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The Tenant "Protection" Act:
An Attack on Tenants



Written by Robert Levitt
April 3, 1998


Ontario Tenant Protection Act, that was repealed January 31, 2007
Residential Tenancies Act, that came into effect on January 31, 2007


EXECUTIVE SUMMARY

Today, behind us at the Metro Toronto Convention Centre, there is "Springfest! '98 Multi-Unit Expo, A Special Event Exclusively for 1,500 Property Managers, Building Owners, Developers . . ."

Some of the seminars going on include, "The New Tenant Protection Act: Understanding the Implications ...," about such issues as the new eviction procedures, "how to achieve maximum rents with prospective and new tenants," and "how to assign, sublet or create a new tenancy"; the seminar "Renting 2000," which covers "increasing a building's cash flow and bottom line," and "how to sell a rent increase to your tenants"; and the seminar "The Arrival of REIT's to the Canadian Apartment Market," which is about Real Estate Investment Trusts and how they turn apartment buildings into easily tradable commodities (ie. "the Securitization of Rental Housing").

The Tenant Protection Act has been passed into law and was expected to come into effect in April, but now the government is saying May.

The Tenant Protection Act (TPA,) is a brutal attack on the 4 million tenants in Ontario, 1/3 of whom are on social assistance.

The TPA:

  • repeals the Landlord and Tenant Act;

  • repeals the Rent Control Act;

  • repeals the Rental Housing Protection Act;

  • ends the Residents Right's Act (which protected people in care facilities); and

  • amends the Human Rights Code.

Low income tenants: seniors, the disabled, the working poor, single parent families, immigrants and visible minorities will be the most vulnerable to the changes under this new "protection" act, that eliminates many protections they were previously covered by.

Some of the changes being brought in by the Harris government's Tenant "Protection" Act, include:

  • Bringing in Vacancy Decontrol. When a tenant moves out the landlord is allowed to charge anything they want to the new tenant; there will be no regulatory limits on how high the rent to the new tenant can be. This sets up an extremely adversarial situation between all sitting tenants and landlords. Landlords will want to get tenants out of apartments so they can jack-up the rents, and tenants will desperately want to hang onto their apartments so that they will not face a much higher Vacancy Decontrolled price.

  • Greatly relaxed Rent Controls for those who remain in their apartments, including loopholes such as no ceiling whatsoever on financing cost or on extraordinary operating costs. This will lead to Real Estate speculation in rental housing that can be fully passed onto the tenants. If an investor decides to pay a ridiculously high price for a building tenants will pay for his mistake; after all tenants have to live somewhere.

  • Fast-track eviction procedures - now a tenant who has reasons to dispute a landlord's application for an eviction, will only have 5 days from the time a landlord claims to have informed the tenant about the application, to file a written dispute. If the tenant doesn't make the ridiculously short deadline, they are assumed to not be disputing the landlord's claims.

  • With the repeal of the Rental Housing Protection Act, communities will lose by-law control over the conversion or demolition of rental housing and care homes.

  • There are new much shorter time restriction on tenants filing against landlords. It often takes a lot of time before a tenant realizes and can prove that a landlord is charging them an illegal rent or made them pay an illegal charge. When a tenant does find out it often has been going on for years. Now a tenant must file within a year of the end of the event, and can only get back that which is owed to them over the past 12 months.

  • Early termination of leases are permitted for landlords if they are demolishing or converting a building, or if they claim they need the apartment vacant to do renovations.

  • The end of the "costs no longer borne" provisions, means that under the government's Tenant "Protection" Act, that once your rent increase (such as for a new stove or balcony repairs) have completely paid off that item for the landlord you continue to pay for them . . . forever.

  • Landlords will now be able to refuse you a lease purely on the grounds that they think you don't have enough income, even if you have a great credit and tenancy record, which could be used to disguise illegal discrimination really based on other grounds such as age, marital status or race.

  • The misnamed Tenant "Protection" Act is an attack on the supply of affordable housing, and will be devastating to the poorest in Ontario. It will affect all tenants as well as those in care homes, but the poor will feel the greatest impact, especially seniors on fixed incomes, the disabled, working-poor families, single parent families, youths and visible minorities.

  • I expect skyrocketing rents, particularly for the most affordable units. Vacancy rates that are as low at 0.8% in the Toronto Census Metropolitan area will drop as rental housing is demolished and converted to condominiums. Separate vacancy rates are not kept based upon the affordability/price of the units, but the vacancy rate for the most affordable units will drop to close to zero in the Toronto area.

