RHB Magazine Jan 2018

Page 1

Vol. 10 No. 6 January 2018

Canada’s #1 most widely read publication for Apartment Owners, Managers and Association Executives

The official publication of:

Municipal planning & the rental property development process

Yes, I can.

Yes, I can.

No, you can’t…

Inside the RAC By-Law

Airbnb - Long & short

That breach could cost you

The City of Toronto discusses the newly accepted RAC Zone By-law and what that will mean in terms of future development and existing buildings.

There is no denying that Airbnb rentals have made an impact for travellers everywhere. What does Airbnb mean for the apartment industry?

With all the options for managing your property using technology, from energy management to finances, there is also an increased need to secure your information from hackers everywhere.


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McIntoshPerry.com CCI Group merges with McIntosh Perry Consulting Engineers Ltd. to form one of the largest privately held engineering firms in Canada. The new company, called McIntosh Perry, has more than 500 professional and technical staff in nine locations across the country, and provides a full range of services to the rental housing industry.

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Editor’s notes We survived 2017! I’m sure that most people are glad that 2017 is over. What a crazy year. While we all hope that 2018 will be better, there’s a chance that it could be worse on more than one front. While we can do little about the macro, we can all do our part to make the micro better. Be kind to your friends and family, and do something nice for a stranger. Buy someone a coffee at a local coffee shop (if you happen to be boycotting your usual hangout). Say something nice to someone you know when you have the chance. Read a book. Go to the library. Donate a little time or money to a charity. This issue of RHB Magazine features an article on the effects of the municipal and provincial planning processes on the rental housing industry. Unfortunately, many developers find that municipal planners impede rather than support the development process, and make it a more arduous and expensive venture than it should be. Governments also create legislation that has a negative impact on purpose-built rental properties. We have an article on the dangers of IT to landlords and property managers. While technology has made it easier to be more efficient in running your rental property business, it also opens your business up to data loss and theft, viruses, malware, hackers and more. Learn to protect your business, systems and data from inside and outside threats. You can also read the interview with the City of Toronto on its Residential Apartment Commercial (RAC) Zone By-law, and how it will affect rental properties. As always, have a read through CFAA’s newsletter, National Outlook, as well as the Regional Association Voice. Make sure to check out “Spin Cycle” before you file the magazine away. Of course, we always enjoy hearing from our readers, and we want to support two-way communication. If you have any comments or questions, send them to david@rentalhousingbusiness.ca. I look forward to hearing from you.

Enjoy the issue! David Gargaro Senior Editor

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Co-founder, Director

Juan Malvestitti juan@rentalhousingbuisness.ca

Co-founder, Publisher

Marc Côte marc@rentalhousingbusiness.ca


David Gargaro david@rentalhousingbusiness.ca

Contributing Editor

John Dickie, President CFAA jdickie@rentalhousingbusiness.ca


Wendy Tabor

Director of National Sales Nishant Rai

Regional Sales Executive (RAV) Ranjna Bhardwaj

Office Manager Geeta Lokhram


One year $37 Cdn Two years $59 Cdn Single copy sales $9 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

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VOL.10 NO.6 2018

contents Get into the Zone RHB and the City of Toronto discussed the newly passed RAC Zone By-law and what’s in store for Toronto’s neighbourhoods.

Municipal planning and the rental property development process RHB sheds some light on the sometimes lengthy process all aspiring developers go through to begin building on their properties.

Regional Association Voice Regional Association Voice features the latest industry news from four member associations.

Watch out your data is showing Storing your data in the cloud and being able to control your boilers through your smartphone is great, but it might also make your system and data vulnerable to attack.

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Spin Cycle Spin Cycle discusses the importance of branding and how it affects the decisions of consumers.

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president’s corner Currently, a key issue for some landlords and rental housing suppliers is the federal government’s plan to raise income taxes on certain corporations. CFAA opposes the planned increases. Along with many other business associations, CFAA is a member of the Coalition for Small Business Tax Fairness, which has forced a rollback of a number of the changes originally planned. (That includes obtaining an exemption for assets held now, and the $50,000 per year exemption.) CFAA has met the Finance Minister’s Office and the Prime Minister’s Office on the issues. While we continue to oppose all the changes, we are particularly concerned that companies in the rental housing industry not be sideswiped by the tax reforms. Our preference is that as few in the industry as possible be negatively affected. So far, only limited groups of landlords are targets of the reforms affecting passive income. Landlords and suppliers who will NOT be affected: • Owners of REIT units or REIF units • Public corporations and their shareholders • Landlords who hold title in their own names • Property managers or suppliers who operate without a corporation The reforms apply only to some people who operate through Canadian Controlled Private Corporations (CCPCs). Landlords or property managers who operate through CCPCs with fewer than six full time employees, report active business income (for property management), AND invest proceeds in rental property, will be affected by both the passive income reforms and the income sprinkling reforms. CCPCs which manage real estate, but do not invest in it, and CCPCs which hold only real estate, and do not manage it, will be affected only by the reforms to the income sprinkling rules. Active businesses receive favourable tax treatment not generally available to those who own rental property or other passive investments,

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or to salaried people. The government considers that favourable tax treatment is appropriate if the after-tax active business income is invested in the business (or another active business), but not if it is invested in rental property or other passive investments. For more information on the pending tax changes, see www.cfaa-fcapi.org. On the marijuana front, CFAA is working to support our members and member associations, since marijuana issues are now up to the provinces, which can regulate or prohibit home growing or smoking marijuana in rental units. Learn more about all these issues, and about solutions to many other operational concerns, at CFAA Rental Housing Conference 2018, being held in Vancouver from May 14 to May 16. Go to www.CFAA-RHC.ca for more information. Sign up to receive the CFAA e-Newsletter at communication@cfaa-fcapi.org.

John Dickie

CFAA President

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Taxes on personal, business and rental income – Page 35 Go behind the current dispute about reforms to the taxes on CCPCs to understand how our income tax system works, and the arguments that come up about taxes on landlords and on rental income.

Airbnb – the long view of short-term rentals in Canada – Page 39

Showcasing excellence in Canada ‘s rental housing sector – Page 41

AirBnB is shaking up the Canadian rental housing market. Landlords and tenants are feeling the impact of these short-term lodgings all across Canada.

The Canadian Federation of Apartment Associations successfully launched the first and only national rental housing awards in Canada in 2016. Take part in the program this year.

NATIONAL OUTLOOK – DIGITAL EDITION available at www.cfaa-fcapi.org CFAA Member Associations Eastern Ontario Landlord Organization (EOLO) www.eolo.ca P: 613-235-9792 Federation of Rental-housing Providers of Ontario (FRPO) www.frpo.org P: 416-385-1100, 1-877-688-1960 Greater Toronto Apartment Association (GTAA) www.gtaaonline.com P: 416-385-3435 Hamilton & District Apartment Association (HDAA) www.hamiltonapartmentassociation.ca P: 905-632-4435

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Investment Property Owners Association of Nova Scotia (IPOANS) www.ipoans.ns.ca P: 902-425-3572

Professional Property Managers’ Association (of Manitoba) (PPMA) www.ppmamanitoba.com P: 204-957-1224

LandlordBC www.landlordbc.ca P: 1-604-733-9440 Vancouver Office P: 604.733.9440 Victoria Office P: 250-382-6324

Saskatchewan Landlord Association Inc. (SKLA) www.skla.ca P: 306-653-7149

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

Waterloo Regional Apartment Management Association (WRAMA) www.wrama.com P: 519-748-0703

The Canadian Federation of Apartment Associations represents the owners and managers of close to one million residential rental suites in Canada, through 11 apartment associations and direct landlord memberships across Canada. CFAA is the sole national organization representing the interests of Canada’s $480 billion rental housing industry. For more information about CFAA itself, see www.cfaa-fcapi.org or telephone 613-235-0101.

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of universe is

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Municipal planning and the rental The Canadian rental housing market is a true conundrum. On the one hand, there is consistent demand from all levels of government and the public for more purpose-built rental properties in many Canadian cities. However, numerous factors impede their progress and discourage developers from providing more much needed rental stock. Rent control and other legislation have discouraged the construction of purpose-built rental properties since the 1970s, and municipal planners continue to make the development process arduous and time-consuming. What’s even more frustrating to developers is that municipal and provincial planning processes vary from province to province, and from city to city – and, in some instances, within different parts of the same city. Municipalities that have the worst planning processes can delay development projects by years, as well as greatly reduce its profitability to the point at which a rental development is not viable. However, as seen in other locations, municipal

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and provincial planning departments have the ability to make the development process run more smoothly, and can actually help to get rental properties built where they are needed in a reasonable time frame – it’s just a matter of working with (rather than against) developers.

Impact of planning processes on development It is unfortunate to state that – from many developers’ perspectives – municipal and provincial planning processes have impeded the progress of rental property developments. Municipal zoning processes are often relatively rigid, controlled and detailed, which can lead to delays in development where the designs for a rental property do not match up with the municipality’s pre-existing plans for a particular area. “Urban design produces beautiful buildings, but they are ‘Porsche-like’ in expense, and not very livable, as they result in small units to reduce cost,” said Allan Drewlo, Vice President, Drewlo Holdings Inc. “There needs to be an ability to still build a ‘Ford-like’ building for the middle

property development process class. Provincial agencies have no firm processes with timelines, so these issues can take years.”

purpose-built rental projects less viable in markets that cannot achieve higher rents.”

Some stakeholders claim that planning departments and their regulations impede all housing applications, and not just those of rental properties. Municipal planning processes in most municipalities do not differentiate between residential development proposals’ unit types, affordability or ownership models. This means that rental projects – including purpose-built rentals with affordable units – do not receive priority over other residential projects within the permitting queue. Since the municipal processes don’t differentiate between these projects, they must all meet the same design requirements.

