from an associations’ perspective Association Members: British Columbia
David Hutniak, CEO, LandlordBC
Al Kemp, Executive Director, Manufactured Home Park Owners Alliance of BC
Avrom Charach, Director of External Relations, Professional Property Managers’ Association of Manitoba
Jim Murphy, President and CEO, Federation of Rental-housing Providers of Ontario
Arun Pathak, President, Hamilton and District Apartment Association
Andrew Macallum, President, Waterloo Regional Apartment Management Association
John Dickie, Chair, Eastern Ontario Landlord Organization
This year was marked by numerous issues that have not yet reached a resolution – tax policies, marijuana legislation, municipal charges, housing policy and so on. Things are a bit murky for the rental housing industry in Canada, so RHB Magazine spoke to a number of landlord associations across Canada to see if we could get a clearer picture of what happened this year, and what is projected for 2018. 14 | nov 2017
RHB: How have changes in tax policies over the past year affected your members? Are there any strategies that members are employing to reduce their tax load, at any level of government? David (LandlordBC): The small business tax that the Federal Government originally proposed was cause for concern for a cohort of our members. Al (MHPOABC): There have been none; however, manufactured home community owners and residents are double taxed. Owners pay property taxes on the value of their land with homes on it. Homeowners pay taxes on the value of their homes on a community site. This situation requires changes in about five different provincial Acts, and provincial politicians won’t make any change that is detrimental to municipalities – most of them cut their political teeth as municipal mayors or councillors. Avrom (PPMA): None of note – we do have concerns around some of the federal proposals but provincially there is not much happening. John (EOLO): Mid-size third-party property managers are concerned about the proposed federal corporate tax changes. As in other business sectors, forward-thinking corporate rental owners and managers are thinking about paying out dividends ahead of the tax changes, because the tax changes will come with decreases in the dividend tax credits, which will raise the effective rate of tax on some income which was earned, but not paid out, before the small business tax and dividend credits rates are changed. Jim (FRPO): The Ontario government recently introduced property tax measures that will benefit our members. All new rental projects in the province must be assessed at the lowest residential rate, usually single-family homes. The province also froze property taxes for existing rental buildings if they are two times or more the lowest residential rate. Members may be impacted by the federal changes to small business and incorporation. Members can also appeal their property taxes, which many do. Andrew (WRAMA): WRAMA’s members are concerned about increased property taxes and other building costs. In some cases, we cannot increase rents to cover those costs, so that maintenance and other services to tenants suffer. RHB: How are members preparing for the impending legalization of marijuana, and its impact on their tenants and buildings?
David (LandlordBC): LandlordBC is actively liaising with the Solicitor General of BC on this matter and collaborating with numerous municipal leaders and stakeholders to ensure that personal grow-ops, in particular, are banned from rental housing in BC. Al (MHPOABC): Our association has made submissions to both the federal and provincial governments recommending that growing marijuana not be permitted in rental properties, whether apartment buildings, manufactured home communities, single rental homes, or basement suites. This is critically important from safety, health, and potential property damage perspectives. Avrom (PPMA): We have made presentations to the government and our membership. We are endeavouring to allow landlords to make rules around growing and smoking in suites. We have had monthly discussions regarding the surrounding provinces and regarding the concerns we have. Jim (FRPO): Ontario has not yet finalized rules for household use that would affect rental buildings. FRPO has advocated that the growing of marijuana plants for personal use not be allowed in rental units. We have raised several concerns over how the growing of marijuana plants would be treated, e.g., issues around unit condition, access to unit. Arun (HDAA): HDAA members have no idea how to prepare for the impending marijuana legislation and its impact on their tenants and buildings as Ontario’s legislation has not been clarified. Our members’ main concern is that growing marijuana in multi-unit dwellings poses safety hazards and could result in damage to buildings and loss of insurance. Other concerns include overloaded electricity systems and potential damage from mould that can thrive in the humidity created by marijuana plants. At the last HDAA dinner meeting, we had a member raise the question as to how to handle smoking in buildings. What are the rights of landlords for those that are disturbed by another tenant’s smoking? Can we stop them from growing marijuana in their units? There have been many articles written in the papers about their concerns but there are no definite answers as everything is still up in the air. Andrew (WRAMA): Members and their tenants are anxiously waiting to see whether the new mandatory provincial lease will address marijuana growing and marijuana use, or at least allow landlords to do so. There is no doubt that growing plants and smoking marijuana will impact the
