Changes to the Rent Control The Political Context

Transcription

1 Changes to the Rent Control The Political Context John Matheson Jne 2, 2017 STRATEGYCORP 2017

2 This Presentation Backgrond on the key hot btton isses in the Rent Control policy Recent political and hosing trends How they combined to create the new changes to Rent Control Some thoghts on what may come next How the indstry can best advance its interests in the months ahead STRATEGYCORP

3 Rent Control: A Political Football Exemption for new nits Post 91 Vacancy Decontrol Hard Cap on Gideline Above Gideline Increases 1975: Rent controls created as a temporary measre -- evolved over 80s. 1992: De to crisis of spply, NDP created a fiveyear exemption to rentals coming onto the market after : Harris PCs make post-1991 exemption permanent, and create vacancy de-control 2013: Gideline is capped at 2.5% These featres are key political footballs that come p when nfavorable market and political conditions arise FRPO scceeded in fighting off significant change in 2003 and Isse was qiet in 2011 and 2014 elections. STRATEGYCORP

4 Recent Sitation Decline in Poplarity of the Wynne Liberals GTA Real Estate Prices and the crisis of affordability Bad anecdotes created political opportnity These three factors combined created the conditions that led to the recent Rent Control changes STRATEGYCORP

5 Liberals lagging in polls May 2015 May 2017 PC 42 LIB 28 NDP 23 Green 6 Form Research: Voting Preference Qestion STRATEGYCORP

6 Impact of the Bad Nmbers Pressre on Leader, morale, and fndraising Need to do something Lean Left: Aggressive and progressive Liberals have driven a very aggressive agenda to reset Fair Hydro Plan; redce rates by 25% Pilot on Create Garanteed Income Increase minimm wage / new protection for low wage employees / easier nionization Health and Edcation Spending: Pharmacare for nder 25 s OMB changes Fair Hosing Plan: Market Cooling in GTA and Rent Control STRATEGYCORP

7 GTA Crisis of Hosing Affordability GTA Real Estate Prices and the crisis of affordability Bad anecdotes created political opportnity 2017: Real estate prices post hefty year over year increases in GTA - 33% year over year The pblic was concerned.. Several isolated incidents of egregios rent increases in the private landlord market garner significant media attention creating political pressre Created something to fix and blame NDP Proposes Private Members Bill to end the Post 91 Exemption Liberals follow sit STRATEGYCORP

8 Fair Hosing Plan Tax on non resident speclation Measres to stimlate spply Expand Rent Control by repealing the 91 Exemption Introdced April 20, 2017: Billed as 16 measres aimed at improving hosing affordability Key elements: A non-resident speclation tax foreign tax Some moves to facilitate development (property tax changes/rebates on development charges) Expand rent control to all rental nits in Ontario, by inclding those that were previosly nder the 1991 exemption - All rental nits now sbject to the annal provincial rent increase gideline, which is linked to inflation and capped at 2.5% No change with respect to vacancy de-control. Minor changes to above-gideline increases STRATEGYCORP

9 How is the Liberal reset going? PCs won the Salt Ste. Marie by-election - PCs: 40 - NDP: 33 - Libs: 23 In the previos election the Libs won with almost 60% Not yet certain how this will impact the Liberals in terms of their strategy Will they slow down? Or pedal to the metal Newly elected Salt Ste. Marie MPP Ross Romano and Progressive Conservative Leader Patrick Brown celebrate their byelection win. (Erik White/CBC) STRATEGYCORP

10 Rent Control: Cold it Get Worse? Vacancy Decontrol Potential for a change to Vacancy Decontrol? Or AGGIs? - NDP are on record and wold repeal it - The Liberals are worried abot left flank - Rent control poplar with pblic Liberals or NDP cold introdce Bill to end vacancy decontrol Possible Campaign Isse Will a new government act? What if it s a minority? Now to election Dring election (Jne 2018) After election STRATEGYCORP

11 Risk Factors Market Pressre If new development of spply (prpose-bilt and condo rentals) falls behind while demand increases, that will pt pward pressre on market rents (on trnover) Upward market rents will trigger a poplar desire for the elimination of vacancy de-control Condct in the Market: Bad anecdotes make bad policy: One extreme rent increase by one non-professional landlord created the political climate that started the attack on the 91 Exemption In an era of social Media, the day-to-day choices of operators matter, and have the potential to inflence provincial policy STRATEGYCORP