Time is a very common and difficult challenge that arises from the planning process. It takes time to get comments and approvals at every stage of the development process, not just from municipal staff, but from regional authorities, utilities, transit operators and other stakeholders. Delays mean that properties must be carried longer, which increases financing costs. Delays can also lead to higher construction costs, due to inflation or the inability to take advantage of down times in the construction industry.

“As an example, a high-end condo must meet the same urban design requirements as an affordable rental project,” said Andrew Kent, Associate Director, Developments, Killam Apartment REIT. “The additional costs will be borne by the future tenant. Without elevated rents, the rental project may not be viable. Likewise, condo and rental projects most often pay the same development charges – costs that will be borne by the future tenant – making

Related to the time factor is the level of detail required for the review of applications. Many details, which are often required by municipal staff early in a project, would not otherwise be determined until the detailed design phase after a project has been approved. This makes it difficult to resolve requirements early in the project. The accumulation of recommendations from the wide range of required studies – such as wind, shadows, noise, heritage, environment, transportation and so on – must be resolved early in the design process. All this additional work to address studies’ findings creates

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significant delays that often produce little benefit to the tenants or community in the final product. “Of course, a certain level of study is important, but it is the detail, the back and forth, and the attention to minutiae that are difficult to resolve, especially if recommendations within studies conflict with one another,” said Kent. “Most municipalities don’t have terms of reference for these studies, creating an even greater lack of clarity as to what is actually needed. The best way to resolve these issues is face-to-face meetings with planning staff. However, access to staff is increasingly restricted and staff are not empowered to make decisions.” When underwriting a purpose-built rental opportunity, a degree of certainty with respect to timing, built-form and project costs is essential in determining the project’s feasibility. Over the past few years, developers have observed the implementation of an increased volume of new planning policies and guidelines that increase the complexity of approvals, limit development potential, and reduce the certainty in obtaining necessary entitlements. All those factors often lead to a decrease in profitability, which can threaten project viability. “For example, increased building amenity requirements, or outdated parking ratio enforcement, sometimes mid-way through the application process, only serve to increase capital costs, operating expenses, and increase the burden on a per unit basis,” said Brian

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McCauley, President and CEO, Concert Properties Ltd. “Meanwhile, municipal costs, such as park levies, development charges and public benefit contributions, have increased year-over-year, while new planning policies and more complex sites means that planning and building approvals are taking longer to process, which compounds the issue of rising costs and the uncertainty associated with them.”

Differences across municipalities Different cities have different by-laws and regulations in place that will vary according to a large number of factors. However, planning processes are generally similar across different municipalities. These processes are difficult to compare unless the developer is building similar properties in different municipalities. Some developers across Canada have found that the approval process is smoother in a smaller city, as less “red tape” is required and fewer people need to sign off on decisions. In larger municipalities, developers have run into issues such as the amount of development charge, parkland dedication, bonusing and receiving extra density. In Ontario, those issues can be covered by a section 37 agreement where more units are allowed in exchange for additional amenities on the building site. Some municipalities are also better than others in discussing issues around density, bonusing and financial contributions to help get rental properties built.

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“Current planning approvals processes across Ontario are similar but about to change with the elimination of the Ontario Municipal Board,” said Jim Murphy, President and CEO, Federation of Rental-housing Providers of Ontario (FRPO). “In larger municipalities, issues around zoning, density, development charges and parkland dedication fees become major issues in regard to the feasibility of a rental building. The length of time to receive an approval is also a major concern.” One key factor that differs across municipalities is the ability (or desire) of municipal staff to make decisions. Some people have a fear of their decisions being appealed to municipal review boards or ending up in court. Municipalities can address these issues by empowering staff to create clearer policies, develop straightforward regulations and allow rational decision-making. This can only work when staff have a good sense of the bigger design picture. If a municipality wants well-designed, affordable and sustainable rental housing, then it makes sense for staff and stakeholders to work together to achieve this goal. “The best cities to work in have a positive attitude toward good development and see development as a means to improving their communities,” said Kent. “A good example is the City of Calgary, which recently hired a Manager of Partnership Services. Her role is to act as a mediator between developers and city staff, with the aim to get

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projects approved faster – while maintaining policy objectives. The impact on the process remains to be seen, but it is definitely a step in the right direction.”

How governments can help support purpose-built rental developments Every developer wants municipalities to reduce the costs of doing business, including development charges, fees and municipal taxes for purpose-built rental projects. However, there are many ways to incentivize the development of rental properties. This could include tax rebates in exchange for the addition of rental units, or providing incentives through density bonusing or land transfers. Governments could freeze or reduce property taxes, development charges, permit fees, park levies and public benefit contributions for purpose-built rentals, and differentiate these costs from condominium housing. “Such a change is not unlike the incentive being offered as part of the Open Door program for Affordable Housing in Toronto,” said McCauley. “Other incentives could include upfront capital grants collected from public benefits or development charges, or low cost financing, as currently being offered by CMHC in their Rental Construction Financing program. Furthermore, the relaxation of certain design restrictions, such as amenity, parking, or suite

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Another look at inclusionary zoning Municipal and provincial planning departments have implemented bylaws and legislation that have either helped or hindered the development of purpose-built rental housing. In the September 2016 issue of RHB Magazine, we explored the inclusionary zoning land use planning concept. Inclusionary zoning has been effective in increasing the stock of affordable housing in some municipalities. However, it is not without its detractors due to the negative impact it has on project revenue and viability. Ontario’s Bill 204 (which is part of Ontario’s Affordable Housing Strategy) proposes to allow municipalities to decide where and how inclusionary zoning will apply. It will also provide the power to implement those decisions through Official Plan policies and zoning by-laws. Inclusionary zoning refers to Official Plan policies, zoning by-laws or land use programs that require development proposals with residential units to include “affordable housing units,” which must be maintained as affordable over the long term. The goal is to compel private sector developers to include below market rate rental and homeowner housing in all new and infill residential developments. As it stands, municipalities cannot accept offsets (e.g., cash in lieu), land exchanges or donations in exchange for providing affordable housing units as part of a development. The draft regulation would restrict municipalities from using density bonusing to offset the imposition of affordable housing units in a development even though that is currently allowed under the Planning Act. “In our view, flexibility in the form of offsets should be permitted,” said Joe Hoffer, Partner, Cohen

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Highley LLP. “Without flexibility, the province is handcuffing municipalities and developers from achieving construction of affordable housing because the costs, including marketability of the product, far outweigh the benefits.” The key issue is that the province’s draft regulation would exempt rental developments from all inclusionary zoning requirements. However, Toronto and Ottawa want rentals included. Inclusionary zoning inhibits construction of rental apartments. Homes and condos can bear the cost of inclusionary zoning, but rental properties are more vulnerable to fixed rental rates due to constraints on annual increases. Renters can rarely afford the cost of subsidizing affordable units in their building, so the developer would have to carry these costs. Bill 204 allows municipal planners to create positions related to zoning approvals. This means more red tape and more bureaucrats in the approval process. Inclusionary zoning will likely increase the risk and cost for developers. Markets with less demand than large cities will face less new construction of rental housing and a higher cost of home ownership. “Inclusionary zoning will impact the cost of the market units,” said Allan Drewlo, Vice President, Drewlo Holdings Inc. “It’s wrong since a 150 unit project now bears the weight of a province-wide population social benefit. It is unclear how this will get implemented by the cities but it will take time and money on the part of the proponent developer to sort out. It’s not really good for the housing industry.”

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types, that account for sensitivities associated with rental buildings would also be positive.” Reducing the time involved at different stages of the development process would go a long way in improving rental property development. For example, expedited permitting will help to get rental units to market more quickly. In some municipalities, it takes longer to approve a project than it does to actually build it. “Municipalities can pre-zone areas for development so that only a site plan process is necessary,” said Drewlo. “Put firm approval dates in law, such as six months to approve a site plan, eight months to approve a zoning by-law, and so on.” Municipal planners can also consider how purpose-built rental properties are different from condo properties, and change their approach based on where they are built. Urban design is a key element of every building project, but not every project has to result in “signature” buildings. Homeowners will pay more for design elements in their condo properties, but tenants want clean, safe, affordable places to live. Removing the need for every building to have high-end amenities can help to make projects proceed more quickly, and help with creating more affordable properties. “Simple, well-designed, well-built buildings can provide good quality, affordable rental houses, and contribute to mixed use, affordable communities that are connected to transit and active transportation,” said Kent. “In this light, the reduction or elimination of parking requirements for purpose-built rental projects

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can significantly improve affordability, encourage transit use and create activated streets.”

Conclusion Developers of purpose-built rental properties face a number of challenges in getting their buildings to market within a reasonable amount of time. The biggest obstacles lie within the municipal and provincial planning process, which can add months (or years) to project terms, as well as significantly reduce the profitability of those projects. There is plenty of room for improvement and streamlining of the process. Governments can also take an active role in helping developers to add more rental units to the market. They can use a variety of incentives to make it more affordable to do so, which would be a positive move for all parties involved. “Governments can do many things if they are genuinely interested in new rental supply,” said Murphy. “They can create a regulatory environment such as a rolling exemption [from rent control] for new rental supply. Municipalities can rebate costs associated with rental such as development charges and building permit fees to make rental housing more attainable. A concerted effort at the provincial and municipal level is required [if we are to see the new rental supply that is needed].” By David Gargaro, in collaboration with Andrew Kent, Allan Drewlo, Brian McCauley and Jim Murphy

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Watch out - your data is showing Technology can improve the efficiency of managing rental properties. Websites and online applications make it easier to attract and maintain communications with tenants. Your smartphone lets you manage and monitor your heating and cooling systems, as well as keep an eye on security, track repairs and maintenance, and access building information. However, there is a downside to ease of access – your data, finances and systems are more vulnerable to attack from hackers, malware, viruses and data breaches. Every point at which you can access the Internet, and every entry point into your systems, is vulnerable. If you can access your data from your smartphone or computer, then so can someone else. “If a company has not taken reasonable steps to protect private and sensitive information, the company may be held liable for a breach into their records causing sensitive data loss to unlawful intruders,” said Patrick Bakos, Associate, Friedman Law Professional Corporation. “A landlord or property manager should engage a third party IT company, or maintain competent in-house IT employees, to ensure company systems are up to date with the latest cybersecurity protection. Not doing so may result in liability for exposed records.”