  • Evictions will soar with the "protection" act's fast track eviction system, where people have a ridiculously short 5 days to respond. People away, maybe because of a hospital stay or to visit out-of-town relatives, will come back to find they have lost their homes. Landlords will have a huge financial incentive to file unwarranted evictions so that they will be able to charge anything they like on the apartment. And there have always been other indirect ways to improperly force people out, and unscrupulous landlords will use them. The most vulnerable will be the most victimized.

  • Others will be economically evicted. The Tenant Protection Act creates many loopholes such as ending the "costs no longer borne" provisions, and ending above guideline rent increase ceilings for some items, which will be fully exploited by landlords. The "securitization of rental housing," where housing is only a commodity, will bring in foreign and domestic speculators who don't create housing, they merely speculate in it to drive up the prices, but at the expense of the 4 million tenants of Ontario. Those tenants who can no longer afford their skyrocketing rents will be out of luck and there will be few if any options available to them.

  • Our society's already unconscionable levels of homelessness will multiply as people are evicted and our affordable rental housing is demolished or converted. There will be greater demands on our social services and hostel systems which will cost all taxpayers.

  • After the first year, when half to three-quarters of a BILLION dollars annually is siphoned off by landlords in higher rents, malnutrition in tenant families will increase, and communities including local businesses will feel the devastating effects.

  • This government's policies, which are based upon ideology rather than facts and logic, will wreak a huge toll in human costs on the 4 million tenants of Ontario through increased poverty, homelessness, the breaking up of families, constant fear of rising rents or eviction, poorer health and even deaths.



The Tenant "Protection" Act: an Attack on Tenants



Written by Robert Levitt
April 3, 1998



FULL REPORT


"We want to bring in a rent control program . . . that will truly protect tenants and give them lower rents."
"We will replace nothing until we have a superior plan in place proven to work better."

- Mike Harris, April 3, 1995 {1}

The Tenant Protection Act has been passed into law and was expected to come into effect in April, but now the government is saying May.

The Tenant Protection Act (TPA,) is a brutal attack on the 4 million tenants in Ontario, 1/3 of whom are on social assistance.


The TPA:

  • repeals the Landlord and Tenant Act, Part IV (which protected residential tenants){2};

  • repeals the Rent Control Act{3};

  • repeals the Rental Housing Protection Act{4};

  • ends the Residents Right's Act (which protected people in care facilities){5}; and

  • amends the Human Rights Code.{6}


Low income tenants: seniors, the disabled, the working poor, single parent families and visible minorities will be the most vulnerable to the changes under this new "protection" act, that eliminates many protections they were previously covered by.


The most important protections lost under the new "protection" act include:

  • Order's Preventing a Rent Increase (OPRI's); when a landlord had a history of ignoring municipal Work Orders relating to such issues as building or health standards, an application could be made for an OPRI, which would prevent the landlord from receiving any rent increase (including a "guideline increase,") until they complied with the municipal Orders.

  • As outlined in the June 26, 1997 deputation, by Pamela Ann Coburn, Director of Inspections and Chief Building Official for the City of Toronto, (and also a member of the Toronto Area Chief Building Officials Association,) stated:

    "The single most timely and effective means of enforcing property standards has been the process to institute an Order to Prevent a Rent Increase, or OPRI." "In my view, the process to institute Orders Preventing Rent Increases should remain as the only truly effective means of ensuring repairs are undertaken in a timely way." {7}

  • Rent Controls; though the government claims to have retained rent controls they have used the verbal slight of hand of saying the controls protect the tenants instead of the units. This is also called Vacancy Decontrol and is in fact the phasing out of effective Rent Controls, but more on that will be covered on page five in the next section.

  • The "costs no longer borne" provisions will no longer exist, so now landlords have a huge loophole by which to receive undeserved windfall profits. Before, if a landlord received an "above guideline" rent increase for repairs or renovations, under "costs no longer borne," once the extra increase being paid by the tenants, completely paid off the costs of the repairs, that part of any rent increase would get reversed. Now under the Tenant "Protection" Act, if the tenants get an increase for a new refrigerator expected to last six years, they don't just pay for it for six years, but it stays on the rent forever! And if after six years, they get a new fridge, any above guideline increase for that will be on top of the one for the previous fridge and now they will be paying off two refrigerators . . . forever.

    Another feature of ending the "costs no longer borne" provision is that landlords will want to amortize expenditures over the shortest time period possible, whether justified or not, so as to get the largest permanent rent increase possible.

  • Being repealed, is the Rental Housing Protection Act, which had been introduced to prevent the wholesale conversion and demolition of rental housing. There has always been a shortage of rental housing in Canada, even since the turn of the century. Professor David Hulchanski of the University of Toronto has coined the term, "market failure," for this lack of construction of needed rental housing by the private sector even under "free markets." {8} With the repeal of this act, Ontario and particularly the Toronto (Census Metropolitan) Area, with only an 0.8% vacancy rate {9}, will lose much needed rental housing.(There is more on the other implications of this on page 10 of this report.)

