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.
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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.
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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
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Ottawa property tax status â€“ what landlords need to know As landlords and homeowners know, property taxes are paid to the City, based on the Cityâ€™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 propertyâ€™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
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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.
ADDRESSING YOUR OWN ASSESSMENT OR TAX CHANGES
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 firstname.lastname@example.org. 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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