Computers Every business uses computers, which includes laptops, tablets and smartphones. Almost all of them are connected to email and the Internet. Those devices must be secured against external dangers, such as viruses and hackers, as well as internal dangers, which are the people who use them. All it takes is for one person to click on the wrong link, or open the wrong attachment, and your systems and data could be at risk. “The weakest point in your office is the user,” said Suheyl Khaki, Consultant, Data First Solutions. “You need to secure your devices from theft as well as electronic dangers. If someone steals your

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computer, you could lose your data, as well as your clients’ data, and even lose the ability to run your business.”

Websites Websites enable you to promote your buildings and units to prospective tenants, as well as provide tenants with information, the ability to request repairs and service, and more. Not having a website means that you are practically invisible online and behind the times in the eyes of tenants. Websites are also one of the most vulnerable points in your system. Websites can be hacked to redirect users to another site and spread viruses to visitors. False websites can also be set up to mirror your own, redirecting visitors through email scams. Websites are not static, unlike other forms of marketing – they must be maintained and updated. Make sure that it’s secure and up to date, and that it uses current applications and technologies. “Protect clients and yourself by ensuring that your website has an up-to-date security certificate,” said Khaki. “Certificates are essential for maintaining your company’s credibility and building trust. Avoid simple administrative passwords that are easy to guess, and employ current security measures such as two-factor authentication.”

Automation and the smart building Automating boilers, thermostats, security systems and other devices can make your building more efficient. It is a true benefit to be able to access, monitor and control these systems through your smartphone. It’s also an overlooked area of security vulnerabilities, although this depends on the application’s security and your setup. The system could be self-contained, and available only through a local intranet. However, some systems are connected to a router, which makes it accessible to anyone online, or vulnerable to denial of service attacks. Some devices use proprietary systems, protected within a closed circuit connection, while

May 14 - 16, 2018

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#reflections, with its biopic format, provides us with an inside look into the lives and professional milestones of Canada’s leading real estate executives. Our upcoming episode features Paul Chisholm of Berkley Property Management Inc.

To watch the trailer now, visit: www.perpetualmediagroup.ca/reflections

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Seven keys to prevent security breaches in smart buildings 1. Use encrypted certificates to access the BAS instead of usernames and passwords. 2. Eliminate virtual private networks (VPNs) and access point names (APNs – similar to VPNs but for cellular networks) to avoid usernames and passwords—everything needs to work on certificates and keys. 3. Don’t rely on existing routers in the building; instead, connect to the cloud using a secure gateway. 4. Avoid changes to firewall or proxy settings as this can make the IT network vulnerable to attack—and can require lengthy approval. 5. Use a book-ended architecture with software running at the data source and sink to avoid DDOS attacks. 6. Ensure data isolation such that every subsystem (lighting, HVAC, security, etc.) is separate all the way to the cloud, so that if malware affects one subsystem, it won’t affect the others. 7. Encrypt all traffic to prevent unauthorized users from accessing data. Ron Victor, CEO, IoTium

other systems and independent devices are network enabled. Protect your investment with proper security, which should be tied to your overall strategy. “If you’re going to invest in automation, then start with developing the architecture rather than just plugging devices into your network,” said Khaki. “Design your security from the ground up, create a private network and secure it, so your devices will be protected as you add them.” Protecting the smart building is difficult because security risks span multiple levels: the building automation system (BAS), the cloud connection and the remote management interface. What’s more, smart buildings are often part of a real estate portfolio, so any security solution must be able to scale across all locations. “The inherent network infrastructure required to securely connect at such a large scale is fundamentally different from that required for connecting a few buildings,” said Gerry Cellucci, Vice President, Yorkland Controls. “Deployment complexities are enormous; each building has multiple sub-systems, such as HVAC, lighting, access control and CO2 monitoring. One has to protect against DDOS attacks,

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internal fraudulent employee hacks, proliferation of hacks from one sub-system to another, as well as the need for unmanageable usernames and passwords.”

Safeguarding your business To safeguard your business, conduct a security or IT audit to identify potential gaps in your system. For example, an IT audit can identify whether your firewall is secure and functioning, determine whether your PCs and devices are up to date with current software to resolve open vulnerabilities, and ensure that you have a current antivirus solution. It can help with updating email policies and educating staff on email and online threats. It can also secure your network and servers with software and physically, and make sure that you are properly backing up your system. “Many clients believe because they invested in an antivirus or a firewall once that they are secure,” said Khaki. “The reality is that these things need to be managed and maintained to ensure they continue to function.” Perform periodic audits, on a schedule and when something significant changes. For example, if you moved a lot of information to the cloud or added new services (such as automation), you will need to conduct an audit to ensure that your systems are secure. Maintain the currency of applications and technology to protect systems and data against vulnerabilities. Also, use secure passwords, and change them regularly. “When you partner with an IT or security audit provider, make sure that they are transparent in what they are doing for your business,” said Khaki. “You don’t need a large budget to find the right partner. It’s a matter of identifying what you need and what you can do yourself, and finding the right level of service for your business.”

Conclusion Technology is ever changing, and so are the dangers that come along with them. Safe computing is the only way to maintain a safe environment, and your security is only as strong as your weakest component. Get an IT or security audit to identify your weaknesses, and follow best practices to maintain the security of your systems and data. By David Gargaro, in collaboration with Patrick Bakos, Suheyl Khaki, Gerry Cellucci and Ron Victor

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Rental Housing Lifetime Achievement Recipient Ignat Kaneff Kaneff Group of Companies

Outstanding Community Service Award Minto Properties Inc.



2016 MAC AWARDS On December 1, 2016 FRPO held its 16th annual awards gala in Toronto, at the Metro Toronto Convention Centre in conjunction with the PM Expo. FRPO’s MAC (Marketing, Achievement and Construction) Awards recognize success and quality in Ontario’s rental housing sector. FRPO’s MAC Awards gala continues to grow each year, with record attendance of over 1000 guests. Thank you to all of our guests, FRPO members and congratulations to the 2016 MAC Awards winners and nominees.

Property Management Website CAPREIT www.caprent.com

Marvin Sadowski Memorial Award for Certified Rental Building Member of the Year

Advertising Excellence Single Campaign

Best Lobby Renovation of the Year

Best Curb Appeal

Advertising Excellence Social Media

Hollyburn Properties – Free Rent Contest

Briarlane 350 & 390 Queen’s Quay West, Toronto

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Minto Properties Inc.

Starlight Investments Ltd. 35 Walmer Toronto

Greenwin Inc.



Resident Manager of the Year Janice Mahy CAPREIT

Leasing Professional of the Year Best Suite Renovation Michael Vezina Under $12,500 Vertica Resident Services

Cherishome Living professionally managed by Sterling Karamar Property Management 64 St. Clair Avenue West, Toronto

Best Suite Renovation Over $12,500

Rental Development of the Year Environmental Excellence Sun Life Financial – Alto Award 1544 Dundas Street West, Toronto

Skyline Group of Companies

Property Manager of the Year

Amenities Award of Excellence

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rentalhousingbusiness.ca | 31

Rental properties are getting into the Zone Taking a closer look at the RAC Zone By-law RHB Magazine interviewed Lauralyn Johnston, a registered professional planner and project manager with the City of Toronto’s Tower and Neighbourhood Revitalization Unit about its newly implemented Residential Apartment Commercial (RAC) Zone By-law. RHB: Please briefly describe the RAC Zone By-law. Lauralyn Johnston: The City of Toronto's commitment to building strong and revitalized neighbourhoods is supported by a number of programs and opportunities. The Residential Apartment Commercial (RAC) Zone by-law, administered by the City's Tower and Neighbourhood Revitalization unit, is one example. The RAC zoning by-law is an amendment that allows small-scale commercial and community services on more than 400 older apartment building sites where they were previously prohibited. These include small businesses such as food markets, barber shops, nail salons, small shops, medical offices and cafes. Also included are not-for-profit organizations and charities such as places of worship, after school youth clubs, and even outdoor uses like farmers' markets – all the elements that make up a vibrant community. RHB: How are buildings chosen to qualify for this RAC Zone By-law zoning change / what is the process? Lauralyn Johnston: The buildings that were identified for the rezoning by the City were mainly the larger/older towers with 100 plus units that were previously zoned as "residential apartments" and only allowed for residential uses. These types of towers are mostly located in the City's older suburbs where building strong neighbourhoods means investing in them to ensure that Toronto is a city for all. RHB: How does adding these services change a building owner’s tax situation? Lauralyn Johnston: Tax assessments are a provincial matter and conducted by MPAC.