12 To Avoid the Removal of Vacancy De-control Some things are beyond or direct control: Spply: We need government to facilitate rental development and developers need to develop if there is a crisis of affordable spply, it will create political more pressre to end vacancy decontrol. How the indstry can help itself 1. Strategy: Unity arond a common strategic approach to dealing with the government 2. Better Pblic Relations: Invest in improved pblic relations for the rental hosing sector as a whole Risk Management: Landlords need to be aware of the dangeros political context as they manage their operations especially rent increases and tenant commnications. Lets not create or own crises

13 Bill 124 Webinar Prodly Sponsored by:

14 Bill 124 Rental Fairness Act, 2017 PRESENTED BY: JOE HOFFER COHEN HIGHLEY LLP

15 VACANCY DECONTROL REMAINS BUT. Repeal of Rent Control Exemptions Rles for Post November NORI s NORI given before April 20, 2017? NORI given after April 20? Redce the increase. Rent = all money paid to landlord in exchange for occpancy (parking, locker, separate charges)

16 NEW EXEMPTION FROM RTA Amended exemptions from RTA for Hosing Programs which inclde rehabilitative or therapetic services or services intended to spport employment or life skills development For years max., very detailed reqirements to qalify Relevant if yo deal with Social Service Agency contracts

17 PRESCRIBED LEASES For prescribed classes of tenancy Prescribed Form (can be agmented) Shall be signed on or before tenant entitled to occpancy Tenant may demand prescribed form for signing once dring tenancy Conseqences if se wrong form of lease Rent penalty (max. 1 month, recoverable) Lease termination at tenant s option

18 NEW RULES: LANDLORD S OWN USE 1 month rent penalty 1 year minimm (what if yo move? Sell? Die?) Rebttable Presmption Freeze period = day of giving Notice of termination pls 1 year after tenant vacates

19 NEW RULES: LANDLORD S OWN USE If dring freeze period yo A) advertise nit for rent B) enter into lease with another person C) advertise the nit or the bilding for sale D) demolish the bilding E) take any step to convert the nit or bilding to non-residential se = bad faith, reverse ons

20 N5 AMENDMENT If N5 is served and condct occrs within 7 days- file If N5 is served and condct occrs after 7 days bt within 6 months- file No longer an isse of application being dismissed if Landlord failed to apply for termination based on first N5

21 TENANT VOIDING EVICTION ORDER BASED ON RENT ARREARS Previosly cold stay the eviction by filing a motion Under amended rles, the motion mst be accepted by the Board and the Board mst refse acceptance nless the tenant has paid all amonts nder the Order

22 ORDER BASED ON PRIOR CONSENT ORDER OR SETTLEMENT ( s. 78 ) Minor amendment where application against Tenant is based on previos application reslting in a consent Order or Settlement with a section 78 provision. In addition to moneys owed, Board can now order payment of compensation for repair or replacement of damaged property if that was in previos application

23 AGI CHANGES Repeals extraordinary increase based on cost of tilities AGI based on Mnicipal taxes and charges remains Change to eligibility of capital expenditres (to allow Board to dismiss claims for crb appeal items): likely a broad discretion Retrospective in natre to captre work done in reliance on crrent rles (now sbject to new rles)

24 ELEVATOR/WORK ORDER ISSUES Mst file evidence of stats of any pending elevator (s. 21) TSAA Order or Board Orders regardless of whether compliance period remains open and regardless of whether the work is being claimed on the application If compliance period for elevators or other Board work order is expired, no AGI will isse ntil work is done, again regardless of whether the cost of sch work is claimed in the application

25 ILLEGAL CHARGES S.134: Landlord cannot attempt to collect any amont of money prporting to be rent for any period of time after tenancy (or tenant s interest in the tenancy per 28 day notice ) is terminated and nit is vacated Likely intended to eliminate remedy for damages de to breach of fixed term lease (bt does it?)

26 QUESTIONS?