Residential Tenancies Act: Briefing Book
Table of Content Frequently Asked Questions General 3 For Tenants 5 For Landlords 9 Overview of the Residential Tenancies Act (RTA) Introduction 12 Evictions 15 Rent Increases 19 Building Maintenance & Repairs 23 Landlord & Tenant Board 26 Rent Reductions due to Municipal Tax Decreases 27 History of Legislative Reform & Council Responses 29 Key Differences, RTA and the previous Tenant Protection Act Background 31 Rules that have changed 31 Rules that have not changed 35 Special Rules for Transition 36 Update: The Tenant Defence Fund Introduction 38 Background 38 Tenant Support Grants Program 39 Outreach Program 40 Key Results of the Grants Program 40 Program Review 41 Education Initiatives on the RTA Educational Initiatives on the RTA 43 Tenant Survival Manual 43 Tenant Hotline 43 Facts on Social Housing What is Social Housing 45 City s role in Social Housing 46 Units Built 47 How to apply for a rent-geared-to-income unit 47 Key Contact Sheet Key Contacts 49 Helpful Websites 50
FAQ s
Frequently Asked Questions GENERAL RESIDENTIAL TENANCIES ACT Q: What is the Residential Tenancies Act (RTA)? A: The RTA is provincial legislation that regulates rents in residential rental buildings as well as aspects of the landlord/tenant relationship. It replaces the Tenant Protection Act (TPA). The RTA: provides protection for residential tenants from unlawful rent increases and unlawful evictions; establishes a framework for rent regulation; balances the rights and responsibilities of residential landlords and tenants; and provides for adjudication and other informal processes to resolve disputes. Q: What are the key differences between the RTA and the TPA? A: The RTA is mostly based on the TPA. However, some changes have been introduced to the most controversial provisions of the old law, such as the default eviction process and applications for above-guideline rent increases. Key changes are discussed in the Key Differences section of this briefing book (page 31). For more information about the differences between the RTA and TPA, please contact the Ministry of Municipal Affairs and Housing at 416-585-6511 for a copy of the Residential Tenancies Act brochure or visit the Ministry s website at www.mah.gov.on.ca/userfiles/html/nts_1_28468_1.html. The brochure is available in English, French, and ten other languages. Q: Under the RTA, the Ontario Rental Housing Tribunal has been replaced by the Landlord and Tenant Board. What are the key differences? A: Effective January 31, 2007, the Ontario Rental Housing Tribunal became the Landlord and Tenant Board. The new Board continues to provide information about the legislation and to resolve disputes between most residential landlords and tenants. The intent of the new legislation was to make the operations of the new Board fairer and more accessible than the previous system. For example: Now when a tenant is subject to an eviction application, the tenant will have a hearing without having to file a written dispute. 3
Frequently Asked Questions The Board will send an information notice about the eviction hearing process to the tenant; this is in addition to the Notice of Hearing the landlord is required to give the tenant. Some application fees are reduced, such as fees for above-guideline increase applications and photocopying services. For more information, please contact the Landlord and Tenant Board at 416-645-8080 or visit the Board s website at www.ltb.gov.on.ca. Q: Who is covered by the RTA? A: The RTA covers most residential rental units in Ontario, including apartment buildings, rented houses and townhouses, rented condominiums, mobile homes, care homes and rooming and boarding houses. However, there are some situations where a rental unit may not be covered by the Act or certain parts of the Act. For example, the Act does not apply if: the rental building is a non-profit housing co-operative; or the tenant must share a kitchen or bathroom with the owner, or the owner s immediate family members. Many of the rules about rents do not apply to: new rental buildings; non-profit and public housing; university and college residences However, these units are still covered by most of the other rules in the Act, such as maintenance and eviction rules. If you are unsure if a rental unit is covered under the RTA, contact the Landlord and Tenant Board at 416-645-8080 or visit the Board s website at www.ltb.gov.on.ca. Q: How can I learn more about the RTA? A: A good first step to learn more about the RTA is to contact the Landlord and Tenant Board at 416-645-8080 for a copy of A Guide to the Residential Tenancies Act or visit the Board s website at www.ltb.gov.on.ca. In addition, the City of Toronto funds the following services to help Tenants learn more about their rights and responsibilities: 4
Frequently Asked Questions The Federation of Metro Tenants Association (FMTA) will be offering education workshops to tenant groups about tenant rights and obligations under the RTA throughout 2007. For more information, please contact the FMTA Outreach Coordinator at 416-413-9442. The FMTA runs a Tenant Hotline with trained staff who can explain tenants rights and obligations, while providing advice on matters ranging from rent increases to maintenance to eviction. Counselling Services are available in 150 languages through the AT&T telephone interpreting service. The Tenant Hotline can be reached at 416-921-9494. The FMTA produces the Guide to Tenants Rights booklet available at www.torontotenants.org/guide.htm. The booklet is currently available in English but plans are underway to translate it into 12 different languages. The FMTA also updates the Tenant Survival Manual regularly. The 2007 Manual is being updated to reflect the changes in the RTA and will be available later this year. Landlords can contact the Landlord