32 | dec/jan 2017-18

Once MPAC provides some clarity on the tax situation, we will communicate this to building owners. What I can tell you is that the RAC Zone by-law opens up new possibilities for these older towers, giving them a new "life" while benefiting tenants, landlords and the community. RHB: Does this change affect rent levels? Lauralyn Johnston: The information we have, to date, indicates the changes would not affect most units. Of course, if a building becomes more desirable because it now has new, previously unavailable services, units to be re-rented may obtain higher rents in the future. RHB: This obviously benefits tenants, as it gives them access to services in their building / neighbourhood not available. It benefits the landlord in offering amenities to tenants. But is there a downside for the tenants / landlord / neighbourhood / tenants in neighbouring buildings without these amenities? Lauralyn Johnston: Remember the old "tuck shops" that where only accessed by building tenants? Those days are almost gone. Landlords can now offer new services found within the building to the neighbourhood, making these true community offerings. This builds a sense of community, increases the small business owner's clientele or customer base and increased foot traffic generally makes the area safer and inclusive. Even residents of detached homes in the area may have access to services that they can now walk to. RHB: Why were these services prohibited in the first place? Lauralyn Johnston: When these buildings were built, car was king and the predominant philosophy was to separate where people

lived from where they worked or shopped. A lot has changed in 50 years. Reducing our carbon footprint is critical. Today, it's about building communities through planning so we can live, work, shop and play in our community. RHB: How is this by-law similar to / different from what other municipalities do? Lauralyn Johnston: Research shows that there are a lot of different approaches, depending on the municipality's history, location, growth rate and planning context. We're Canada's largest city and sixth largest government. We have a vibrant downtown that already employs "mixed use" planning in new developments while meeting the community's needs. This amendment simply makes it easier for other parts of the city to revitalize their area and strengthen their neighbourhoods without having to rezone a whole property for a minor change. RHB: What happens if the landlord / tenants want to get rid of an amenity to get an available unit? Lauralyn Johnston: This would be assessed on a case-by-case basis. Some buildings are required by the zoning by-law they were built under to have an amenity. And while the new zoning by-law changed the parking regulations a bit (most RAC buildings are now allowed to have less parking), amenity spaces weren't touched. Then there are buildings with underused spaces such as storage rooms, old locker rooms, maintenance areas, and some have areas where they could build small additions to accommodate a new use. A perfect example is an ATM machine. Previously you couldn't install one; now with a little space, an ATM is possible.

costs on building surveillance, and repairs. The bottom line is that having these amenities is a "win-win-win" for business owners, tenants and the community at large. That's why we encourage building owners to come talk to us about the benefits of RAC Zone by-law. They can call us at 416-392-9716 for more information. RHB Magazine asked John Dickie, President, Canadian Federation of Apartment Associations (CFAA), for his interpretation and views on the by-law. RHB: What is CFAA’s take on the RAC Zone By-law? John Dickie: CFAA welcomes Toronto’s Residential Apartment Commercial (RAC) Zone By-law. The by-law provides flexibility for residential landlords to offer rental space for more services for their tenants and for others in the community. As the City says, allowing these amenities is a “win-win-win” for the rental owners, tenants and the community at large. For years, Canada’s cities have typically erred on the side of too little freedom in land uses, rather than too much. CFAA and landlords would like to see more flexibility in permitted uses in virtually all residential zones across Canada.

RHB: What does the landlord gain / lose in rent by allowing different amenities / services to use a unit? Lauralyn Johnston: There are a lot of possibilities and potential scenarios that this new amendment fosters. A building owner could generate additional income if, for example, a City-run daycare would pay to lease the space and renovations to accommodate it. Or a change of space may add intrinsic value, such as a sense of community. An after school homework club or program for youth may not generate a lot of income, but could create a sense of pride and ownership by engaging youth. This, in turn, could lower vandalism and property crime rates, lowering spending

rentalhousingbusiness.ca | 33

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DEC/JAN 2017-18

Taxes on personal, business and rental income By John Dickie, President, CFAA The federal government plans to reform the income tax payable by Canadian controlled private corporations (CCPCs). That was headline news from September to November 2017. The revised plans will likely be headline news in March and April, and the reforms may have a significant effect on many landlords. This article goes

behind the current dispute to explain the basics of how our income tax system works, for both individuals and corporations, with particular attention on the effects on rental owners and operators, and to the arguments that come up when people consider taxes on landlords, on rental property and on rental income.

Income tax

income at all. Business people apply and combine resources, which cost money, and by doing that produce products or services, which other people buy.

As its name suggests, income tax is tax on income. It is not tax on gifts received or inheritances. For individuals, it is usually tax on their wages, salaries, commissions and bonuses. (There are grey areas like large Christmas bonuses, prizes won through work, and reduced rent for superintendents, but they do not change the principle.) Income tax is generally tax on net income. If a person makes jewelry or paintings and sells them, they do not pay tax on the full sales proceeds, which is their gross income. Instead they report their gross income, and also their expenses, such as the canvasses and paint, the material that goes into the jewelry, the rent on any studio space they use, and the cost of booths at shows where they sell their products. Tax is payable on their gross income after deducting their expenses, i.e. on their net income.


Landlords and other business people also report their gross income and their expenses, and pay tax on their net income. (Corporations also pay tax on their net income, which we will get to below.) In most cases, without spending the money on the expenses, there would be no net

For a unit that rents for $1,000 per month, a landlord may well pay the costs shown in Table 1, and end up with net income of only $100 per month. It is on their net income that a landlord or any other person or business pays income tax. Table 1 – gross vs. net income Gross Income (Rent)


Expenses Mortgage Interest


Property Taxes


Repairs & Landscaping




Insurance & misc.


Total Expenses


Net Income


Some people point to landlords or other business people and say they have an advantage because they can write off expenses. However, writing off legitimate expenses is just the process by which business people pay tax on net income rather than gross income.

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NOV 2017

Energized for Tomorrow 36 | nov 2017


Homeowners do not write off their expenses because they pay no tax on the benefit they get from occupying their homes. In a few countries, homeowners have to report the value they receive in occupying their homes (usually the rent they would have to pay to rent them), and then they deduct their expenses such as the mortgage interest payment, property taxes and repairs. Non-profit social housing providers do not “write off” their expenses because they pay no tax on their net proceeds. In both cases, tax is not charged, which is why expenses do not reduce the tax payable (and there is no tax payable!) Progressive income tax Besides applying to net income rather than gross income, federal income tax is “progressive”, which means that a lower rate of tax is charged on lower incomes, and higher rates of tax are charged as incomes rise. In fact, through the personal tax credit system, no federal income tax is charged on an annual income below $11,650. The exact exemption level for provincial income tax varies by province, as do some of the tax brackets. In Quebec the province collects its own income tax, whereas in the rest of Canada, the federal government collects its own income tax AND the provincial income tax applicable to each person and most corporations. Table 2 shows the federal income brackets (for people under age 65, rounded to the nearest thousand dollars), and what tax rates applies to income in each bracket on average. Just as businesses can deduct their expenses from their income for tax purposes, individuals can deduct education expenses and significant medical expenses. Canadian income tax generally applies to each person individually, rather than to a couple or to a family unit.

Table 2: 2017 Income tax brackets and tax rates for individuals

Income Bracket (rounded)

Federal tax rate

Average provincial tax rate

Average total tax rate on income in that bracket

Up to $12,000




$12,001 to $58,000




$58,001 to $103,000




$103,001 to $154,000




$154,001 to $214,000




$214,001 and up




Notes: 1. A number of the provincial tax rates change at thresholds different from the federal thresholds. 2. The provincial tax rates tend to be higher in Atlantic Canada, Quebec and Ontario, and lower in the West.

Corporate income tax Corporations established to make money pay income tax based on their net income. There are currently three rates of tax, as shown in Table 3. Rental income is treated differently according to whether it is earned by a corporation with more than five full-time employees, or by a smaller corporation. For larger CCPCs or public companies, rental income is generally considered to be active business income. However, for corporations with fewer than six full-time employees, rental income is considered to be passive income, which attracts the current highest rate of corporate tax. Rental

Want to stay up to date? Sign-up for CFAA’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 communication@cfaa-fcapi.org to start receiving National Outlook today!

rentalhousingbusiness.ca | 37

DEC/JAN 2017-18

Table 3: 2017 Corporate income types and tax rates

The proposed federal tax reforms

Type of income and corporation

Federal tax rate

Average provincial tax rate

Average total tax rate

Active business income earned by a CCPC (of under $500,000 per year)




Active business income earned by a public corporation or a CCPC (over $500,000 per year)




Passive investment income (including much but not all rental income)




income is treated differently according to whether it is earned by a corporation with more than five full-time employees, or by a smaller corporation. For larger CCPCs or public companies, rental income is generally considered to be active business income. However, for corporations with fewer than six full-time employees, rental income is considered to be passive income, which attracts the current highest rate of corporate tax, namely an average of 51 per cent. Integration of corporate and personal income tax Another feature of the tax system is what is known as “integration”. Shareholders who receive income as dividends from corporations are given a tax credit to account for the fact that the corporation has already paid tax on that income. (The tax credits vary to account for the different tax rates which apply to different corporate income.) With a few minor and mostly transitory exceptions, the system works so that people pay the same amount of tax whether they receive business or rental income directly or through a corporation, and whatever tax rate the corporation paid.

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The government’s proposed reforms are meant to charge a new higher rate of tax (up to 73%) on the “second generation income” earned by CCPCs which received income that was taxed at the lowest rate. The rationale is that those corporations received a benefit, which they should only be able to keep if they invest the income in the active business. (For most owners, rental income is already taxed at about 51%, but some CCPCs will be made to pay up to 73%.) If instead of paying out its profits, a CCPC which makes a product invests its after-tax profit in shares of other companies or in rental real estate, the higher rate of tax is to apply in order to claw back the benefit of the lower rate of tax originally charged. That will: create an accounting nightmare interfere with efficient capital allocation • reduce investment in rental real estate, including rental housing. • •

Income from managing rental property for other owners qualifies as active business income, regardless of the size of the management company. Third party managers who invest part or all of their management income in rental property may find themselves paying a very high rate of tax on the income from those properties. According to the rationale for the new higher rate of tax, it should not apply to third generation income. As a result, the proposed reform will require many CCPCs to keep track of five different streams of net income, and whether that income has been paid out or reinvested (and in what).

Conclusion CFAA has met with key Finance policy people to seek to minimize the negative impact of the intended corporate tax reforms on rental owners and managers. In future issues, look for reports on the details of the proposed reforms as they affect rental income.