  • Under previous law, landlords could not discriminate against a prospective tenant on the basis of income. Credit checks, check references and rental history were considered more than sufficient, especially in addition to the demand for first and last month's rent since it is extremely unlikely any person on government benefits could afford (for example) $2,400 for first and last month's rent on a $1,200 a month apartment, though they logically wouldn't even try to rent an apartment they could not possibly afford.

    Research by Professor Michael Ornstein, of York University, using data provided by Bramalea Limited about their tenants, has shown that income is not a measure of "credit worthiness," nor a useful basis for determining who will default on their rents.{10} The Tenant Protection Act, will permit the discrimination by landlords against new tenants, solely on the basis of income, even where the tenant has a good credit rating, good references and a good rental history. Chief Human Right's Commissioner, Keith Norton, (a former P.C. Conservative cabinet minister,) denounced the inclusion of "income information," and wanted it deleted from the new Act.{11} About 1/3 of the almost four-million people living as tenants in Ontario rely on social assistance. In the report, Prof. Ornstein wrote:

    "Legalizing discrimination against social assistance recipients will dramatically reduce access to affordable units, increasing recipients' rental payments and so raising shelter allowance costs dramatically, as well as raising the economic and social costs of related homelessness and emergency shelter."

    The Centre for Equality Rights in Accommodation states that the situation of tenants when they apply for an apartment should not be confused with the reason for defaulting on rent payments.{12} Tenants default not because of low income, but because of a change in life circumstances, predominantly due to job loss or a decrease in wages. Social assistant recipients have a secure income and are therefore less likely to default, but under the income criteria, are the most likely to be discriminated against.

    Metro Tenant Legal Services surveyed a sample of 280 tenants whose landlord had filed for their evictions.{13} 54.6% of tenants were in arrears due a dispute with the landlord. Only 45.4% were in arrears because they were unable to pay the rent. For only 7.9%, of those unable to pay the rent, was the reason that their "income wasn't high enough in the first place".

    Even though under the old laws, it was illegal to use income information as a basis for selecting tenants, a survey conducted by real estate consultants N. Barry Lyon and Associates fount that 17% of small landlords and 40% of landlords of larger complexes did so anyways.{12} A quick survey of the Internet found that there is at least one organization that purports to provide landlords with, "easy evictions"; "tenant income credit and financial records," and to "find out if tenants have connections to tenant organizations".{14} Under present laws it is illegal discriminate on the basis of income information though that will change when the Tenant "Protection" Act comes into effect, but under both old and new laws it is illegal to discriminate against a tenant on the basis of belonging to a tenants' organization, but obviously this is being ignored by some.

    Since some landlords are already illegally discriminating on the basis of income, by using rent-to-income ratios, even though they have been proven not to be a reasonable basis to to judge the probability of future default. When the TPA comes into effect making it legal, this will dramatically increase the use of this criteria. Use of income criteria, will likely be used by some landlords to disguise the real reasons for refusing to rent to a person or family. But, based upon demographics, just using rent-to-income ratios will particularly affect people on fixed incomes, such as those on disability, pension, FBA and welfare benefits, as well as women, youth, and visible minorities.

  • Under the Landlord and Tenant Act, landlords had to provide a summary of Part IV of that Act, (pertaining to tenants' rights and obligations,) in a conspicuous place, as well as the legal name of the landlord and a contact address.{15}

    Eliminating this necessary source of information, makes an uneven playing field even more uneven. Tenants need to have easy access to such a summary, especially for this new and complex law, but this has been repealed. Repealing this section is an attempt to keep tenants ignorant of the new law and who their landlord really may be.


Those were a few of the most important things tenants are losing with the repeal of previous laws that ensured a balance of power between landlords' corporations and tenants, and protected housing. So what is being added by the new law?

The most significant concerns with the new law are:

  • Vacancy Decontrol: when a tenant moves into an apartment, even another unit in the same building, controls won't apply and the landlord can offer the unit at any price they wish; there are no regulatory limits on how high the rent may be. {16}

  • According to the government's Lampert Report, one-quarter of all tenants move each year,{17} meaning that in just a few years, most apartment units will have received at least one large unregulated rent increase. This will lead to greatly decreased tenant mobility. Many growing families will not be able to afford a needed larger apartment because of the unregulated increase that goes with a change in apartments. In cases of partner-abuse, the women may feel financially imprisoned in a potentially dangerous, if not deadly situation involving domestic violence, due to not being able to afford the much higher cost of a vacancy decontrolled unit.