and Tenant Board at 416-645-8080 or visit the Board s website at www.ltb.gov.on.ca, or the Landlord s Self-Help Centre website at www.landlordselfhelp.com. FOR TENANTS: Q: I am about to move to a new rental apartment. Do I need to sign a lease? If yes, what should I expect to have included? A: The RTA does not require all landlords and tenants to have a written tenancy agreement or lease. A tenancy agreement can be oral or written. However, it is generally better to have it in writing because if there is a dispute later, a written record of the agreement may help to settle the dispute. A written lease agreement must set out the legal name and address of the landlord so that you know where to send any notices or documents that are required under the Act. It may also contain information about: the date you will move into the rental unit; the rent amount; the date rent is to be paid; 5
Frequently Asked Questions what services are included in the rent (such as electricity or parking) and any separate charges; and the rules that the landlord requires all tenants to follow. The tenancy agreement should not contain any rules or conditions that are not allowed by the RTA. If there are any such rules or conditions in the agreement, they will not be enforced by the Board if there is a dispute between the landlord and tenant. You may be able to get help or information about signing a tenancy agreement from the Tenant Hotline at 416-921-9494. Q: I have never rented before and plan to begin renting soon. Is there any information available about rights and responsibilities of a tenant? A: Landlords are required to give new tenants an information sheet developed by the Landlord and Tenant Board that explains some of the rights and obligations of being a tenant. This can be found at: www.ltb.gov.on.ca/en/key_information/stel02_111600.html In addition, there are a number of excellent resources either already available or currently under development: The Landlord and Tenant Board has produced a general guide to the Residential Tenancies Act available at: www.ltb.gov.on.ca/en/key_information/stel02_111677.html The Tenant Survival Manual is currently being revised. This manual is prepared by the Federation of Metro Tenants Associations with funding from the City and help from the staff of community legal clinics. Check for its availability at: www.torontotenants.org/literature&links.htm Community Legal Education Ontario has prepared a plain language guide called What Tenants Need To Know About The Law, available at: www.cleo.on.ca/english/pub/onpub/pdf/landlordtenant/tenantsaccess.pdf Q: I think that I am being unfairly evicted? What can I do? A: Tenants have security of tenure and can only be evicted for reasons permitted by the RTA. Sometimes the eviction may result from the conduct or actions of a tenant or their guest, such as not paying rent in full or causing damage to the rental property. In other cases, you could be evicted because the landlord wants the rental unit for 6
Frequently Asked Questions their own use or major repair or renovations are planned and the premises need to be vacated. For the full list of reasons for eviction, please contact the Landlord and Tenant Board at 416-645-8080 or visit the Board s website at www.ltb.gov.on.ca. If you think you are being evicted without a justifiable reason, it is best to call the Tenant Hotline at 416-921-9494. The hotline counsellor will talk to you about your specific situation and give you advice, or refer you to other community services for help. Q: My landlord is not taking care of the building? Can he be reported? A: A landlord has to keep the rental property in a good state of repair. A landlord must obey all health, safety, housing and maintenance standards, as set out in any provincial laws or municipal bylaws. If you are concerned about the state of repair, safety or heating of your apartment or building and have approached your landlord, who has not addressed the problem, please contact your local Municipal Licensing and Standards office: East Office (Scarborough Civic Centre) 416-396-7071 North Office (North York Civic Centre) 416-395-7011 Toronto & East York (2238 Dundas Street W, 3 rd Floor) 416-392-0855 West Office (Etobicoke Civic Centre) 416-394-2535 You can apply to the Landlord and Tenant Board to order the landlord to fix the rental building if your landlord is not meeting their maintenance obligations. If the Board agrees that maintenance obligations are not being met, there are a number of remedies the Board can order, including prohibiting rent increases until the landlord has fixed the building in compliance with the prescribed standards. Q: My landlord has raised my rent? Is this allowed? A: Under the RTA, your landlord can increase the rent if at least 12 months have passed since you first moved in or since your last rent increase. The increase must be no more than the annual rent increase guideline, which is determined by the Government of Ontario. For 2007, the rent increase guideline is 2.6%. 7
