A REALITY CHECK ON RENTAL HOUSING POLICY IN ONTARIO LONDON PROPERTY MANAGEMENT ASSOCIATION JANUARY 13, 2015
� � � � ONTARIO’S PRIVATE SECTOR HOUSING INDUSTRY � Provides homes to over � 1.2 million households in Ontario � $18.3 billion � in GDP annually � Over 147,000 jobs � $7 billion in tax � revenue to governments � FRPO—Federation of Rental-housing Providers of Ontario 2
Rental Housing Infrastructure Investment $4.5 billion in capital expenditures on new apartment construction and renovations to existing housing Over 42,000 full-time jobs created in new construction and repair FRPO—Federation of Rental-housing Providers of Ontario 3
An opportunity for the rental-housing industry to be proactive in helping to steer the THE WYNNE GOVERNMENT development of § Majority government new policy § Beginning of less centralized directions approach to governing § Recognition of evidence-based decision making § Focus is on affordable housing 4 FRPO—Federation of Rental-housing Providers of Ontario 4
DEMOGRAPHICS OF RENTERS IS SHIFTING § Millennials (ages 15-35) are a key part of the population seeking rental accommodation § Seniors are looking for specific amenities when they downsize from larger homes AGE PROFILE OF ONTARIO RENTERS 75+ 55% of Ontario’s 65-74 Age Group 55-64 rental housing stock, 45-54 was built prior to 35-44 25-34 1970 15-24 0% 20% 40% 60% 80% 100% Percent Renting FRPO—Federation of Rental-housing Providers of Ontario 5
KEY ISSUES IN THE ONTARIO RENTAL HOUSING INDUSTRY § Rent Control § Rent Dispute Process § Property Tax & Assessment § Municipal Licensing 6
RENT CONTROL 7
POLICY ISSUES RENT CONTROL POLICY CHANGE IMPACTS ON SUPPLY An idea that plays well with tenants and voters But it is a policy that brings dire economic consequences FRPO—Federation of Rental-housing Providers of Ontario 8
POLICY ISSUES RENT CONTROL INFLATION IS PUTTING PRESSURE ON 2.5% RENT CAP 3.5% Operating and 3.0% capital costs have 12-month CPI Change 2.5% edged above 2.0% 1.5% annual rent 1.0% increase guidelines 0.5% 0.0% KEY FACTORS 2014 rent increase guideline 0.8% 2015 rent increase guideline 1.6% FRPO—Federation of Rental-housing Providers of Ontario 9
POLICY ISSUES “The post-1991 rent exemption was RENT CONTROL originally introduced—and has been maintained over time—as an incentive for private landlords to build new rental accommodation. This The current new incentive not only helps to renew the development policy set rental housing stock, but also creates out in the Residential jobs in the construction sector. As Tenancies Act is the such, any changes to this incentive primary reason why could have an adverse effect on the new rental housing is rental housing sector, the economy, being built and job creation.” � Hon. Linda Jeffrey Minister of Municipal Affairs and Housing April 2013 FRPO—Federation of Rental-housing Providers of Ontario 10
RENT DISPUTE PROCESS 11
� � POLICY ISSUES RENT DISPUTE CASE STUDY SAIDA SABRIE v. STARLIGHT APARTMENTS PROCESS Failure to pay rent. Amount of rent $2,127 owed to landlord First hearing scheduled � ADJOURNED April 8,2013 Comparison of 129 Rescheduled hearing set for � ADJOURNED June 7, 2013 Average Days to days Rescheduled again and heard on � August 14, 2013. No further ORDER ISSUED Resolve Landlord- adjournments granted Tenant Disputes � Tribunal issued order to pay arrears AUGUST 26, 2013 or move out Tenant ignored order, appealed to LTB ORDER Divisional Court (Judicial Review) STAYED British Columbia 35 � Divisional Court hearing scheduled JUNE 10, 2014 292 and heard Alberta 17 � days Court found no error of law, LTB ORDER Saskatchewan 25 � applicant’s case had no merit CONFIRMED Manitoba 32 � Total landlord costs incurred: $2,500 $25,000. Total amount awarded Ontario 90 � 421 days FRPO—Federation of Rental-housing Providers of Ontario 12
� � � POLICY ISSUES RENT DISPUTE Eliminate the automatic stay of a Tribunal PROCESS order in the event of a tenant appeal being filed � FRPO is presenting Reduce statutory delays, such as reducing several options to the N4 notice period from the current 14 government to bring days down to 5 � about an appropriate balance to the current Introduce a Dispute Form and end dispute process default hearings � Allow private bailiffs to enforce Orders as an alternative to the Sheriff’s Office FRPO—Federation of Rental-housing Providers of Ontario 13