    Unscrupulous landlords will have a financial incentive to force tenants out of their units so that they can increase the rents under Vacancy Decontrol. As seniors have a tendency to remain in units the longest, they will be very vulnerable to coercion to get them out. Those who are unaware of the new laws, especially those with a poorer command of the English language will also be particularly vulnerable.

  • Ontario Rental Housing Tribunal: this will be a group of some 35 full-time adjudicators (at $67,882 a year salary) as well as an unknown number of part-timers for outside of the major metropolitan areas, handling Ontario tenant landlord disputes for some four-million tenants, whether the tenants are in care homes, apartments or even trailer parks.

  • Landlords will continue to enjoy the ability to do one "whole building application" as they have for the past 22 years, such as to apply for a rent increase for a whole building.

    Under the Rent Control Act, if a even one tenant made an application for a rent decrease such as for a reduction in services or for a tax decrease, and it was an issue that applied to the whole building, then the Order pertaining to that application would apply to the whole building. Tenants will lose this right to have their applications apply to the whole building for applicable items. This decreased the number of applications and saved the government a lot of money. From January 1, 1987 until August 9, 1992, there were 20,688 tenant applications to the Ministry covering 20,696 units, under the Residential Rent Regulation Act. Under the Rent Control Act, from August 10, 1992 until June 30, 1996, there were only 11,381 tenant applications covering some 46,587 units. This showed that making Ministry Orders apply to all applicable units about halved the number of applications, while affecting more than double the number of units, and therefore saving the government time and money.

    Now, tenants will have to make separate applications, or if they get together, a joint application. Joint applications under this law are difficult, as each party must sign the application. That would mean lots of organization work in each building to inform everybody, of what is going on, and then managing to meet every tenant to get them to sign the application. In many cases this will be practically impossible, due to the numbers of people who are not fluent in English and who do not speak a common language, all living in the same building.

    With the increased number of tenant applications that will be filed due to this illogical change, the Tribunal will be unable to handle all the landlord/tenants cases in a timely manner. There will be huge backlogs, which will discourage tenants from even applying. This system and the filing fees appears as if they are designed to discourage tenants from making applications and having even a chance for justice.

  • There will now be a fee for making applications to the new Tribunal. Ministry officials have suggested it will likely around $50 per application. With a single person on welfare receiving only $520 maximum on welfare{18}, and the average bachelor apartment in the Toronto (C.M.A) costing $531 as of October 1995{19} it is extremely unlikely that most people on fixed incomes, whether it be Canada Pension, disability, family or welfare benefits, or people living in care homes, will be able to afford the fee to file an application.

  • Then there is the issue of Care Homes. The landlord may apply to the tribunal to have a tenant evicted if:

    "the tenant no longer requires the level of care provided by the landlord, or the tenant requires a level of care that the landlord is not able to provide." {20}

    What expertise will the Ontario Rental Housing Tribunal adjudicators have in medical matters to decide what level of care is provided by a facility, and if a senior or disabled person no longer needs this level of care or needs more? And on what basis will they make this judgement? Will it be based upon the claims of the landlord of the facility, or on the claims of a doctor paid for by the landlord? If a tenant in such a facility complains that the food is bad or of insufficient quantity, or that the staff are not treating them appropriately, instead of getting these problems solved will it just get them evicted?

  • Harassing a landlord - Under section 206.(1)(6) of the TPA, a tenant can be deemed by the Tribunal to have committed an "offence" against the landlord, punishable with a fine of up to $10,000 if the Tribunal decides the tenant has:

    "Harass, hinder, obstruct or interfere with a landlord in the exercise of,

    1. securing a right or seeking relief under this Act or in the court, or
    2. participating in a proceeding under this Act."

    Landlords could use tenants' ignorance of the new law to falsely claim that any actions tenants take to dispute the landlords applications to the Tribunal constitutes interference for which the tenant can face huge fines, to dissuade tenants from standing up for their legal rights.

  • Property Taxes - If municipal taxes are reduced by more than the amount set out in the regulations, and only for buildings larger than a certain size, also to be set out in the regulations (and these regulations have not been made available to the public by the government yet, and may be changed at any time by the Lieutenant Governor in Council, ie. by a Cabinet decision,) it is the municipality's responsibility to inform the landlord and tenants. It is then the landlord's responsibility to pass on this property tax reduction as a reduction in the rent. If the landlord does not pass on this reduction it is then the tenants' problem to pay the application fee and file with the Tribunal for what under the Tenant "Protection" Act is supposed to be the obligation of the landlord. And how many landlords, knowing that if there ever are any fines for not passing on the obligatory reduction (according to the report by the City of Toronto Director of Inspections, the average fine for offenses has only been $370 {21},) fines actually levied will likely be minor, will reduce the rents without the tenants having to file with the Tribunal? {22}

    There is an inherent imbalance of power in relationships between professional landlords and tenants. The vast majority of units are rented out by landlords who have more than one unit and are professionals. Part of this power imbalance is one of knowledge of the law and procedures. Due to the lack of knowledge of most tenants, in the vast majority of cases if there is a decrease in property taxes, landlords will merely pocket it, and not pass it on to the tenants as is their obligation.