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physical structure of a house or building - and also negatively affect other tenants who live in the same house or building. WRAMA sincerely hopes that the government recognizes the rights of nonsmokers, families and children. John (EOLO): Most people seem to be waiting for the provincial rules. Some people are modifying their leases to prohibit the growing or smoking of marijuana, although whether such rules are enforceable will depend on the attitude of the Landlord and Tenant Board. The upcoming mandatory, standard lease will also have a significant impact on how landlords are able to police marijuana growing and smoking and other tenant behavior issues. RHB: Compared with past years, what is the situation for your members with regards to bedbugs and pest control? David (LandlordBC): Their knowledge level is higher so the situation has improved, or at least has not worsened. Al (MHPOABC): This is not an issue in manufactured home communities, as the residents own their homes, plus bedbugs can’t migrate from one self-contained home to another. Avrom (PPMA): Pest control has become all consuming in many ways. It has been very difficult to properly control bedbugs, especially if tenants fail to co-operate. That being said, the government has been very supportive of our needs for tenant compliance. Jim (FRPO): A number of major municipalities, in Ontario, are reporting a rise in the incidence of apartment bedbug infestations in 2017. FRPO’s Certified Rental Building (CRB) program has partnered with the City of Hamilton to develop a new Best-In-Class Integrated Pest Management program that encompasses new policy approaches, promotes a number of early preventative measures, and introduces new educational programs for both frontline staffs and tenants. These new measures introduce a shared responsibility for pest control, and are expected to significantly help reduce the incidence of major bedbug infestations. The new CRB IPM program is expected to launch early in the new year. Arun (HDAA): This year, HDAA has made a pointed effort to help landlords rethink the way they approach pest control – specifically bedbugs. Along with FRPO, HDAA has worked with the City of Hamilton and sat on the committee that developed Hamilton’s Integrated Pest Management program. Some techniques
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to pest management include encourage early reporting, conduct annual pest inspections, educate tenants, simplify the tenants’ role in treatment, take steps to avoid the spread of pests, work closely with pest control professionals, and ongoing monitoring and documentation. Andrew (WRAMA): At this point, this is not a prevalent issue for members. John (EOLO): On average, EOLO members find the current bedbug situation to be similar to recent years, although cockroaches seem to be getting worse. However, some members are struggling, while others see their situations getting better. EOLO is working with various social agencies in a recently formed Bed Bug Information Group on ways to address bedbugs more aggressively and effectively. While private owners have some problematic buildings, the more extensive problems seem to be in social housing buildings. Problems occur in all buildings when tenants do not prepare their units as required. EOLO is looking for help on that problem from the Property Standards Officers and from social agencies. RHB: If there has been a change in provincial government, how has that affected your members? If the government is still in place, have there been any changes in legislation that has affected your industry provincially? David (LandlordBC): There is a new government as of the end of June 2017, with the NDP assuming power, supported by the Green Party. The new government is very focused on increasing rental housing supply. Legislative change surrounding fixed term tenancies with a vacate clause in process to close a loophole that a steadily increasing number of landlords were using to avoid rent control. (Royal Assent is likely during the third week of November.) Legislation will also enhance housing security for tenants. LandlordBC is a strong supporter of the legislative change, as this form of tenancy was being misused, causing harm to the broader industry. Al (MHPOABC): There is the usual pressure when an NDP government takes power in BC to freeze rents – ideally forever. Avrom (PPMA): We have had a new government for almost two years. They inherited large deficits and have spent much of their energy concentrating on government efficiency. They have not made any changes to our legislation. We are trying to work with them to effect positive change but it can be difficult to have meetings