PROPERTY TAX & ASSESSMENT 14
POLICY ISSUES PROPERTY TAX & ASSESSMENT How apartments are assessed Ontario is the only jurisdiction that uses the outdated Gross Income Multiplier (GIM) methodology How apartments are taxed On average, municipalities tax apartments at TWICE the rate of houses and condominiums FRPO—Federation of Rental-housing Providers of Ontario 15
� POLICY ISSUES FRPO recently negotiated a PROPERTY TAX & streamlined data collection process ASSESSMENT for multi-residential properties RESOLVING THE § New Tenant Information Package (TIP) forms released September 29 th ASSESSMENT ISSUE § Rental data now collected at the suite level only (suite time, market rent)—individual tenant data no longer FRPO has formed a required partnership with the § One-time collection of what utilities and amenities are Municipal Property included in rent—going forward you notify MPAC of Assessment Corporation changes only ( MPAC ) to examine the § New form captures number of vacant units on � move to a more transparent June 1—you no longer have to indicate individual unit assessment methodology vacancy Previous forms collected 10.7 million data points. This new process will drop this number to 733,000 , a volume reducMon of 93% FRPO—Federation of Rental-housing Providers of Ontario 16
Ratio of Multi-Residential to POLICY ISSUES Residential Property Tax Rates PROPERTY TAX & 3.50 3.00 ASSESSMENT 3.15 2.50 2.74 2.57 2.00 2.05 1.98 Municipalities set the 1.50 tax ratios between 1.00 1.00 1.00 1.00 different property 0.50 classes 0.00 Multi-residential Source: FRPO Survey of MunicipaliMes properties are taxed on average at TWICE FRPO’s Fair Tax Fair Rent Campaign the rate of houses and condominiums A HOME IS A HOME www.fairtaxfairrent.ca FRPO—Federation of Rental-housing Providers of Ontario 17
Estimated annual LONDON 2 BDRM APARTMENT tenant savings on CURRENT WITH FAIR TAX RATES TAX RATES avg 2 bedroom Average apartment if $ 943 $ 877 monthly rent taxed fairly at Property tax the same rate as $ 149 $ 83 portion houses & condos � 2.05 1.00 Property Class Tax Ra0o $792/yr $66/mth OVERPAYMENT FRPO—Federation of Rental-housing Providers of Ontario 18
MUNICIPAL LICENSING 19
POLICY ISSUES EXAMPLES OF MUNICIPAL LICENSING FEES MUNICIPAL LICENSING Permissive authority granted to municipalities in 2007 by repealing Section 2 of Ontario Regulation 243/02 This new fee, from $50 - $400 is passed along to the tenant through their rent Municipalities already have the necessary tools to effectively manage how rental housing is developed and operated FRPO—Federation of Rental-housing Providers of Ontario FRPO—Federation of Rental-housing Providers of Ontario 20 20
POLICY ISSUES MUNICIPAL In 2013, FRPO commissioned a research study to examine the evidence on apartment licensing LICENSING schemes in multiple jurisdictions CONCLUSION “Apartment licensing is not an efficient source of new ‘net’ municipal revenues. It creates unintended nega0ve effects on the local economy…” “…More importantly, apartment licensing does not necessarily offer added protec0on to tenants and prospec0ve tenants. In fact, it tends to add to the eligible costs that can be charged by landlords and to reduce the op0ons for tenants in the rental housing market.” FRPO’S SOLUTION Restore the regulatory provision that existed prior to 2007 to exempt apartments from municipal licensing FRPO—Federation of Rental-housing Providers of Ontario 21
FRPO’s key messages to government 1. The solution for affordable housing involves all the players doing only what they do best 2. Let evidence guide the development of public policy � 3. A fair and level playing field for the industry generates the best outcomes FRPO—Federation of Rental-housing Providers of Ontario 22
� Scott Andison President & CEO Federation of Rental-housing Providers of Ontario tel: 416-385-1100 email: sandison@frpo.org 23
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