Frequently Asked Questions Your landlord must give you at least 90 days notice in writing before the effective date of any rent increase. The proper forms are available from the Board offices or the Board website. There are certain circumstances in which the landlord can increase rents more than the guideline, but they must first apply to the Landlord and Tenant Board. If you want to know more about the rules for rent increases, or if you are unsure whether your rent increase is legal, contact the tenant hotline at 416-921-9494 or the Landlord and Tenant Board at 416-645-8080. Q: I have an application filed under the previous Tenant Protection Act (i.e. filed prior to January 31, 2007). What is the status of that application now? How will it be resolved? A: All applications that were filed with the Tribunal prior to January 31, 2007, have become the responsibility of the Board. This means that you will not have to refile any documents you have already filed with the Tribunal. If a hearing date has been scheduled by the Tribunal, it will take place as scheduled. If a hearing date was not scheduled by the Tribunal, the Board will schedule one. There are special rules for dealing with some applications filed under the TPA, but not resolved prior to the effective date of the RTA January 31, 2007. For more details on these rules, please contact the Landlord and Tenant Board at 416-645-8080. Q: What services and programs does the City provide in support of Toronto s rental housing tenants? A: The City funds and supports a number of initiatives, including: Housing Help Centres help tenants to find affordable housing, keep the housing you have and answer questions about rental housing. http://www.toronto.ca/housing/housing-help-services.htm Rent Bank - provides modest interest-free loans to eligible tenants who are in rent arrears and facing eviction. More information is available at: www.toronto.ca/housing/rentbank.htm or by calling: 416-924-2543. Tenant Hotline: responds to tenants enquiries about rights and obligations of tenants and landlords, while providing advice on matters ranging from rent increases to maintenance to eviction. Counselling 8
Frequently Asked Questions services are available in 150 languages through the AT&T telephone interpreting service. The Tenant Hotline is run by the Federation of Metro Tenants Associations (the FMTA). It can be reached at 416-921-9494. More information is also available at: www.torontotenants.org/hotline.htm The Tenant Defence Fund - provides Tenant Support Grants and outreach and organizing assistance to groups of tenants fighting high rent increases or the loss of their rental housing. The program is funded and administered by the City of Toronto. The FMTA Outreach Team provides assistance for tenant organizing and grant applications. The Outreach Team can be reached at 416-413-9442. More information is also available at: www.torontotenants.org/outreach&organizing.htm FOR LANDLORDS: Q: As a landlord, what are the key components of this new legislation that I should be most familiar with? A: The RTA has made some changes in the areas of rent increases and eviction applications to the TPA that landlords should be aware of. For example: The rent increase guideline is now based on the Ontario Consumer Price Index (CPI) rather than the building operating costs. If you have got an above-guideline rent increase (AGI) for a capital expenditure, you must reduce the rent after the expenditure has been paid off; a similar rule applies to AGI based on utility cost increases. Tenants are no longer required to file a written dispute to get a hearing on eviction applications, instead, all eviction applications will automatically move to a hearing. The RTA permits a shorter eviction process under certain circumstances. For more detailed information, please contact the Landlord and Tenant Board at 416-645-8080 or www.ltb.gov.on.ca, or the Landlord s Self-Help Centre at www.landlordselfhelp.com. Q: I currently have a disorderly and disruptive tenant. What steps do I need to take to evict? A: Tenants have security of tenure and you may only evict a tenant for reasons permitted by the RTA. Reasons for an eviction could include: not paying rent in full or persistently paying rent late causing damage to the rental property illegal activity 9
Frequently Asked Questions substantially interfering the enjoyment of other tenants or the landlord If one of the conditions is met, the first step is to give the tenant notice in writing that you want the tenant to leave. The RTA sets out the proper notice period and remedy for tenants subject to any of the above eviction reasons. Generally, for substantial interference of enjoyment, the termination date is 20 days from the date you give the notice. If the tenant corrects his/her behaviour within seven days of receiving the notice, the notice will be void and the tenant will not have to move out. You must indicate the termination date in the notice. The proper forms are available from the Board offices or the Board website. If the tenant does not stop his/her behaviour within seven days, you can ask the Board to end the tenancy by filing an application on the eighth day of the notice period. If you live in the same property and your property has 3 units or less, the notice period is shortened to 10 days and you can immediately apply to the Board after serving the notice. The Board will decide if the tenancy should end after holding a hearing. Both the landlord and the tenant can come to the hearing and explain their side to a Member of the Board. For more detailed information on the process for ending a tenancy, please contact the Landlord and Tenant Board at 416-645-8080 or the Landlord s Self-Help Centre at www.landlordselfhelp.com. For the most comprehensive information, please see the City of Toronto website at www.toronto.ca/housing - Tenant and Landlord Resources. 10
General Overview: RTA