NATIONAL OUTLOOK Airbnb – the long view of short-term rentals in Canada By Jeremy Newman, Director of External Relations, CFAA Short-term rental services have massively disrupted how consumers and hosts approach short-term lodging, turning many would-be hotel guests into Airbnb guests and many homes into de facto hotel rooms. Short-term rentals are a growing issue for many of Canada’s landlords, as some tenants seek to earn a good part of their monthly rent through daily rentals of their apartments. A few tenants are in the business of renting well-located apartments short-term, for profit, while they live elsewhere. Airbnb is the biggest and most popular of the short-term rental services, which are popular among users for their ease of use and flexible and (sometimes) economical short-stay accommodations. Airbnb has seen staggering growth since it came on to the market in 2009, now boasting 200 million users and over 3 million listings in 191 countries. In Canada, it is estimated that there are 70,000 Airbnb hosts with over 105,000 listings. In Canada, Airbnb generates now generate over $500 million in revenue; which is more than double what it generated in 2015. Governments have been slow to understand the impacts, and effectively regulate short-term rentals. Bowing largely to considerable pressure from the hotel lobby which argues that Airbnb benefits from an uneven playing field, Airbnb has made several major concessions, including its agreement to collect local hospitality taxes from its hosts. Impacts felt by landlords and tenants alike But the impacts of short-term rental services extend far beyond the bottom-line of the hotel industry. At a market level, research has confirmed what those in the rental housing industry already knew: Airbnb removes units from the rental market, causing or exacerbating supply and affordability issues in supply-limited centres like Toronto and Vancouver. This in turn, pushes low-income tenants out of city cores as units are turning into “ghost hotels.” Data from Toronto and Montreal, as well as many major American centres, show that increased Airbnb

use has inflated the cost of rent, and also leads to increased house prices. On a practical level, Airbnb rentals present security issues and sometimes noise and damage issues at rental buildings. Most landlords would prefer not to have to deal with “home sharing” and consider it a form of illegal subletting, where provinces allow.

A worrying picture Data from 100 US cities shows that a 10% increase in Airbnb listings leads to a:

0.39% increase in rents, and 0.64% increase in home prices.

Data from Canada show that Airbnb listings remove a total of 13,700 units from rental markets in Montreal, Toronto and Vancouver annually. That is about a 2% loss of rental stock. There are 105,000 active listings of Airbnb units in Canada. This number doubled in Canada since 2015.

Thriving in a legal grey zone In the United States, disturbances by Airbnb guests at a high-end apartment complex in Los Angeles led American landlord AIMCO, a major publicly traded apartment REIT, to sue Airbnb, claiming that Airbnb facilitated tenants in violating their lease agreements through unauthorized sublets. The federal judge ruled against AIMCO, saying that Airbnb was insulated from AIMCO’s claim, and that tenants were ultimately responsible for the violation, citing American communications law. Airbnb says that all tenants must have the landlord’s permission to host. Airbnb’s Terms of Service require hosts to pledge that they “will not breach any agreements with third parties.” However, it is relatively common for landlords to find their units listed without permission. An Ottawa landlord recently emailed Airbnb after finding one of their units listed. The listing was removed, but soon re-appeared on the listing site. Airbnb sent the landlord an official email response advising the landlord of their rights. Their conversation and email showed a definite reluctance to be helpful.

rentalhousingbusiness.ca | 39

DEC/JAN 2017-18 An Ottawa landlord advocate says, “I am convinced Airbnb wants to encourage tenants engaged in the practice to continue because then Airbnb gets paid.” In response to questions about the issues at Airbnb short-term rentals, Airbnb pointed to its recently-launched “neighbour tool,” which allows people to contact Airbnb about problems with listings in their community. Airbnb says it works with the host to resolve the issue. Airbnb’s spokesperson added, “Hosting is a big responsibility and those who repeatedly fail to meet our standards and expectations will be subject to suspension or removal.” Responses across Canada Cities across Canada are moving to license Airbnb operators. Toronto’s Airbnb rules would use licensing to reduce “neighbourhood nuisances” from short-term rentals. The City could deny applications or remove problem operators from the city registry if there is criminal activity or a threat to public health and safety at a listing. Both Toronto and Vancouver want to limit Airbnb rentals to primary residences to keep people from buying housing stock to use as Airbnb income properties. Toronto city staff estimate that such a move would reduce the number of properties listed by 3,200 leaving 7,600 properties listed in Toronto. The City of Ottawa may follow suit. The City is currently examining whether existing bylaw and zoning rules can deal effectively with concerns about safety, parking, noise and land-use conflicts that come with the growing popularity of short-term rental operations. Licensing Airbnb operators (whether landlords or tenants) may make sense since the area is currently as unregulated as the “Wild West.” That is unlike rental housing, which is already heavily regulated by the provinces and the various building safety authorities, and does not need more regulation from the cities. However, landlords may only want Airbnb rentals to be regulated if landlord consent is required, since a regulated use without consent might interfere with landlords’ current ability to prevent Airbnb rentals as unlawful sublets. Even in provinces and municipalities that have regulated short-term rentals, host compliance and enforcement are major hurdles. For instance, Quebec has passed a provincial law requiring Airbnb hosts to register

40 | dec/jan 2017-18

with the province. Few hosts have complied. Of the estimated 19,400 Airbnb hosts in Quebec, only 967 hosts are operating with a permit – that’s less than a 5% compliance rate. Divergent landlord views Most landlords want to stop short-term rentals by tenants in their buildings. However, a few are willing to allow tenants to rent short-term occasionally because they believe they can get higher rents if the tenants can get that help to pay the rent. In an effort to try to work with landlords and alleviate concerns, Airbnb has created the Airbnb Friendly Buildings Program to engage landlords in the hosting process. The program aims to better manage complaints and gives participating landlords a share of the hosting revenue. Support for, and uptake of the program is mixed. Critically, the program does nothing to alleviate the impact of Airbnb on prices and availability of housing in supply limited centres. A few other landlords are looking at hosting their units which may be vacant for 15 to 30 days between tenancies. While they would need to furnish the units to rent them on Airbnb, such rentals would be a way to generate extra revenue when they are not able to arrange back-to-back rentals. In the short and medium term, such operations could raise the net revenue and value of suitable rental buildings without reducing rental supply, and without increasing residential rents. In the long-term, such operations by landlords could raise the value of rental buildings, and thus encourage a larger supply of purpose-built rental buildings, which would be to the benefit of both tenants and property managers. The landlord community as a whole wants government to address the short-term rental issue in a way which addresses the concerns of landlords, tenants and homeowners in the long-term.

What do you think? Let CFAA know by email at communication@cfaa-fcapi.org.

NATIONAL OUTLOOK Showcasing excellence in Canada‘s rental housing sector By Jeremy Newman, Director of External Relations, CFAA The Canadian Federation of Apartment Association successfully launched the first and only national rental housing awards in Canada in 2016. The program was well received. In its second year, applications in the CFAA Rental Housing Awards Program doubled. Now, CFAA is proud to announce that the 3rd annual Rental Housing Awards Program is open for applications. To learn how to apply, judge, or sponsor, please email awards@cfaa-fcapi.org. Awards finalists and winners will be announced at the CFAA Awards Dinner on May 15, 2018. The Awards Dinner is part of the CFAA Rental Housing Conference 2018.

In 2017, Hollyburn properties won Rental Housing Development of the Year for their stunning “Bridgewater” development in North Vancouver. The building is the synthesis of Hollyburn’s four decades of property management experience. CFAA’s judges praised it for its modern, community oriented design and environmental practice. This year, attendees on the Building Innovations Tour will have a chance to see first-hand what made the Bridgewater stand out among the competition in 2017. The tour will also feature “The Duke” by Edgar Development, a 14-storey, 201 units mixed-use development in Mount Pleasant, Vancouver. With its LEED Gold certification, European inspired design, and public art installation, The Duke is also worthy of a national showcase. Visit www.CFAA-RHC.ca for more information about Rental Housing Conference 2018 in Vancouver.

Top: Hollyburn accepting Development of the Year award Middle: Bridgewater, North Vancouver Bottom: The Duke, Mount Pleasant, Vancouver

rentalhousingbusiness.ca | 41

42 | dec/jan 2017-18

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President’s message With the upcoming municipal and provincial elections this year, we have encouraged our members to vote, and if they were going to be meeting with their municipal and provincial candidates to ask for change. When we asked our members about what was important to them, they answered! In the provincial election, they want to see candidates who push for various changes to better the industry. Some comments included:

In the municipal election, they want to see candidates who push for various changes to better the industry. Some comments included:

• • • •

A rent control guideline that better represents the increase of building operating costs Landlord Tenant Board reform (better balance of fairness in LTB and fix the deficiencies) Removal of rent control Retain vacancy decontrol Change human rights legislation Abolish the recent change to the mortgage rules so that investment is easier

• • • • • •

Stop licencing and better educate the public on why it’s not good Property tax fairness Portable rent subsidies More reasonable bylaw enforcement LRT (Light Rail Transit) in Hamilton Homelessness, more affordable housing opportunities Open up more land for development and intensification with incentives to private development

We encourage our members to get involved to help the industry. We plan to help them meet the candidates and express their concerns as well as canvas the candidates on their positions.

Multi-family market review and outlook for 2018 At out last dinner meeting in January, our guest speaker, Lucie Brusse, discussed the multi-family market review and outlook for 2018. Here is what she covered. Unprecedented land prices and the steady stream of capital into this asset class continued in 2017, with the expectation being that this momentum will continue into 2018 and beyond. Earlier in the year, there was much debate around what the impact of the provincial government’s “Fair Housing Plan” would have on the market. The plan said bye-bye to the 1991 exclusion that allowed for rent increases on newer built units based on market demands (with no rent control limit). The debate questioned how many purpose-built rental development projects would be converted to condos, due to this change. While some were abandoned, many moved forward and have been further planned as 2017 progressed.

rentalhousingbusiness.ca | 45

The continued increase in land prices, the change in rental rules and the way people live present unique opportunities for those who are able to creatively develop properties that will meet the needs of today, tomorrow and beyond! Some of the key market drivers we saw in Hamilton in 2017 were: • • • • • • •

At 28% of the population, Millennials now outnumber Baby Boomers in Hamilton. Millennials want to live an urban life. LRT approved by Council – improving the connection from Hamilton to the GTA and beyond. Bid for Amazon’s HQ2 was submitted by the City of Hamilton. GO Train service to Toronto moves forward, and gains exposure. Hamilton smashed its $1 billion record for building permits in the first nine months of the year. The number of apartment buildings (valued at over $500,000) was up 31% over 2016.

