report a suspected unlicensed rooming house or off-campus student housing to by-law enforcement while protecting their privacy as per their rights under the Municipal Freedom of Information and Protection of Privacy Act
Grandfathering of secondary units 6) That Hamilton grandfather all pre-existing secondary units provided they fully comply with the Fire Code, Building Code and any applicable property standard by-laws
Streamlined building permit process for secondary suites (Granny Flats) 7) That Hamilton adopt a one-stop shop service to streamline the process of obtaining a building permit for secondary suites and make it easier for rental unit owners to come to the City to legalize their units
16) That any complainant be advised that their identity is protected under MFIPPA
Merge the zoning by-laws of the former municipalities of the Hamilton-Wentworth Region 17) That Hamilton create one modern zoning by-law for the entire City providing reasonable and fair policies that treat all residents equally 18) Adopt a zoning by-law that is congruent with the Ontario Building Code (full details on this are in the paper)
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Tenantsâ&#x20AC;&#x2122; and landlordsâ&#x20AC;&#x2122; rights and responsibilities charter 19) That Hamilton, in consultation with rental housing stakeholders, develop a charter outlining rights and responsibilities for tenants and landlords including a complaint resolution protocol with progressive steps of action for the tenant 20) That Hamilton provide public education to encourage tenants and landlords to follow a suggested complaint protocol (full details on this are in the paper) 21) That Hamilton adopt a new program whereby tenants may request a free tenant safety inspection to identify safety concerns related to Ontario Building and Fire Code regulations 22) That Hamilton develop a public awareness campaign to inform the general public, tenants and landlords about the free tenant safety inspection 23) That Hamilton request local universities and colleges provide information about the free rental unit inspection to all students 24) That upon a tenant inspection request, Hamilton inspectors will identify themselves to the tenant and explain that the inspection is provided to identify any safety concerns related to Ontario building and fire code regulations (full details on this are in the paper)
Support the establishment of the Hamilton Rental Housing Roundtable 25) That Hamilton support the establishment of an independent communitybased Hamilton Rental Housing Roundtable (HRHR), consisting of a broad cross-section of rental housing stakeholders as an advisory/liaison committee to assist the City on all rental housing matters
Recent events The HDAA Charity team had their first event on March 28, they had a fantastic night Bowling for Kids. This is an annual charity event for the Big Brothers, Big Sisters of Hamilton and Burlington. We are happy to announce we raised $880.00 and even won a pizza for our efforts.
Keynote speaker & trade show HDAA decided to do things differently this year; we moved the trade show to a new time and invited a few keynote speakers. HDAA suppliers who had booths at this yearâ&#x20AC;&#x2122;s trade show gave out some great show prizes, information and promotional items. It was a two-hour opportunity for local housing providers to connect with local suppliers in the industry. Our speaker event was right before the trade show. We were honoured to have Brad Clark from Maple Leaf Strategies as our moderator and especially excited to have David Horwood (The Effort Trust Company), Kris Boyce (Greenwin) and Scott Topping (Homestead) as our keynote speakers. The discussion lasted only an hour but was full of interesting answers and outlined some issues that all housing providers are facing in Hamilton. Brad asked some interesting questions of the speakers, here are a few of their answers: CONTINUED ON PAGE
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Do you feel Hamilton is encouraging the development of rental housing? David Horwood: Hamilton is talking the talk; there is a lot of small well-meaning discussion, but very little in the development of the product that we need to build. There have been very successful incentive programs that the City planning department has implemented, which have become purpose-built rentals in the downtown core, but it won’t be enough. We need programs to encourage construction in the suburbs and less urban areas. The City can do that with tax increment financing in a tax increment positive way; it doesn’t need to be a draw on the municipal resources. What keeps you up at night? Kris Boyce: Development, construction, the planning, the RTA, all the unknowns – I don’t sleep at all. If we all had a crystal ball to know where we are going to be in a few years with the upcoming election... there could be a different mindset coming. After the election we will see if some of the promises are going to happen to help us make more informed decisions. Family owned vs corporate company: which is the better way to go in terms of being a property manager? Scott Topping: I have worked for both scenarios: being on the corporate side has a lot of resources, but it can be somewhat indecisive and bureaucratic with a lot of reporting. Repositioning can be difficult for them because they can’t wait out the time to get the value back out of some properties. On the family side I find them to be very decisive with a long-term approach and they can bid on those properties that take time to get the value out of.
The speakers also answered questions about gentrification, AGIs, the upcoming elections, how to deal with the media, how tenant groups have impacted their business and what some of the biggest changes will be. For more details on this and upcoming events, contact HDAA.