    If property taxes are increased, they are grounds for an "above guideline" rent increase so that the landlord will be able to pass it all onto the tenants. But there is also another probability in regards to increased taxes. The landlord could apply to the tribunal for a rent increase based upon the tax increase, and then file for an assessment appeal on the taxes. The landlord will get a rent increase for the tax increase, and then if the landlord wins on the assessment appeal their taxes will go down, but tenants will have received a notice of rent increase and then another notice, this one municipal that property taxes have gone down, but will their rent increase be cut back or cancelled, and will the tenants have any idea of what is going on or what to do in all this confusion?

  • There is the issue of time limitations in the TPA. If a landlord files for an eviction under the Act, the tenant has only 5 days to dispute the filing, {23} or the landlord wins an eviction. We can't seem to find any clause with the information presently available that specifies the deadline for tenants to dispute a landlords application for an "above guideline" rent increase, and so assume that TPA section 177(2)(b) applies:

    "in the case of any other application, within the time provided for in the Rules."

    Where the "Rules" means the rules of practice and procedure made by the Tribunal or the Minister under section 164 of the TPA.

    Of course there are many reasons for a tenant to be in arrears. A study by Metro Tenants Legal services showed, that 54.6% of those whose landlord had filed an Application for Termination of their Tenancy, were in arrears due to a dispute with the landlord.{24} Under the TPA, if a landlord does not pay the tenant 6% interest on the last months rent deposit, the tenant may deduct that from the rent. The landlord could file for an eviction for nonpayment of the full rent, and if the tenant did not dispute this within the 5 days, the eviction would be granted, even though the deduction made by the tenant was perfectly legal.

    Then if the landlord has overcharged or illegally charged a tenant money, or there are other disputes, tenants now, under the TPA only have one year to file to get the money owed to them or to get the matter resolved, and can only get back those overpayments or illegal charges going back one year.{25} Due to the difficulties in tenants getting access to information, some landlords have overcharged for many year and so the time limit used to be six year, but under the Tenant "Protection" Act landlords will get off scott-free for anything not caught within one year.

    So if you don't know the Rules, and don't know the new complex law, which is made worse in that posted summaries of tenants' rights and obligations no longer have to be posted for tenants to view (with the repeal of that section of the Landlord and Tenant Act{26},) a tenant has no chance for justice when up against landlords who know the rules or who have consultants or lawyers working for them who know the rules.

  • The repeal of the Rental Housing Protection Act - There has always been a shortage of affordable rental housing. This has been documented in the works of many, including Professor David Hulchanski, of the University of Toronto, who calls it "market failure." Builder's have been very open that they will not build rental housing, especially affordable rental housing, either with Vacancy Decontrol, nor even if Rent Controls were immediately and totally eliminated. Yet, that is one of the reasons the Harris government kept repeating as a reason for Vacancy Decontrol: that builder's would build more units. And the Harris government's downloading of social housing onto the municipalities, without providing transfer payments to the municipalities to pay for it, will make the shortage of housing more immediate and severe.

    With the repeal of the Rental Housing Protection Act, and the introduction of the Tenant "Protection" Act, tenants, including those in "care homes," may now be evicted if a landlord intends on demolishing a building, converting a building over to condominiums or to non-residential uses, or if they decide to renovate a unit in such a way that it must be vacated to be renovated. Municipalities lose zoning controls over conversions and demolition of rental housing.

    Since the landlord will be able to do what they want in the way of renovations, it would be worth it for them to use these provisions in the Tenant "Protection" Act,{27} and to pay tenants' a three month severance for forced early termination of the lease, because now then units will be Vacancy Decontrolled, and landlords can recoup this severance payment in just the first year, with a 25% increase in rent. In the case of renovations, tenants can try to partake of the "right of first refusal," clauses in the TPA, but how many tenants will be able to find a place to stay during the whole duration of any renovations, plus be able to afford two moves? These provisions, in conjunction with Vacancy Decontrol, will only encourage landlords to do unnecessary renovations as an excuse to evict tenants.

    With the severe shortage of rental housing, (there is a 0.8% vacancy rate for all rental housing in the Toronto C.M.A., and probably much lower vacancy rate for the most affordable units,) and with builder's clear intentions not to build more, even without any rent controls, the shortage will get much worse because of the Harris government's TPA. The end result can only be more homeless families on our streets, but this time due to economic evictions by landlords and the destruction of our society's affordable housing stock.