with our minister who also is responsible for Justice. While the government has not been making changes, there has a been a push, through the Human Rights legislation, to allow comfort animals in all suites even though legislation does not make that allowance. Jim (FRPO): 2017 has been a very busy year on the regulatory and government relations front. The Ontario government in April brought in Bill 124 that ended the post-1991 exemption for new rental buildings, eliminated the ability of property owners and managers to apply for Above Guideline Increases related to utilities, and toughened eviction rules for personal use. The government also began a process to introduce a standard lease for landlords and tenants. FRPO opposed these changes and proactively tabled alternatives including a rolling exemption or increase in the guideline formula of CPI plus for new rental buildings. FRPO has insisted that additional items, such as contents insurance and parking, be allowed in any standard lease. FRPO has initiated an extensive public relations campaign with the hashtag #rentON to encourage more rental supply and to promote rental lifestyle. The vacancy rate in Toronto and Ontario is low and going lower. More supply is the answer. FRPO is working proactively in the lead-up to the June 2018 provincial election by reaching out and meeting with all three main political parties and informing them of the importance of rental housing and the need for practical, balanced rent control legislation. FRPO has undertaken to research reports to support our efforts on supply, and on the economic importance of vacancy decontrol. Arun (HDAA): There have been no changes in government but bad policy from the Ontario Liberal government. Andrew (WRAMA): The greatest change has been the introduction of Bill 124, the Rental Fairness Act, as a part of Ontario's Fair Housing Plan. The RFA effectively eliminated the new building exemption to rent increase rules, and now requires landlords to compensate tenants if they wish to terminate a tenancy for personal use. The latter has a striking similarity to severance pay. RHB: Have there been any significant changes in municipal charges or taxes, and if so, how have they affected your members? David (LandlordBC): Other than constantly going up, no. Al (MHPOABC): There have been no significant changes; however, the assessment of property
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values for property tax purposes can result in tax increases as high as 50 per cent. This is because BC Assessment places significant weight on recent property sales. Where there are a number of fixed building sales in an area, the impact tends to even out. However, when one manufactured home community sells in an area where there haven’t been any comparable sales for several years, BC Assessment uses the sale price to unrealistically and exorbitantly increase the assessment of other communities in the area. Jim (FRPO): In July 2017, the City of Toronto introduced a New Apartment By-law #354 that includes a new Registration program for multi-res buildings (three or more stories and ten units or more); a number of mandatory Apartment Building Management requirements; and an enhanced building inspection/audit regime. This new by-law represents a landmark of increased regulation for the multi-res industry. The by-law requires property owners to provide a myriad of information about the age, condition, and physical operating systems of their multi-res building as well as paying an annual registration fee of $10.60 per unit annually to the City. The annual registration fee is expected to cost the Toronto purpose-built rental industry up to $3.6 million annually. The added cost of registration fees, plus the burden of additional regulatory requirements in Ontario’s rent control marketplace, will no doubt negatively impact the amount of annual capital spending, as well as impede new purpose-built rental construction. Arun (HDAA): Reassessment has led to higher taxes for some but others have found that their taxes have dropped, triggering a reduction in rents. Andrew (WRAMA): The City of Waterloo continues to enforce its residential rental housing licensing by-law (no. 2011-047) giving the City the "...ability to manage low-rise residential rental housing in the City." Proving compliance with the licensing requirements adds significant costs. Those new costs drive up the costs of providing rental housing, and will be ultimately reflected in rents. John (EOLO): Mayor Watson has led the City of Ottawa for the last seven years. In 2014, he promised to hold property tax increases to 2 per cent for this term of Council, and he has kept that promise. In 2017, some rental owners experienced assessment-driven tax increases, while some others received tax decreases. Tax decreases of more than 2.49 per cent are