Overview of the Residential Tenancies Act INTRODUCTION This Overview provides important information about the new Residential Tenancies Act (RTA) that took effect January 31, 2007. It highlights the key areas covered in the RTA that are of interest to Councillors and Councillors staff. It does not cover every section of the legislation. The new Landlord and Tenant Board web site provides a good range of information about the new Act including helpful brochures, frequently asked questions, forms and instructions, rules of practice for Board members, and links to the Act and regulations: www.ltb.gov.on.ca/. Additional information about the legislation, including backgrounders and media releases, can be found at the Ministry of Municipal Affairs and Housing Residential Tenancies Act web site: www.mah.gov.on.ca/userfiles/html/nts_1_26923_1.html. Purpose and Scope of the RTA The RTA is provincial legislation that regulates rents in residential rental buildings as well as certain aspects of the tenancy relationship between landlords and tenants. It came into effect on January 31, 2007 and replaced the Tenant Protection Act (TPA). Applications filed under the TPA and not resolved by January 31, 2007, will be addressed through special transition rules. For more information about transition rules, see www.ltb.gov.on.ca/en/key_information/stel02_111533.html. The provincial government stated that the purposes of the RTA are to: provide protection for residential tenants from unlawful rent increases and unlawful evictions; establish a framework for rent regulation; balance the rights and responsibilities of residential landlords and tenants; and provide for adjudication and other informal processes to resolve disputes. What rental buildings are covered? Most residential rental buildings where tenants pay rent to a landlord for the right to occupy the rental unit are covered by the RTA. These include apartment buildings, rented townhouses, duplexes and detached homes, rented condominiums, rooming houses, most care homes, and for-profit cooperative housing. 12
Overview of the Residential Tenancies Act There are a number of important exemptions. Generally, if the building, operations, or rent is regulated by some other piece of legislation, the unit or rent or rental agreement will be exempt or partially exempt from the RTA. For example: Non-profit housing co-operatives are exempt from the RTA as these are governed by provisions of the Co-operative Corporations Act, 1992. However, tenants who are not members of the co-operative may be covered by some of the rules. Social housing and new affordable housing are exempt from certain rent rules (i.e. annual rent increases and above-guideline increases) and certain rules governing the landlord and tenant relationship (i.e. sublet/assignment). If the tenant is paying a rent geared to income, the 90-day rule for giving a notice of rent increase before the date of the intended rent increase does not apply and there can be less that 12 months between rent increases. Other examples of exemptions include: New rental buildings built since November 1, 1991 and new rental units since June 17, 1998 are exempt from rent control and rules about annual guideline increases and above-guideline increases; however, they are still subject to rules for rent increase notice and frequency, evictions and other aspects of the RTA. New affordable housing is now exempt from the same rules as social housing. Ontario Regulation 516/06 sets out the criteria a project must meet to be eligible for this exemption. The exemption applies to projects funded by certain government programs and projects developed under a municipal housing facilities by-law or other Council-approved program. There must be an agreement between the landlord and the municipality (or an agency or corporation thereof): the tenancy agreement must identify the unit as a subsidized unit, the government program that funded it, and that there is an agreement with the municipality; and the tenant must have been on the social housing waiting list or eligible to be on the list when their tenancy began. A rental arrangement provided to an employee as a condition of employment is exempt. Rental accommodation where the tenant shares a kitchen or a bathroom with the landlord. For more information about exemptions, refer to sections 5 to 9 of the RTA at www.e-laws.gov.on.ca/dblaws/statutes/english/06r17_e.htm. These following pages (15-28) provide an overview of the key areas in the RTA that are of most interest and concern to the tenants, landlords, and the work of the City. It 13
Overview of the Residential Tenancies Act highlights certain points of the legislation and is not intended to provide a comprehensive review or legal advice on any issue. For general information about the rights and responsibilities of tenants and landlords under the RTA, see the brochure of the Landlord and Tenant Board entitled Information for New Tenants : http://www.ltb.gov.on.ca/en/key_information/stel02_111600.html 14
Overview of the Residential Tenancies Act EVICTIONS Background Tenants have security of tenure. This means that they can continue to rent their homes for as long as they choose, except for very specific reasons. A tenant with a one year lease who pays the rent each month, for example, can remain in their unit after the lease has ended on a month to month basis, even if they do not sign another lease. Tenants must give proper advance notice to move out, generally 60 days from the end of the term or the last day of the lease. Most disputes between landlords and tenants concern termination of tenancies before the end of the lease or term, also known as evictions. A landlord may evict a tenant only for reasons permitted by the RTA. Sometimes the eviction may result from the conduct or actions of a tenant or their guests. This is called termination for cause. In other cases, tenants may be evicted because of other circumstances relating to ownership or disposition of the property. This is called a no fault termination. Causes of Eviction There are different causes that may lead a tenant to being evicted, including: failure to pay rent; consistent late payment of rent; the tenant or another occupant has caused or permitted illegal activities in the rental unit or property; the tenant, another occupant, or their guest has caused damage to the rental unit or property; the tenant, another occupant or their guest has done something that impaired the safety of others; the tenant, another occupant or their guest has disturbed the reasonable enjoyment of other tenants or the landlord; allowing too many people to live in the rental unit that is inconsistent with health, safety or housing standards; and misrepresentation of income when living in subsidized housing. No fault reasons include: The landlord wants the unit for their own residence or for their spouse or partner, or a child or parent of one of them, or a caregiver for the landlord or a family member; The landlord of a property with no more than three units has agreed to sell the property to someone who wants all or part of the property for their own residence, 15