  • "Above Guideline" rent increases use to be limited to 3% above the yearly "guideline" amount, and could only be carry-forwarded an additional two years. Now, under the Tenant "Protection" Act, the ceiling will be 4%, and is a ceiling on "above guideline" increases only for capital expenditures or operating costs.{28} In addition, there are no limits as to how many years these 4% above guideline rent increases may be carry-forwarded for.{29}

  • Financing costs are not mentioned in the TPA, whereas there was a clause specific to such costs in the previous Rent Control Act. Financing costs have always been considered a reason under the various acts for a landlord to increase rents, and so we must assume that it will be considered a reason by the new tribunal. But, there are no limits to how high any rent increase for financing costs can be under the TPA.{28} This will only encourage speculation in the rental housing market, since even if the buyer pays a ridiculous price for the buildings, they will be able to very quickly pass on all their financing costs, in one huge rent increase, onto the tenants. After all, tenants have to live somewhere, and with a 0.8% vacancy rate for the Toronto (C.M.A.) tenants will have little or no choice. Tenants remember the Greymac Credit Corporation/Crown Trust flip of over 10,921 apartment units, as well as the many buildings that received single year rent increases of 30%, 40% and even 50%{30}, and these times will now return.

    This would explain the reason for the seminar called, "The arrival of REIT's (Real Estate Investment Trusts) to the Canadian Apartment Market," at Springfest '98 Multi-unit Expo, "A Special Event Exclusively For 1,500 Property Managers, Building Owners, Developers..." being held at the Metro Toronto Convention Centre on Friday April 3, 1998.

    The flier advertising this seminar says, "The Canadian REIT market exploded in 1997 and now includes 13 REIT's comprising over $4 billion of publicly traded equity . . . will result in more and more apartments finding their way into Canadian REIT's." REIT's create large pools of investment capital for real estate speculation, which will only fuel larger rent increases to pay for the inflated prices they will buy the buildings at. These REIT's will do nothing to create more housing. As the added bonus section of the expo flier labels it, "REIT's and the Securitization of Rental Housing;" REIT's turn housing into a mere commodity to be traded, regardless of the affects on tenants and on communities.

    Speculation in private sector rental housing, fuelled further by REIT's, besides directly increasing rents, also have a secondary effect that will also increase rents even further. The sale of an apartment building at an inflated price, will not only cause the property assessment to go up for that building, but sale prices are used in the models by which assessments are made to judge the price of all buildings. This will result not only in increased rent to pay for the financing costs due to the sale of the building, but also another rent increase due to the higher property tax due to the increasing assessed value of multi-unit residential properties.


THE FINANCIAL AND SOCIAL IMPACT ON TENANTS

There are 4 million tenants in Ontario. One-third of all tenants in private sector rental housing are on government benefits {31,32}. Housing is the single biggest expense for most people in rental housing and because of this, increases in rent lead to disproportionately larger decreases in disposable income. Not only will it affect the tenants but our society as a whole.

Surveys by the Daily Bread Food Bank {32} show that the poor sell off private possessions, walk instead of using public transit, and cut other necessities like telephone service. Tenants would rather do without food before not paying the rent and losing their family's housing.

Canada Mortgage and Housing estimates there are over 560,000 known private sector rental housing units in Ontario just in buildings of six units or more. Then there are the smaller buildings plus many unrecorded rented units in homes, basements, converted warehouses and in condominium buildings. With the Lampert Report, commissioned by the Harris government estimating that about one-quarter of all tenants move every year, which would make them Vacancy Decontrolled under the government's TPA, 200,000 units over the next year could experience rent increases that may average $150 a month. After the first year, this would be a gain for landlords of $30 million a month on the 200,000 units, or $360 million a year. This would also be a $360 million a year loss after the first year for tenants that could translate into increased homelessness and increased malnutrition. For all the remaining units who will now experience less regulated Rent Controls, depending upon the number of apartment sales/flips which would further increase rents, after the first year this could be another $180 million to $360 million annual loss for tenants.

After the first year of the new Tenant "Protection" Act, I expect the loss to tenants to be a total of $540 million to $720 million.

The situation may be even worse than we expect. When the Harris government in 1996 published their, "Tenant Protection Legislation: New Directions for Discussion," proposal paper, some people said that the government was just testing the waters and the final version would be watered down. In November 1996, when the First Reading version of the Tenant Protection Act, was introduced, it was worse that the proposals, but again wishful thinking led some people to believe that it was just a strategy and that the final version of the act would not be as bad. On November 28, 1997, the Third Reading version of the bill was introduced and it was even worse, adding such features as the fines against tenants who are claimed to have harassed or interfered with a landlord.