passed through to residential tenants by way of mandatory rent reductions. EOLO members whose buildings received the tax decrease are in the process of providing those rent reductions. Leading EOLO members also provide voluntary rent reductions when buildings receive tax decreases of between 0.5 and 2.49 per cent. Members with significant tax increases can apply for above-guideline rent increases to pass through tax increases. RHB: Are there new housing programs in your area (such as Housing First or housing benefits paid to tenants or more social housing), and if so, how have they affected your members? David (LandlordBC): Housing and rental housing in particular is front-of-mind for all levels of government. Purpose-built rental is increasingly the focus of zoning relaxation, financial incentives, free government-owned land, etc. While there are many positive measures and the beginnings for some momentum, the scale of need far exceeds the supply under construction or in the pipeline. The new provincial government has committed to produce or facilitate production of 114,000 units of housing (primarily rental) over the next 10 years. The City of Vancouver is looking to end “exclusionary” zoning in single-family neighbourhoods to permit gentle intensification. Al (MHPOABC): Nothing has changed recently. The new NDP government has pledged to build 114,000 housing units over the next 10 years. Avrom (PPMA): The provincial government has been cutting back on payments of rent for clients on social services. That has led to calls from social housing advocates for returns to previous levels. John (EOLO): The City of Ottawa is slowly moving to a Housing First model in which people who are homeless are given supplementary income supports and, if need be, social service supports. Over the past three years, over 400 individuals were moved into supportive housing and into private market housing with supports. Many of them had lived in the homeless shelters for five or ten years. There have been some hiccups, but the new approach is effective overall. RHB: How are you addressing current housing programs? Are you seeking changes? David (LandlordBC): LandlordBC is advocating to (cajoling) provincial and municipal leaders throughout Metro Vancouver, Victoria, the Okanagan and other jurisdictions to support building of new purpose-built rental housing, and to do it fast.
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Al (MHPOABC): We are working on educating municipal and provincial politicians and the media on the value of manufactured home communities on the housing spectrum. A young family can buy a new 1500 sq. ft. home placed on a site in a manufactured home community for $250,000 to $300,000. While they are paying site rent in addition, this compares with the cost of a traditional home in a suburban or semi-rural area of $500,000 to $1 million and to rents of $1800 to $3000 a month. Avrom (PPMA): We support portable shelter benefits and fair benefits to help low-income tenants pay their rents, while still affording their other necessities. Jim (FRPO): To address income issues, FRPO has been a strong supporter of rent supplements and portable housing benefits. The Ontario government has introduced three basic income pilots, which FRPO supports. FRPO also believes that a part of the National Housing Strategy must include a portable housing benefit. Arun (HDAA): Hamilton has been working on its poverty reduction strategy. This is a 10-year plan that relies on millions in increased dividends from the Horizon Utilities merger and money drawn from the Future Fund. This will include money to repair up to 200 unusable social housing units, more funds for portable housing allowances for families, help to keep families in their homes and “rapidly re-house” those who lose housing, some funding for shelter diversion strategies and some funds for “indigenous-led” strategies to fight poverty and homelessness. Andrew (WRAMA): We are advocating collaboratively with FRPO. John (EOLO): Supplementary income support often comes in the form of a portable housing benefit paid by the City of Ottawa to supplement the inadequate Ontario Works or Ontario Disability Support Program shelter allowances. The use of housing benefits attached to the tenant rather than to the rental unit has been a long standing policy advocated by EOLO, as well as FRPO, HDAA, WRAMA, LandlordBC, MHPOABC, PPMA and CFAA. EOLO used CFAA’s lobbying material to achieve this program move by the City of Ottawa. Announced on November 22, the National Housing Strategy includes a plan to create a Canada Housing Benefit that will attach financial support to low-income renters rather than to rental units, starting in 2020.
Published on Dec 19, 2017