Overview of the Residential Tenancies Act or that of their spouse or partner, or a child or parent of one of them, or a caregiver for the landlord or a family member; The landlord plans major repairs or renovations that require a building permit and vacant possession of the building; and The landlord plans to demolish the rental property. In the case of major repairs or renovations, the tenant has the right to reoccupy the unit when the repair or renovation is complete, and the landlord must pay the tenant the lesser of three months rent or the amount of rent the tenant would have paid during the period of renovations/repairs. The City has planning policies that relate to the conversion of rental housing in certain situations. In the case of demolition, the landlord must compensate the tenant with three months rent or offer alternative accommodation acceptable to the tenant. The City has planning policies that relate to demolition of rental housing in certain situations. These policies provide for the replacement of rental housing being demolished as part of a redevelopment proposal. They also promote tenant relocation and assistance beyond the standard requirements of the RTA. The current, consolidated planning policies on housing, including those which deal with rental demolition and conversion, were approved by the Ontario Municipal Board in October 2006. The full Official Plan as adopted by Council in November 2002, with some modifications, can be found at: www.toronto.ca/planning/official_plan/pdf_chapter1-5/chapter1-5_searchable_locked.pdf. In addition to the Official Plan policies, the City of Toronto Act, proclaimed January 1, 2007, permits Council to regulate the conversion and demolition of rental housing (section 111). City planning is currently developing this program. Further planning research on affordable and rental housing is provided at: www.toronto.ca/planning/housing.htm Contact for City Planning: Noreen Dunphy, Senior Planner, at 416-392-1255 David Spence, Senior Planner, at 416-392-8124 16
Overview of the Residential Tenancies Act The eviction process The eviction process involves different steps, forms and deadlines depending on the reason for the eviction. Tenants may move out or make remedy to avert eviction (except in situations such as illegal acts and impaired safety) at any stage. For those reasons for termination that do not have a remedy most are the "no fault" reasons the application will go to a hearing where the tenant can dispute the reasons for eviction. Generally the process involves a number of steps in the following sequence: Notice of Termination The landlord must give the tenant a notice in writing when they want a tenant to move out, regardless of the reason. This is called notice of termination. The notice must specify the termination date. Application to the Landlord and Tenant Board (the Board) If the tenant does not remedy the situation (e.g. pay rent before the termination date), the landlord may apply to the Landlord and Tenant Board to evict the tenant and/or collect the rent owed. Once the application is received, the Board schedules a hearing and gives the landlord a Notice of Hearing. The landlord is required to give the tenant a copy of the application and the Notice of Hearing. o Every tenant who faces an eviction application will automatically have access to a hearing or mediation. This is a change from the TPA which required the tenant to file a written dispute in order to have a hearing. Hearing before the Board At the hearing, the adjudicator hears evidence and arguments on both sides and decides whether or not to make an order on the application. For example, if the application is about eviction due to non-payment of rent, the adjudicator may decide whether to order the tenant to pay the rents owed or to evict the tenant. o Sometimes, the tenant and the landlord can reach an agreement on a payment plan and file a copy of the written agreement with the Board. In this case, the Board will issue a consent order based on the agreed payment plan and a hearing will not be required. o In a hearing about arrears or eviction due to non-payment of rent, the tenant can raise other issues such as maintenance or harassment as long as they can provide supporting evidence, and the adjudicator may order remedies on the tenant s claim. Order to terminate tenancy After the hearing, the adjudicator makes a decision and issues an order that will be sent to both parties by mail. The order indicates the reason for the order and the effective date after which the landlord can enforce the order. 17