Trends to plan for in 2018 and beyond: • The shared economy continues…. How can it benefit your properties? – short-term rentals, co-working space, shared bikes, Zip car pick-up…..

Landlords in the news They say that all press is good press, but they are wrong. Landlords historically have been the go-to bad guys to sell papers. Recently, some of our members have hit the headlines in local papers with stories geared to demonizing their business practices: “Two years without beds because of bedbugs” or “Renting to a different demographic.” The landlord’s side of the story is typically minimized and much different than the article indicates. We know that the media is not on our side because we rarely see something like “Landlord provides decent housing at a reasonable cost

Millennials and Baby Boomers want to live an urban life. Work. Live. Play. How we shop moves more and more to online. Do properties need delivery rooms with parcel lockers? Apartments that allow shorter-term rentals can command a higher rent. Do you have a mix of rental types in key properties to meet the increased demand for short-term rentals?

In the next 3-4 years, more than 2,943 units will be built in the City of Hamilton, with more being proposed (for a complete list of these projects, visit http://theinletonline.com/hamiltondevelopment-boom-high-rises/). This will impact units already in the market, and further enhance the continued revival of the City of Hamilton. Like any industry, we are faced with significant changes, and those who face the changes with a new strategy will continue to prosper in this asset class. For a complete overview of market update and overview, please contact HDAA. Let’s look to a very successful 2018! Lucie Brusse is an HDAA Board member and Real Estate Advisor with Royal LePage Commercial. while paying higher taxes” or “Landlord helps tenant down on his luck by deferring rent payments for a month.” We know that there are great landlords who go above and beyond, but negativity sells and that is what the media goes for. Unfortunately, the more negative press, the more it reinforces the belief that all landlords have a vault full of cash that they roll around in on the first of every month and the only reason tenants pay rent is so that Uncle Scrooge can fill his vault. Perhaps it’s resentment for having to pay rent

Hamilton and District Landlords Since 1960, the Hamilton and District Apartment Association has grown significantly. Our member landlords and property managers manage in excess of 30,000 units throughout Hamilton, Burlington, Brantford, Guelph, Mississauga, Oakville, St. Catharines and into the Niagara Peninsula. The association is a highly respected organization, sought out regularly by government, industry, media and the public. To join, submit the application form available at www.hamiltonapartmentassociation.ca, or contact HDAA at 289-208-5445.

46 | dec/jan 2017-18

that leads to a belief that the monthly rent payment doesn’t go toward maintaining building and staff. I wonder how grocery stores and clothing departments do it. There is not the same level of resentment for having to pay for food, clothing or any other product we purchase and use. There is an understanding that the product costs something to produce, therefore it is worth paying for. Grocery stores are rarely in the headlines as the bad guys who are making more money than they deserve or need. It seems like landlords are the only ones criticized for being in business to earn money, while grocery stores are selling you food because they don’t want you to go hungry - but I digress.

solution is closer then we think. Stronger association involvement and pubic awareness of the industry (and the costs associated with maintaining a building) are a good start to change views of on landlords. Proactively presenting our contribution to the community we are a part of will go a long way to correct public opinion. HDAA does many charity, educational and social activities throughout the year that should be celebrated. It will take all of us to re-educate society and change public opinions, so let’s get started!

Perhaps bitterness toward landlords has always been there. They were originally wealthy landowners that the majority of the people could never dream of reaching, similar to how we view billionaires. The view of tenants is that they charged people just for being on their land, they incurred zero costs and had a lot of influence over tenants’ rights; whether that is a fact or not, that view of landlords has not changed. Today’s landlord is nothing like that; many are middle-class couples trying to find a way to pay their mortgage. The cost to maintain a building is ever rising and tenants have more rights than landlords. So the problem remains, how do we handle bad press? Do we complain that we are being treated unfairly? That bedbugs are a shared problem by both landlord and tenants? That changing the demographic of your tenants to improve your building and the City is the smart move? No, we sit quietly because we know that the media and public are not on our side. Until we can change public opinion to sympathize with landlords, we will be the go-to bad guys. Perhaps the

rentalhousingbusiness.ca | 47

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Ottawa property tax status – what landlords need to know As landlords and homeowners know, property taxes are paid to the City, based on the City’s tax rate multiplied by the assessment of the property. The City sets its tax rates based on its budget, but the property assessments are set by Municipal Property Assessment Corporation (MPAC). 2018 is the second year of the current four year assessment cycle. The 2018 taxes will be based on the 2017 assessment, which reflects a valuation date of January 1, 2016. Subject to any appeal by the owner, that assessment will also determine the property taxes for 2019 and 2020. For multi-residential properties (seven units and up), MPAC previously used the gross income approach, but for 2017 and 2018 taxes it is using a net income approach. However, the new system continues to look at average parameters for groups of buildings rather than the revenue and expenses of each building on its own. MPAC seeks to determine a normalized value for each property, ignoring the quality of management of any specific building. MPAC values residential properties (one to six unit buildings) by the sales comparison approach, with some elements of the cost approach (determining land value and depreciated building value separately). In Ottawa and in most other Ontario cities, new multi-residential properties and all residential properties pay a lower municipal tax rate than multi-residential properties. For example, in 2017 the City of Ottawa charged a multi-residential tax rate of 1.2915 per cent and a residential tax rate of 0.88885 per cent. That is a multi-residential tax ratio of 1.45. Both classes paid the same provincial education tax rate of 0.179 per cent. Rental properties and tenants are being treated unfairly by the application of different tax rates. In other parts of Ontario, the discrepancy is larger, since the average multi-residential tax ratio is 1.92. In Toronto, the multi-residential tax ratio is

2.99, meaning that renters pay a tax rate three times as high as homeowners. Many people think that when their assessment goes up their taxes go up. However, the real key is how each property’s assessment changes compared to other properties (especially those in the same property tax class). Table 1 shows the average assessment changes for Ottawa from the 2015 assessment for 2016 taxation, to the 2016 assessment for 2017 taxation (which applies for 2018 taxation). (Assessment increases are phased in over the four-year assessment cycle.) Individual properties have gone up by different amounts. Some newer buildings, and properties in the centre of Ottawa, have gone up significantly more than the average within the multi-residential class. Many older buildings and properties in some suburban areas have not gone up much.

Table 1: Average assessment increase by property class in Ottawa Average Total Change %

Average change per tax year




Commercial Broad Class



Industrial Broad Class









New multi-residential







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The provincial tax freeze In the Greater Toronto Area, the average multi-residential assessment went up by 45 per cent in this assessment cycle. Owners were alarmed and feared dramatic property tax increases, piled on top of the unfair excess multi-residential tax ratio. To address those concerns, the provincial government provided a tax freeze for multi-residential properties in many municipalities, although not in Ottawa or other municipalities with tax ratios below 2.0. About 15 years ago, the province recognized that the different tax burdens and tax rates on multiresidential property were unfair. While rental owners send the tax money to municipalities, economists agree that tenants effectively pay the property taxes on their rental apartments or homes. According to tax expert Allan Maslove, Distinguished Research Professor Emeritus at Carleton University, “The differential tax on rental units over owner occupied units is effectively and fully borne by tenants.” The province created a system in which the multi-residential tax ratio would come down, either by decisions of City Councils, or regardless of their wishes. The Federation of Rental-housing Providers of Ontario (FRPO) played a large role in achieving that system. Over that period the multi-residential tax ratio in Ottawa has been brought down from 2.32 to 1.45, largely due to Council decisions based on EOLO’s successful lobbying efforts to address the unfairness in the property tax system. In Toronto, the ratio has come down from 4.18 to 2.99, largely due to the province’s rules. Along with allowing or forcing tax ratios to come down, the province requires rental owners to

reduce rents when the property’s taxes fall by more than 2.49 per cent year over year. That ensures renters and politicians see the impact of city decisions on property taxes. FRPO and EOLO are both watching closely, and encouraging the provincial government to finish the job of moving to equal tax rates for renters and home-owners. Also, if your taxes fell by more than 2.49%, give the mandatory rent reductions OR apply to reduce the rent reductions. You must give your renters what you are required to give them in tax-driven rent reductions. The provincial rent reduction rules assume that multi-residential property taxes will be 20 per cent of rent. That is probably accurate on average across Ontario, but it is too high in Ottawa. The rent reduction rules allow landlords to apply to vary their rent reduction, and many building owners in Ottawa find doing that advantageous. Very recently, the province changed the rent control rules to prohibit landlords from giving above-guideline increases (AGIs) where utility costs have increased by extraordinary amounts. However, the provincial rules still allow landlords to file AGI applications where municipal taxes increase by extraordinary amounts. If your 2017 taxes have increased by more than 2.7 per cent, you can bring an AGI application to recover that increased cost from your tenants. Since tenants’ rents go down when municipal taxes are reduced, it only makes sense to bring applications to increase rents when municipal taxes are increased.

BECOME AN EOLO MEMBER NOW! EOLO invites Ottawa area landlords to join the organization. Have your interests and concerns heard, and benefit from EOLO’s support. As an EOLO member, you will: • Receive prompt email notification of relevant City rule changes • Be able to attend two networking receptions each year • Be able to attend two free education events each year

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•R eceive EOLO’s newsletter with more information about new issues Banner Ad at the City and and developments in provincial funding programs and landlord-tenant laws. To apply for membership, go to www.eolo.ca, download the membership application form and send it to us at the contact info on that website.