The government has delayed releasing the Regulations under this Act, and the Tribunal "Rules," but we now expect that once they are made public it will again be even worse than what we saw before.


THE IMPACT ON COMMUNITIES

The impacts of the TPA will not just be felt by tenants, but by communities. There will be an increased demand for social services and higher levels of support needed to afford the higher rents, and emergency shelter needs will increase. Community healthcare costs will rise as people do without food to pay rent increases.

Community businesses with also feel a huge impact with the decreasing disposal incomes of tenants due to landlords siphoning greater amounts of money out of the local economies. 52% of the people of the amalgamated City of Toronto are tenants. But this is not just a Toronto issue, 48.9% of the constituents of the provincial riding of Sudbury, 51.0% of London Centre, 42.1% of London South, 45.9% of London North, 71.5% of Ottawa East, 69.4% of Ottawa Centre, 56.0% of Ottawa West, 50.8% of Ottawa South, 47.9% of Ottawa Rideau, 67.0% of Hamilton Centre, 44.3% of Mississauga East, 56.0% of Kingston and The Islands, and 43.5% of the riding of Kitchener are tenants.

As early as the 1996, the Harris government was given warnings as to the negative impacts their changes to tenant legislation could have on small businesses and long-term job creation in Ontario.{33}

The Parkdale Community Audit Project {34} on the impact of the 21.6% welfare cuts six months after the cuts were initiated, reported that 64% of business "said the welfare cuts in October were having an impact." "The most common response was that retailers experienced a noticeable drop in business volume/sales since the cuts" was reported by 34% of those businesses sampled.


THE GOVERNMENT'S PORTRAYAL VERSUS HISTORICAL EXPERIENCE

Mike Harris on April 3, 1995, publicly promised that he would:
"bring in a rent control program . . . that will truly protect tenants and give them lower rents."
"We will replace nothing until we have a superior plan in place proven to work better."

Mike Harris lied.

The Harris government is going ahead with this law in spite of the history that proves it will be a disaster leading to skyrocketing rents.

In 1971, Republican New York State Governor, Nelson Rockefeller, brought in Vacancy Decontrol; very much like the present conservative Ontario government is doing. Due to the devastating social as well as financial impacts of these changes, in 1973, Rockefeller commissioned a state study into the results of his policies.{35}

Data from landlord groups in New York City showed average rent increases of 52% above guideline levels in 1972 for vacancy decontrolled units. For poor renters, making up 34% of the decontrolled units, governments ended up assisting these people so they could afford a place to live. Page 10 of the Report says, "The lower-priced rental accommodations experienced the greatest percentage increases under vacancy decontrol, averaging 60.6% city wide, and 74% in both the Bronx and Brooklyn."{36}

The conclusion of the study was:

"No beneficial side effects have resulted from Vacancy Decontrol; major capital investment has slowed, new construction has been unaffected . . . Vacancy decontrol has placed an extreme hardship on the tenants of this state, particularly on the elderly and the poor, in the form of increased rent and insecurity."
"The vacancy rate of the Metropolitan area is 2.03%, much below that level needed to provide free market competition. The policy of returning vacant apartments to the free market has failed because the free market does not exist in the Metropolitan area." {36}

Governor Rockefeller admitted his mistake, repealed Vacancy Decontrol, and brought back Rent Controls but the damage had already been done. The electorate did not forgive him and for the next two decades there were only Democrats as Governor in N.Y..{35}


CONCLUSIONS

The misnamed Tenant "Protection" Act is an attack on the supply of affordable housing, and will be devastating to the poorest in Ontario. It will affect all tenants as well as those in care homes, but the poor will feel the greatest impact, especially seniors on fixed incomes, the disabled, working-poor families, single parent families, youths and visible minorities.

I expect skyrocketing rents, particularly for the most affordable units. Vacancy rates that are as low at 0.8% in the Toronto Census Metropolitan area will drop as rental housing is demolished and converted to condominiums. Separate vacancy rates are not kept based upon the affordability/price of the units, but the vacancy rate for the most affordable units will drop to close to zero in the Toronto area.

Evictions will soar with the "protection" act's fast track eviction system, where people have a ridiculously short 5 days to respond. People away, maybe because of a hospital stay or to visit out-of-town relatives, will come back to find they have lost their homes. Landlords will have a huge financial incentive to file unwarranted evictions so that they will be able to charge anything they like on the apartment. And there have always been other indirect ways to improperly force people out, and unscrupulous landlords will use them. The most vulnerable will be the most victimized.