Overview of the Residential Tenancies Act Enforcement by the Sheriff If the tenant does not move out before the effective date, the landlord can file a request with the Sheriff to enforce the order. However, the tenant can void (cancel) the order by paying all arrears anytime before the Sheriff comes. The RTA allows this remedy to be used only once for every tenancy. Only the Sheriff can force the tenant to move, not the landlord. The tenant has 72 hours to remove their belongings after an eviction. Fast-track evictions (RTA, sections 63 65) The RTA permits a faster eviction process in certain situations: the tenant is purposely causing wilful or excessive damages to a rental unit or building; or the tenant is using the rental unit in a manner that is inconsistent with its use as residential premises and where that use has caused or is expected to cause excessive damage to the rental property; or the tenant is substantially interfering with the landlord s reasonable enjoyment (e.g. playing loud music all night), when the property has three units or less and the landlord lives in the property. The process is faster because: the notice period will be shortened from 20 days to 10 days; the landlord can apply to the Board immediately after serving the notice to the tenant without having to wait until the notice period is over; the tenant cannot void the eviction by repairing the damages or by stopping the conduct or activity; and the Board will order the Sheriff to speed up the enforcement of the eviction. For more information about evictions, refer to sections 48-68 of the RTA. 18
Overview of the Residential Tenancies Act RENT INCREASES Annual Rent Increase Guideline (RTA, section 120) The Ontario government sets a rent increase guideline every year that applies to most residential accommodation covered by the RTA, with the exception of new rental housing, new affordable housing and social housing. The rent increase guideline is the maximum percentage that landlords can raise rents without getting permission from the Landlord and Tenant Board. This is known as rent control. The guideline increase can only be applied when at least 12 months has passed since the tenant s last rent increase. The landlord must give at least 90 days written notice to the tenant prior to the effective date of the rent increase. The annual rent increase guideline is based on the Ontario Consumer Price Index (CPI) and announced in each August. The guideline for 2007 is 2.6 per cent. Under specific circumstances, the landlord can apply to the Board for a rent increase more than the guideline. This will be discussed in more detail below. The landlord can increase by up to 3 per cent more than guideline without an application if the landlord and tenant agree that the landlord will do major repairs or renovations, buy new equipment for the rental unit, or add a new service for the tenants. The agreement must be in writing. The landlord and tenant can agree to increase the rent for the provision of parking as a separate charge. This can happen at any time during the year and no notice of rent increase is required. Vacancy Decontrol (RTA section 113) Under the RTA, rent control does not apply to vacant units. This is known as vacancy decontrol. What this means is that when a tenant moves out and the unit becomes vacant, there is no limit to the amount of rent that can be charged to the new tenant. However, rent controls do apply to future increases charged to that new tenant after the new tenant has moved in. 19
Overview of the Residential Tenancies Act Interest on Last Month s Rent (RTA section 106) Landlords can ask tenants for a deposit before they move in. The deposit cannot be more than one month s rent (one week s rent if the rent is paid weekly) and can only be used for the last month or week of the tenancy. It cannot be used to pay for repairs or for any other reason. If the rent increases, the landlord can ask the tenant to pay the increase to top up the rent deposit. Under the RTA, landlords are required to pay the tenant interest on the rent deposit every year. The interest rate used is the same rate as the annual rent increase guideline (previously it was 6 per cent). They can use the interest to top up the tenant s last month s rent deposit, so that the deposit will be kept up-to-date with the current monthly rent. Above-guideline Rent Increases (AGI) (RTA sections 126 129) Landlords can apply to the Board to increase the rent of a rental unit by more than the annual guideline if their costs have increased due to one or more of the following circumstances: capital expenditures, e.g. roof replacement; extraordinary increase in municipal taxes or utility costs in the building; and/or operating costs related to security services for the building. The landlord must give each tenant affected by the AGI application a copy of the application. A copy of the supporting documents (e.g. Bills) must be made available to tenants through mutual arrangements, or on a compact disc for a small fee (no more than $5). For buildings with property management offices, the landlord must make the supporting documents available for viewing by tenants on site. AGI based on capital expenditures: A rent increase is permitted for capital expenditure work that is necessary as defined in the RTA work needed to protect/restore the physical integrity of the building, comply with landlord s maintenance obligations, maintain the building operating systems (i.e. plumbing, heating, mechanical, electrical, etc.), provide accessibility, promote energy or water conservation, or maintain/improve building security. Routine maintenance and work that is solely intended to increase the prestige of luxury of a rental complex or unit is not eligible for a rent increase. Other key points include: The rent increase allowed for the capital expenditure is determined by amortizing the permitted total cost of the item over a number of years and at an interest rate set by the RTA. 20