Engage a consultant OR check your assessment against that of competing buildings.

Regardless of what the province does, reducing your own assessment is almost always helpful, either now or in the future. To address your assessment on a rental property you are best to:

If the assessment seems high, meet the assessor and request a review.

If an appeal seems to make sense, appeal.

Landlord issues in the upcoming provincial election The next Ontario provincial election is scheduled for Thursday, June 7, of this year, less than six months away. The election campaign will officially start several weeks before that when the writ of election is issued. Individual campaign contributions to any given party are limited to $1,200 to the party, $1,200 to one or more riding associations and $1,200 to one or more registered candidates during the election, for a total of $3,600 in an election year, down from $23,275. Corporation and union donations have been banned. Interest groups such as the union-funded Working Families Coalition, or the teachers unions, are limited to spending $600,000 in the six months before the campaign and $100,000 during the campaign. There will be races for 122 seats, up 15 from the 2014 election. The added seats are in and around the GTA, Kitchener-Waterloo, Ottawa, Hamilton and Barrie. A party will need 63 seats for a majority. Here are the key issues for landlords, with some comments about each: Rental supply and rent control Ontario’s urban areas need new rental supply to meet the demand. A critical piece for that supply is the continuation of vacancy decontrol. That is also critical for the continued renewal of existing rental housing. Positive changes would include removing or raising the cap on rental increases (currently at 2.5 per cent) and allowing a 10 year rolling exemption for new rental construction. (Another issue affecting rental supply is the reforms to the Ontario Municipal Board and planning approvals.) The minimum wage and the Employment Standards Act Taking the new minimum wage as a done deal, the key outstanding issue is the possible inclusion of resident superintendents under the ESA. Landlords oppose that since it would make

it prohibitively expensive to continue current service levels with on-call supers. Income support for tenants The federal government will fund 50 per cent of the cost of a program of housing benefits for up to 150,000 low-income residents of Ontario. For them and for the landlords who rent to those tenants, we want Ontario to take up that funding and contribute its half. A basic income pilot may also be positive in supporting tenants’ ability to pay their rent in full and on time. Property taxes on rental buildings Currently in Ottawa, rental buildings of more than six units pay city property tax at a rate 45 per cent higher than homeowners do. In many other cities the over-taxation of rental buildings and renters is worse. The new provincial government should ensure all cities charge property tax on rentals at the same rate as homeowners (not more). Speeding up proceedings at the LTB For rent arrears, it takes a minimum of 15 days to start an eviction application, and tenant behavioural cases are not much quicker. Hearings are usually scheduled at least three to six weeks later in Ottawa (and that delay can easily be longer in other places). After the hearing, it normally takes another three weeks to actually evict a tenant, for a total processing time of eight to 10 weeks in “fast” locations like Ottawa. Most other provinces employ eviction procedures that enable an eviction to be completed within two to four weeks. Ontario should streamline the process to protect responsible tenants and landlords from the bad apples, especially when “professional tenants” can work the system to delay matters much more, at tremendous expense to the landlord in lost rent and legal fees. Responsible tenants also suffer from the delays, because disruptive tenants continue their problematic behaviour until they are actually evicted.

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WRAMA held its first meeting of 2018 on January 10, welcoming two guests to speak. With WRAMA’s mission to actively and positively develop and sustain the integrity of its members’ business – the provision of private residential rental accommodation – in the Golden Triangle, members were grateful to hear from Jim Garnett, President of Canadian Tenant Inspection Services, and Brenda J. Maxwell, COO of RentCheck.ca. Understanding the risks of failing to conduct regular property inspections By Anna Garnett, CTI Services When was the last time you inspected a rental unit? If you can’t put your finger on the date, then you might be in for a surprise, as well as unexpected expenses, potentially dangerous situations, litigation and more. While you might consider insurance as your protection of last resort, it does not cover every contingency. Some insurance companies consider regular inspections as evidence of the landlord doing due diligence to ensure that the property is properly maintained. The insurer could use failure to inspect to disallow a claim, which could leave you responsible for damages. “We recommend owners have their rental dwellings inspected 3-4 times per year to ensure the property is used for its intended purpose,” said Brian Paetkau, Property Manager, Hugh and McKinnon Realty Ltd. "There are a lot of examples where there were issues with the tenancy. Examples include drugs and cultivation of marijuana, too many people living in the unit, unlicensed vehicles on the property, pets and smoking. As property managers, we are able to monitor and manage a property by having regular inspections conducted." Regular inspections can protect you, your building, your investment and your tenants from a host of problems. Consider the following scenarios that can occur when you do not follow a regular inspection schedule of rental units. Illegal use Residents in a new high-rise wondered why so many subjects of questionable character were coming and going from their building, and why there was an increase in property crime.

Jim Garnett, President of Canadian Tenant Inspection Services Ltd.

Inspection of a unit determined that an 81-yearold tenant was sleeping on a cot in his living room because he rented out his bedroom to a prostitute who was bringing clients into the building. Unauthorized pets A unit in a Burnaby high-rise was rented to a male with no pets. An inspection identified the fact that the tenant had a dog. The landlord has stipulated "no pets" as a condition of the tenancy and therefore no pet deposit was retained. Damage to unit or building Tenants paid little attention to water stains that were forming on the ceiling of their rental unit. An inspection identified the stains as a water leak and alerted the owner who initiated an investigation with the building strata. The taps in a vacant unit on an upper floor of the high-rise building were identified as the culprit and repairs were conducted before further damage was realized. Landlords who are not visible to their tenants are often the target of misuse of their rental dwellings. If the landlord doesn't pay attention to what's happening at their property, activities may be occurring at

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the residence that breach the policy terms and void the policy. Subletting the space A unit in a Vancouver high-rise building was being used as an AirBNB. The building had a concierge service, but the concierge was afraid of the operators so he ignored the activity and did not report it to his superiors. Residents of the building observed people coming and going with luggage on a regular basis and reported the activity to the strata as AirBNB was not allowed under the strata’s by-laws. As the condo was not being used for its intended purpose, the owner's insurance liability was brought into question. Statement from landlord "Many landlords have experienced difficult, maybe even abusive, tenants. They will understand me when I say I was reluctant to personally serve them documents to terminate their tenancy,” said Sarla Ram. "I wanted to avoid confrontation or a volatile situation. Therefore, I made the decision to hire a professional firm who would serve the documents and interact with the tenant.” Conclusion As you can see, the dangers of failing to conduct regular inspections of your rental units are all too real. These real-life scenarios will not happen with every rental unit, but do you really want to take that risk? All it takes is time and effort to prepare and follow an inspection schedule. Learn from the mistakes of others so that you can avoid the consequences of failing to conduct regular unit inspections. If you are unable or unwilling to conduct the inspections, then you should hire an accredited company who specializes in this service. Jim Garnett is the President of Canadian Tenant Inspection Services Ltd. He can be contacted at 778-840-7611 or jimg@ctiservices.ca. Check out the website: www.ctiservices.ca.

Considerations when screening prospective tenants safely, fairly and effectively By Brenda Maxwell, COO Rentcheck Credit Bureau Ltd. This is just a brief summary of points that Rentcheck emphasizes for all members. Since 1976 we’ve been in business not just for profit, but to share the best available information with Canadian housing providers. Get the whole profile: Credit scores aren’t enough. Rentcheck offers premium credit reports, which include detailed tradelines and financial records. Get the real tenant: A low credit score should not automatically disqualify anyone. Credit reports don’t include rental payments, yet industry studies show low-scoring applicants consistently pay rent in full and on time. This is why Rentcheck developed Tenancy History: it tells what landlords need to know and can identify successful applicants who might be disqualified due to consumer low credit scores. Avoid identity theft: Did you know it’s illegal to retain or copy any item of government-issued photo ID? Whether a driver’s licence, health card, provincial identity card, passport, landed immigrant card, etc., it must be used in the owner’s presence to compare their application information. Don’t forget to examine the signature and actual photo; ask questions about any detail that doesn’t match up. Some inconsistencies are harmless but others are not. Understand privacy laws: Nearly every landlord has interviewed couples as potential renters, but they must be screened as individuals. Don’t discuss an individual’s private information in front of their partner without their signed permission. Keep hard copy, signed permission documents for at least seven years, even if the individual is disqualified or moves out. Make sure your application process is fully privacy-

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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(like a constitution), by-laws, rules & regulations, (e.g., whether pets or smoking are permitted) reserve fund, insurance, management contract and any legal issues that the condo corporation may be involved in. In the case of new builds, a board has yet to be determined and condo fees have not yet been established. Responsibilities Research and understand common areas, condo fees and who is responsible for what. For example, if a window in your unit begins to fail (leaks, condensation between glass), is it the responsibility of the condo owner to fix? If other units experience similar issues, and the condo corporation is required to pay for them to be repaired, will this impact the reserve fund and the monthly condo fee? Brenda Maxwell & Larry Smith Jan.10th WRAMA meeting.

compliant by using Rentcheck’s “Schedule A”. It was designed by legal experts to cover all screening and background checks for the duration of a tenancy. Did you know that current privacy legislation allows a landlord to report debt owing, without permission? This includes rent, utilities and court-ordered payments such as child support.

Legislation Familiarize yourself with changing legislation in Ontario and the establishment of the Condominium Authority of Ontario (government trying to improve condo living in Ontario) and the Condominium Authority Tribunal.