Upcoming events May 9 dinner meeting - Engaging the Media & the Public Guest Speaker: Laura Babcock, President, POWERGROUP Communications TOPIC: Laura will speak about how landlords can effectively engage the media and educate the public about the important issues facing housing providers and our community. Hamilton housing providers are in the spotlight right now and we should all understand how the media can work for and against us. May 23 education seminar - New Standard Lease Guest Instructor: Mark W. Melchers, Lawyer, Cohen Highley TOPIC: Mark will discuss the new prescribed lease mandated by the Province to be used for most residential tenancy agreements entered into on or after April 30, 2018. He will cover the contents of the prescribed form, including certain pitfalls to be aware of when filling it out, as well as key additional terms that can be added to the prescribed form, and the consequences of failing to use the prescribed lease. June 19, 2018 HDAA Annual Golf Tournament 11:30 am Century Pines Golf Course 592 Westover Road, Troy, ON. This annual event is always a great day on the green. 11:00 am - Check in & lunch, NOON - Shotgun start, 5:00 pm - Dinner & tournament prizes. All packages include green fees, lunch, electric cart & dinner. Contact us for details.
Hamilton and District Landlords Since 1960, the Hamilton and District Apartment Association has grown significantly. Our members manage over of 30,000 units throughout Hamilton, Burlington, Brantford, Guelph, Mississauga, Oakville, St. Catharines and into the Niagara Peninsula. The association is a highly respected organization, sought out regularly by government, industry, media and the public.
Interested? Call us or join online! Ph: 289-208-5445 Web: www.hamiltonapartmentassociation.ca
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Ottawa’s rental property taxes down slightly On April 11, City Council adopted the City staff report on property tax ratios as recommended by the Finance and Economic Development Committee. That means that in 2018 the multi-residential tax ratio will be reduced from 1.45 to about 1.42. EOLO still believes that the multi-residential tax ratio should be reduced to 1.0, so that tenants pay the same tax rate as homeowners, but small steps in the right direction are better than no steps in the right direction, and much better than any steps in the wrong direction. If the property taxes on a rental building went up in 2017, then the final taxes in 2018 can be expected to go up by a similar amount. If the property taxes went down in 2017, then in 2018, the taxes can be expected to go up by 0 to 1 per cent. That modest increase will be because of the reduced tax ratio, and the fact that assessment decreases flow through in the first year of each reassessment cycle, whereas increases are phased in over four years.
a standard lease, then the lease they use is valid, except that, once during their tenancy, the tenant can demand that the landlord provide a standard lease. Then if they choose, the tenant can end the tenancy early, on 60 days notice to the end of a month. EOLO members are well advised to take one of three courses of action, namely: 1. Obtain a new standard lease from the Federation of Rental Housing Providers (FRPO) 2. Go through their existing lease to identify terms the province’s standard lease does not cover, and create their own addendum 3. Add the one page addendum provided to them at the session John listed key provisions that should be included in the addendum, including • • •
Overall, the rental sector will pay the same city property tax increase percentage that homeowners pay, as per the City’s overall budget increase (net of the revenue from new development).
The new Ontario standard lease A major topic at the EOLO Education Event on April 18 was the new Ontario standard lease. Lawyer John Dickie explained the requirement to use the new lease, the consequences of not using it, and recommended an addendum to spell out important terms that the standard lease does not cover. Landlords are required to use the new lease for all ordinary residential tenancies in Ontario that are signed on or after April 30, 2018, not including subsidized housing. If the landlord does not use
A power to re-allocate parking spaces A requirement for written notices:
of a need for repairs of requests to sublet or assign their tenancy if the tenant wants to make alterations to the unit
Other useful terms address: • • • • •
The payment of rent by someone other than the tenant Insurance Not growing pot Taking photos to document unit conditions Preparing for pest control treatments
The standard lease has a section at which to insert smoking rules, if any. It also addresses tenant liability insurance in a helpful way, but provides that contents insurance is optional, whereas landlord lawyers believe landlords can require tenants to obtain that.
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Backflow prevention â&#x20AC;&#x201C; Updated info At the EOLO Education Event on April 18, a large turnout of landlords and managers heard from Eddy Milito about the new City of Ottawa backflow prevention program. Eddy cleared up a number of issues on which there had been some confusion. Earlier City documents had referred to the program applying to rental buildings of 6 units or more. In fact, the program applies to high rise buildings and any building that has more than three storeys or a foot print of more than 600 square meters. (Those are the same buildings that are required to meet the more stringent fire code requirements.) Over the next five years, the City will mail out notices to property owners on a staged basis. The first set of notice will go to buildings which represent a severe hazard, because of the nature of water use on the property, such as laboratories. The owners will have one year to complete a site survey, and then one year to install one or more backflow devices. Virtually all residential rental buildings are considered to be moderate risk. They will receive notices between the years 2020 and 2022. The owners of those buildings will have one year to complete a site survey, and then two years from the Cityâ&#x20AC;&#x2122;s acknowledgment of the survey years to install one or more backflow devices. In the last issue of RAV, EOLO had reported the time lines as both running from the original notification date, but that is not the case. Landlords may want to address the requirement promptly now, because prices of the engineering work and the installation have not yet risen, but that may not last long. Properties scheduled for demolition within the implementation timelines may be exempt from the requirements. The site survey must be completed by a qualified person, such as a plumber licensed as a Certified Cross Connection Control Specialist under the Ontario Water Works Association, a professional engineer, or a certified engineering technologist under the direction of a professional engineer. (Additional people are qualified to install devices or to test them. See the Cityâ&#x20AC;&#x2122;s website for more details.) The site survey is set up to be completed from a mobile device. There is no charge for the site survey, but once the device is installed an administration fee of $53 will be required for the filing of the first (and subsequent) test results. If a completed survey indicates the requirement for the installation of a new backflow device, replacement of a defective device or the relocation of an existing device, the owner or the contractor must obtain a building permit prior to the commencement of any work, for a fee of $80. Backflow devices must be tested at the time of installation and annually. Property owners will receive a reminder of their annual testing deadline 30 days in advance. Property owners with existing devices and test data are encouraged to submit their most recent information to https://www.bsionlinetracking.ca/.