Overview of the Residential Tenancies Act Above-guideline increases for capital expenditures are capped at 3 per cent per year for a maximum of 3 years. When a landlord finishes paying for capital expenditures (e.g. a new roof), sitting tenants whose rents were increased based on these capital expenditures will have their rents reduced by the same percentage as they were increased (known as cost-no-longer borne ). AGI based on extraordinary increases in utility costs: The key provisions related to this type of AGI application include: A landlord can only apply for an AGI based on an extraordinary increase in utility costs when the increase is greater than the annual rent guideline plus 50 per cent of the guideline. For example, if the guideline is 2 per cent, a landlord will only be able to apply for an AGI if the utility cost increase is higher than 3 per cent. In the situation where a tenant s rent is increased because of extraordinary increases in utility costs, if the utility costs later decrease, the tenant s rent will be reduced accordingly ( cost-no-longer borne ). There may be rent reductions for five years after the initial increase was granted if utility costs decrease.. During the five-year period following the AGI increase, the landlord must provide written notice of actual utility costs on an annual basis to the tenants so that they can verify whether their rents should be decreased. Tenants can request a copy of the actual utility bills from the landlord on CD for a small fee ($5). AGI based on operating costs related to security services A landlord can apply for an AGI due to installation of a new security service or system in the building. The key provisions related to this type of AGI application include: The security services must not be provided by any employee of the landlord. For example, the landlord cannot ask an existing building superintendent to patrol the hallways of the building and apply for an AGI based on a new security service. Above-guideline increases for operating costs related to security services are capped at 3 per cent per year for a maximum of 3 years. 21
Overview of the Residential Tenancies Act Tenant Defence Fund - Help for tenants in challenging AGI applications The City s Tenant Defence Fund provides assistance to tenants who wish to challenge AGI applications through two sub-programs: Tenant Support Grants Program (Grants Program): This program provides direct grants to tenant groups to hire legal representation for their dispute. Applications for the grants are processed by Shelter, Support and Housing Administration (SSHA) staff through delegated authority of Council under the Grants Program By-Law (Toronto Municipal Code Chapter 797). Contact for Grants Program: Sheryl Pollock, Agency Review Officer, SSHA Division, 416-392-0053. Outreach and Organizing Program (Outreach Program): This program assists tenant groups to organize and prepare for the dispute process, including review of the AGI application files and making applications for a tenant support grant. The Outreach Program is implemented through a purchase of service agreement with the Federation of Metro Tenants Associations (FMTA). Contact for Outreach Program: Dan McIntyre, Outreach Co-ordinator, FMTA, at 416-413-9442. More information about the Outreach program is also available on the FMTA website at: www.torontotenants.org/outreach&organizing.htm 22
Overview of the Residential Tenancies Act BUILDING MAINTENANCE AND REPAIRS Key RTA Provisions Related to Maintenance The RTA has provisions that encourage landlords to maintain their buildings and provide remedies for tenants who are living in poorly maintained buildings. These include: Tenants can apply to the Board for an order to stop all rent increases, including annual guideline increases and above guideline increases, when the landlord is in serious breach of their obligations regarding health and safety and property standards. This is called an Order Prohibiting Rent Increases (OPRI). The OPRI applies to rent increases for the current tenant and any future tenant of the units for as long as the order is in effect. If the landlord has filed an AGI application, the tenants can raise maintenance issues at the hearing. The Board may dismiss some or all of the AGI application if there are serious outstanding work orders or maintenance issues. Where tenants apply for an order determining that the landlord is in breach of property standards obligations, the Board can allow the tenants to pay some or all the rent to the Board, instead of paying to the landlord, until the serious maintenance issues are resolved. Landlords are allowed to inspect a rental unit to determine if the unit has any maintenance problem, provided that they give the tenant 24-hour written notice in advance. When repair work is being performed on a building, the landlord must give 60 days notice to the tenants and prospective tenants about the work that is to be done, and the notice must include details of work, expected duration and impacts, and updates on any significant changes. Tenants can apply for a rent abatement where repair work is performed and the landlord does not follow proper procedures. The Board may allow an abatement of up to 25 per cent of the rent. The rent abatement level can be raised up to 100 per cent of the rent if there is excessive interference and the work is not done properly. The City s role in property standards maintenance: There are almost half a million rental housing units in the City. Most of Toronto s rental housing is more than 30 years old. While a lot of capital investment has gone into maintaining rental housing, there is a need for ongoing replacement and repair. Concerns have been raised about the aging stock and the need to ensure the quality, health and safety of renters. 23