Property management Connect with a property management company that can serve you and your investment by providing expertise and experience with managing tenants and their home. Local media speaks with WRAMA president Association membership With a surge in condo development in the Find support and information for best practice Waterloo Region, local news outlets looked to by joining WRAMA. Understanding your WRAMA for perspective from rental housing obligations as a rental housing provider goes providers. Please visit www.wrama.com to read beyond collecting rental payments. WRAMA’s the full Kitchener Record article by Greg Mercer, mission is to actively and positively develop “Landlord association urges caution on condos.” and sustain the integrity of its members’ Questions from the media regarding whether business – the provision of private residential condo ownership for rental purposes is a wise rental accommodation – in the Golden Triangle. investment decision, management issues that Membership information can be found at accompany ownership and the builder/purchaser www.wrama.com. relationship were central to the conversation. When asked by CTV Kitchener’s Maleeha Sheikh where condo investments were seeing positive returns, Macallum replied, “Rental housing providers who are engaged and accessible to their tenants, are the rental housing providers who are seeing success.” With this in mind, WRAMA president Andrew Macallum offers the top five things to understand when considering purchasing a condo as a rental property in Ontario. Legalities Understand the impact of the information contained in the condominium status certificate. It will contain details about the declaration

Jan.10th WRAMA meeting.

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Looking ahead to 2018 Another year has come and gone! It was a busy year for our industry with the passing of the Fair Rental Act, the steps toward a new, standard prescribed lease and the legalization of cannabis. LPMA ended 2017 with a Christmas party to celebrate a successful year. Members also contributed to the Salvation Army Toy Drive, which provides toys to underprivileged children. The beginning of 2018 will bring a full slate of members’ dinners and general meetings with expert speakers, such as Amran Wali of CMHC. On February 13, Amran will present the results of the 2017 Fall Rental Market Report. It suggests a continued strong demand for rental units in our area, which is experiencing the lowest vacancy rate since 2001. The annual trade show will be held on April 10 with our associate members showcasing their products. I’m looking forward to seeing everyone there. Thank you for a magnificent 2017! - Lisa Smith, President

CMHC Fall Rental Market Report: London landlords benefit from the lowest vacancy rate since 2001 The 2017 Fall Rental Market Report suggests that London landlords should have no trouble filling their units this year. Growth in youth employment, an influx of international students, strong immigration levels and the rising costs of home ownership continue to drive the demand for rental units. The latest report from the Canada Mortgage and Housing Corporation (CMHC) found that average vacancy rates in the London Census Metropolitan Area (CMA) – London, St. Thomas, StrathroyCaradoc and Middlesex Centre, among other municipalities – fell to 1.8 per cent in October 2017, down from 2.1 per cent the year before. This marks the lowest vacancy rate in the London CMA since 2001, says Amran Wali, CMHC market

analyst for London-St. Thomas. It is a significant drop since 2010, when the overall vacancy rate for the London CMA stood at 5 per cent. The CMHC report found the supply of rental units rose by only 1.6 per cent in 2017, with 693 apartment units added to the rental market. Limited supply and strong rental demand saw average rents increase by 3 per cent, which is higher than the 2017 Ontario Rent Guideline of 1.5 per cent. “This means that new tenants were willing to pay more. It’s really good news for London landlords,” says Wali, who will present the findings of the report to LPMA members on February 13. Developers have responded to the tight rental market with a flurry of new construction. The London CMA saw 1,340 apartment starts from January to November 2017, up from 1,238 in all of the previous year.

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“We expect rental supply to increase over the coming years once these buildings are completed and occupied,” Wali notes. “But even if we have 2 or 3 per cent growth in rental supply, landlords will still see strong demand.” Gains in youth employment played an important role in the increased demand for rental units during 2017. Full-time employment for those aged 15 to 24 grew by 13 per cent in 2017, allowing more young people to leave the parental household. Young people tend to rent onebedroom units, Wali notes, which is reflected in the low vacancy rate of only 1.7 per cent for this type of rental unit. International students coming to London to study at Western University or Fanshawe College also drove rental demand. “There was a 30 per cent increase in the number of study permits issued in the London CMA this year relative to the same period last year,” Wali says. “Most of these international students are choosing to rent rather than go into student residences.” Many live close to campus in London’s north end, which had the city’s lowest overall vacancy rate at only 1.0 per cent.

a record year in 2016, which saw an influx of more than 1,200 Syrian refugees, international immigration has slowed but still remains higher when compared with the average of the previous five years. New immigrants tend to rent for their first five years living in Canada, says Wali, so their impact continues to be felt on the rental market. Finally, this year’s red-hot real estate market has driven up demand and prices for homes in the London CMA, making it more difficult for some rental households to transition into homeownership. “Essentially, the cost of owning grew substantially more than the cost of renting,” Wali explains. “A lot of households that were hoping to enter the ownership market held back.” Households transitioning into home ownership tend to vacate units with the highest average rents, Wali says. “Interestingly, the vacancy rate for these units was 3.9 per cent in 2016 – the highest vacancy rates among all the rental quintiles. In 2017, as we saw home prices rise substantially, the vacancy rate for that rental quintile dropped to 1.4 per cent,” he adds.

Steady population growth also continues to support the London CMA rental market. Following

Tenant insurance helps protect landlords when there is a fire Many renters buy tenant insurance to satisfy the requirements of their lease, only to cancel their premium once they move into their unit, assuming that their landlord will cover their costs in the event of a fire. What they find, instead,

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is that they’re on the hook for expenses that could include everything from replacing their belongings to paying the rent while their unit is being repaired. London lawyer Joe Hoffer says that most industry leases, including LPMA’s, require that tenants obtain and maintain content and liability

London Property Management Association (LPMA) is a non-profit organization, located in London, Ontario, Canada, that provides information and education to landlords.

Membership is open to landlords and property management professionals who own or manage one or more residential rental units.

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.

Sign up online www.LPMA.ca, or call Brenda Davidson at 519-672-6999 for more information.

(personal injury) tenant insurance. Most landlords also require that new tenants provide proof of insurance to their landlord before the landlord gives them the keys to their unit and that tenants consent to permitting the insurer to notify the landlord if they cancel the insurance. “That imposes on the tenant the obligation to keep the insurance in good standing,” Hoffer says. In the event of a fire, smoke and water damage could ruin the tenant’s belongings and the possessions of other residents in affected units; the occupants could also be injured. Because the fire department seals the premises while an investigation is under way, the tenant will need to find other accommodations, Hoffer says. Even though the unit is uninhabitable because of the damage, the rent continues to be payable under the tenancy agreement.

to repair that damage and damage to the tenant’s belongings, and cover the cost of having the tenant stay in other accommodations. “Those are key things that tenants and landlords often mix up and are key items of dispute,” Hoffer says. If tenants won’t leave their unit with their possessions and move to a hotel, the landlord can’t repair the damage. That delay can cause mold and further structural damage, and often results in the removal of the drywall. The landlord’s insurer will cover the damage to the structure, but the landlord will look to the tenant’s insurer to cover further damage if the tenant doesn’t remove his or her belongings. Hoffer says tenant insurance can help to reduce the premiums for the building or the amount of deductible the landlord assumes to keep his or her premiums down. Some landlords have a $50,000 deductible because, if they didn’t, their premiums would be so high that they couldn’t afford to operate the building. “Very large landlords will self-insure because the cost of premiums is sky high,” Hoffer says.

The rules are clear when the fire is due to the tenant’s negligence. “If the tenant doesn’t have insurance, their contents are lost, they have to pay out of pocket to stay somewhere else and if there’s personal injury, they’re personally liable if they’re the ones who caused the fire,” Hoffer says. Tenants commonly and erroneously believe that covering the cost of those elements is the landlord’s responsibility. “Now the landlord is in a legal dispute with the tenant and that costs money and takes energy,” Hoffer says. If the fire is the landlord’s responsibility, the tenant’s insurer can pursue the landlord’s insurer to cover the tenant’s claims. And if there is water damage to the units below, the landlord will have

If the tenant has insurance, the adjuster will suggest that the tenant stay in a hotel while his or her unit is being repaired. That minimizes inconvenience to the tenant and is within the scope of the policy, Hoffer says. If the tenant isn’t insured, it’s in the landlord’s interest to give some direction to the tenant about staying in low-cost accommodations or in a shelter. “But just because the tenant didn’t comply with the insurance obligation doesn’t mean the landlord’s going to assume responsibility,” Hoffer says. Many landlord policies have rent loss protections in place. If the landlord’s policy does, he or she will be covered even if the tenant can’t pay the rent. “But it doesn’t mean the tenancy is terminated. It just means that the landlord wouldn’t go after the tenant for non-payment of rent,” Hoffer says. “The landlord’s insurer could decide to go after the tenant, but usually they don’t.”

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Five social media and digital marketing trends to watch in 2018 What are the trends that will matter most for CMOs and other marketing leaders in 2018? Though we don’t pretend to have a crystal ball or to know exactly what’s going on in your company, we can share what’s top of mind for PMG and our brand partners, who represent some of our industry’s leading brands. 1. Video’s value keeps growing with real-life storytelling. Successful brands are combining the emotional impact of video with the reach and immediacy of social media to build deeper relationships with customers and prospects. 2. Social media direct messaging could redefine the customer experience. As the

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use of social media messaging platforms like Facebook Messenger, WhatsApp and WeChat grows exponentially, the potential for improving customer experience also expands. Besides allowing customers to interact in a channel where they feel most comfortable, direct messaging enables companies to provide a higher quality of customer care and support. 3. Brands go all-in on mobile or get left behind. The link between social and mobile is clear: 91 per cent of social media users access social platforms via mobile devices. Furthermore, visitors are five times as likely to leave a site that’s not mobile-friendly. 4. Customer-centric technology drives personalization and ROI.

Today, companies are expected to deliver highly targeted, personalized content at the speed of light. To achieve that, we need a 360-degree view of customer engagement across the entire journey. Acting on this customer understanding is central to a successful digital marketing strategy. 5. LinkedIn strengthens its position as the most valuable channel for B2B. With LinkedIn’s “all business all the time” focus, it’s the leading social channel for B2B marketers — 89 per cent leverage it over other platforms. That preference is tied to results, with 62 per cent using LinkedIn for lead generation and 43 per cent attributing sales to the channel.