Others will be economically evicted. The Tenant Protection Act creates many loopholes such as ending the "costs no longer borne" provisions, and ending above guideline rent increase ceilings for some items, which will be fully exploited by landlords. The "securitization of rental housing," where housing is only a commodity, will bring in foreign and domestic speculators who don't create housing, they merely speculate in it to drive up the prices, but at the expense of the 4 million tenants of Ontario. Those tenants who can no longer afford their skyrocketing rents will be out of luck and there will be few if any options available to them. Our society's already unconscionable levels of homelessness will multiply as people are evicted and our affordable rental housing is demolished or converted. There will be greater demands on our social services and hostel systems which will cost all taxpayers.

After the first year, when half to three-quarters of a BILLION dollars annually is siphoned off by landlords in higher rents, malnutrition in tenant families will increase, and communities including local businesses will feel the devastating effects.

This government's policies, which are based upon ideology rather than facts and logic, will wreak a huge toll in human costs on the 4 million tenants of Ontario through increased poverty, homelessness, the breaking up of families, constant fear of rising rents or eviction, poorer health and even deaths.





FOOTNOTES:

1 - Election pamphlet from Rob Davis, P.C. candidate for York South
2 - Tenant Protection Act, section 213(4)
3 - Tenant Protection Act, section 218
4 - Tenant Protection Act, section 219
5 - By ending the Rent Control Act, and Part IV of the Landlord and Tenant Act, which the Residents' Rights Act amended.
6 - Tenant Protection Act, section 212
7 - Written deputation by Pamela Ann Coburn, for the City of Toronto, before the Ontario Government Standing Committee on General Government, re: Bill 96, the Tenant Protection Act
8 - Many reports by J. David Hulchanski, PhD, MCIP, Professor of Housing and Community Development, University of Toronto
9 - October 1997, Canada Housing and Mortgage Corporation statistic
10- Michael Ornstein, Institute for Social Research & Department of Sociology, York University, report Access to Rental Accommodation Restricted by Income Criteria: The Effect of Permitting the Use of "Income Information in Tenant Selection", June 1997
11- Toronto Star, June 20, 1997, Rights chief denounces Tory rent reform bill
12- Centre for Equality Rights in Accommodation, submission to the Ontario Government Standing Committee on General Government with Respect to Bill 96, June 12, 1997
13- Metro Tenants Legal Services, Reasons for Rental Arrears, Survey Report, June 1994
14- Internet posting dated 1997/07/09, called "LANDLORD HELPLINE", posted to ont.general and 7 other groups.
15- Landlord And Tenant Act, Section 111
16- Tenant Protection Act, Section 124
17- Discussion Paper: The Challenge of Encouraging Investment in New Rental Housing in Ontario, November, 1995 by Greg Lampert, commissioned by the Ontario Ministry of Municipal Affairs and Housing
18- The maximum single person welfare rate, comprised of $195 a month for basic needs, plus a maximum of another, $325 a month to cover shelter. For a single parent with two children the shelter allowance is only $554.
19- This figure is from Canada Mortgage and Housing, and of course will now be higher, a year and a half later.
20- Tenant Protection Act, Section 99.1
21- June 26, 1997 presentation to the Ontario Government hearing on Bill 96, by Pamela Coburn, City of Toronto
22- Tenant Protection Act, Section 136
23- Tenant Protection Act, Section 177(2)(a)
24- Reasons For Rental Arrears, Survey Report, June 1994, Metro Tenants Legal Services
25- Tenant Protection Act, Sections 32(2), and Section 144(4)
26- Landlord and Tenant Act, Part IV, section 111, but this is repealed under the TPA
27- Tenant Protection Act, Sections 55, 57 and 58
28- Tenant Protection Act, section 138(9)
29- Tenant Protection Act, section 138(10)
30- The amounts of the rent increases were mentioned in a statement by Al Leach, Minister of Municipal Affairs and Housing, before the Ontario Legislature, on Tuesday, June 25, 1996 as recorded in the Hansard.
31- Access to Rental Accommodation Restricted by Income Criteria, by Michael Ornstein, York University
32- Daily Bread Food Bank, Submission to The Standing Committee on General Government, August 5, 1997
33- A Critical Analysis of the June 25, 1996 "Tenant Protection Legislation: New Directions for Discussion" paper, and the process that led up to it, by Robert B. Levitt, August 21, 1996
34- A Survey of Retailers, Parkdale Community Audit Project, July 1996, by Anne O'Connell, the Social Planning Council of Metropolitan Toronto.
35- Submission to the Standing Committee on General Government, with Respect to Bill 96, by Robert B. Levitt, June 26, 1997.
36- New York State: Temporary State Commission on Living Costs and The Economy, commissioned on August 30, 1973, by New York State Governor, Nelson A. Rockefeller

Read a report done over 4 years later by a legal clinic (specializing in research) about the lack of fairness of the Act and the procedures of the Ontario Rental Housing Tribunal



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