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Ottawa water & sewer rates As reported earlier, the City of Ottawa is bringing in a new system for charging for water. The new system will apply as of sometime in 2018 or early 2019. While the current system sets the charges almost entirely on the water consumption at a property, the new system will include a base charge based on the pipe size, a per unit storm water service usage charge and a reduced volumetric charge for water consumption. In the creation of the new system, EOLO was able to establish that rental properties place less draw on the City’s storm water services than single-family homes. On an average per unit basis, apartments have less roof area and less paved driveway and parking area than single-family homes. Therefore, rental units (and apartment condos) are charged 50 per cent of the storm water rate charged to a single-family home. EOLO’s figures show the discount should be even more, but getting that 50 per cent discount was a significant government relations win for landlords and tenants. Overall, due to City infrastructure repair and replacement needs, water, sewer and storm water charges will likely be going up by about 5 per cent per year for the next 10 years, as compared with the 9 per cent increase in the rates that has occurred over the last decade.
Airbnb Pursuant to a City Council directive, City staff are reviewing whether the current bylaws give them sufficient tools to deal with Airbnb rental issues. That directive arose from complaints in ground-oriented condos in Ottawa’s south end. One or more condo units were rented on Airbnb to guests who decided to party, disturbing neighbouring residents with noise and beer bottles thrown over the unit’s fence. The City has engaged a consultant to report to Bylaw & Regulatory Services (BLRS) for it to create a report to Council. As a key stakeholder, EOLO will provide input to the consultant. We will then discuss the issues with BLRS staff, with whom we have an excellent, long-standing relationship. EOLO is monitoring this review closely, in part because City Airbnb regulations could lead to another look at the landlord licensing issue.
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 be able to: • Receive
prompt emails of relevant City rule changes
two networking receptions a year
two free education events a year
Receive EOLO’s newsletter with current developments, City and 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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Brought to you by:
Suite Count RHB SIDEBAR Capital markets & national investment snapshot
National Apartment Group
Analyzing Metro Vancouverâ&#x20AC;&#x2122;s apartment market 2017 was a robust year for the Metro Vancouver apartment market. While the number of sales was slightly down compared to 2016, the dollar volume of apartment buildings sales across Metro Vancouver in 2017 experienced 10.27% year-over-year increase. A main driver of this was the surge in the acquisition of traditional apartment buildings as development sites. For various properties throughout Metro Vancouver located near popular hubs and transit stations, the added permitted density resulted in the underlying land value soaring over and above the value of the apartment buildings as traditional income-generating assets. The price per suite increased relative to 2016 in a majority of municipalities throughout Metro Vancouver and that is particularly the case for sales within the City of Vancouver. For 2017, the average price per suite in Metro Vancouver sold at approximately $380,000, ranging from high $100,000â&#x20AC;&#x2122;s/low $200,000â&#x20AC;&#x2122;s to as high as $800,000 per suite for highly desired areas located within Vancouver such as Kitsilano, South Granville and the West End. While the new Provincial Government has expressed its dedication to the increase of purpose-built rental apartments, Metro Vancouver remains a condo-dominated development market. 2017 saw a total of 629 rental units added to the Vancouver CMA area. Currently, there are roughly 15,000 +/- rental apartment units in the
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pipeline throughout Metro Vancouver. For the third consecutive year, the vacancy rate remained below 1.0%, sitting at 0.9% as of Fall 2017. As a result of the low vacancy and continued growth in the Metro Vancouver area, the average rents increased by 5.9% in 2017 from 2016. British Columbia is expected to be one of the top performing provinces in 2018 due to a combination of strong migration, low unemployment, moderate growth in GDP and various other factors. Though the Provincial Government has implemented a number of policy changes targeted at foreign/speculation buyers with the aim to curb rising house prices, the multifamily investment environment was largely unaffected except for the slight increase in Property Transfer Tax (PTT). With the current availability of low interest rates, increasing rental rates, future re-development potential and overall positive economic indicators, multifamily assets in the Metro Vancouver market remains one of the most sought-after investment asset classes in Canada. by Lance Coulson Lance Coulson | Executive Vice President Personal Real Estate Corporation CBRE Limited, Real Estate Brokerage National Apartment Group - Vancouver 1021 West Hastings Street, Suite 2500 | Vancouver, BC V6E 0C3T +1 604 662 5141 | F +1 604 684 firstname.lastname@example.org | www.cbre.ca/lance.coulson