Overview of the Residential Tenancies Act The City has a property standards by-law (Municipal Code Chapter 629 at www.toronto.ca/legdocs/municode/1184_629.pdf), enforced by the Municipal Licensing and Standards Division (ML&S), to ensure that all residential properties are maintained to a minimum standard. Owners are required to repair, maintain, and keep properties clean in accordance with the prescribed standards. Occupants are required to maintain the property they occupy in a clean and sanitary condition such as: Maintaining fixtures and appliances Keeping exits clear Limiting the number of occupants Taking immediate action to eliminate unsafe conditions The current enforcement system relies upon complaints and depends upon tenants working with their landlords to address maintenance issues, and contacting ML&S offices when problems persist. ML&S has developed a maintenance request form that tenants may use to notify their landlord about a maintenance problem. This form is available in 22 languages on the ML&S site at: www.toronto.ca/apartmentstandards/home.htm Website on properties with outstanding work orders The ML&S web site provides information related to by-law enforcement activity within the city of Toronto, specific to apartment buildings. The details of property standards orders issued against rental apartment building with 4 or more units (excluding social housing units and condominiums) within the last two years are posted for public viewing at: http://www.toronto.ca/apartmentstandards/home.htm. A list of property standards offices and phone numbers is available at: www.toronto.ca/licensing/key_contacts.htm. Vital Services Vital Services By-Law (Toronto Municipal Code Chapter 835) Since 1998, the City has implemented the Vital Services By-Law to ensure continuing vital services (gas, fuel, hydro, water, and hot water) for tenants of rental buildings where the landlord is responsible for utility payments (i.e. included in the rent ) and has failed to make the payments. The by-law requires utility service providers to give the City 30-days notice prior to discontinuing the service. If the utility service is discontinued, the City may issue an order through the Property Standards By-law, and may pay the utility provider; the cost is recovered by adding it to the property taxes for the building. The Vital Services by-law is available at: www.toronto.ca/legdocs/municode/1184_835.pdf. 24
Overview of the Residential Tenancies Act Contact for Vital Services By-law Program: Lance Cumberbatch, Director, Investigative Services, ML&S, at 416-392-7633 Heating By-law (Toronto Municipal Code Chapter 497) The City has a Heating By-Law which is separate from the Vital Services By-Law. It requires landlords of rented accommodation to provide heat at a minimum air temperature of 21 degrees Celsius in all areas of the rental unit from the 15th day of September in each year to the 1st day of June in the following year. It is available at: www.toronto.ca/legdocs/municode/1184_497.pdf. The RTA includes heat as one of the vital services and stipulates that heat must be provided at a minimum temperature of 20 degrees Celsius in the period between September 1 in a year and June 15 in the following year. This change to the RTA provides a standard for all Provincial municipalities where there is no property standard by-law and no specific provision relating to vital services. In the case of the City, there are existing provisions in the Municipal Code for addressing both vital services and adequate heat. Enforcement activity will continue in a way that does not place the residents of the City at risk. Multi-residential Apartment Regulatory Strategy The City of Toronto Act, which was proclaimed on January 1, 2007, gives the City power to introduce regulations relating to rental residential buildings. ML&S is currently developing a regulatory strategy to ensure multi-residential apartment buildings are maintained in accordance with the provisions of the Toronto Municipal Code. Recommendations are expected in the first half of 2008. Contact for Policy Lead on Multi-residential Apartment Buildings Strategy: Fenicia Lewis-Dowlin, Senior Policy and Research Officer, ML&S, at 416-392-8096. 25
Overview of the Residential Tenancies Act THE LANDLORD AND TENANT BOARD Background Effective January 31, 2007, the Ontario Rental Housing Tribunal became the Landlord and Tenant Board. The new Board continues to provide information about the legislation and to resolve disputes between most residential landlords and tenants. The intent of the new legislation was to make the operations of the new Board fairer and more accessible than the previous system. Key points about the Board Administration Applicants are responsible for serving a copy of their applications and supporting documents to the respondents (in a landlord application, the respondents are the tenants); however, the Board must notify the respondents that an application has been made against them. The notice must provide information about the hearing wherever possible (i.e. the date and location of the hearing, contact information for the Board, and the file number of the application). The Board may permit a tenant who is making a maintenance and repair application to pay some or all of their rent to the Board. This payment would not be regarded as a default in rent. The Board will make forms and publications more user-friendly, and reduce fees for applications for above-guideline increases and other administration fees. For example: photocopying fee: reduced to $0.50 from $1 per page request for review of an order: reduced to $50 from $75 26
Overview of the Residential Tenancies Act RENT REDUCTIONS DUE TO MUNICIPAL TAX DECREASES Automatic Rent Reductions due to municipal tax decreases (RTA sections 131-133) The RTA allows residential tenants to automatically reduce their rents when the rental residential building in which they live has experienced a property tax decrease of more than 2.49 per cent between the two prior consecutive years. The law requires municipalities to provide notices to landlords and tenants if their buildings are subject to an automatic rent reduction. The notices must be sent if there are more than six rental residential units in a building (i.e. multi-residential rental properties). In 2001, Council adopted a policy that the notice must also be sent to buildings with six or fewer units (i.e. residential rental properties), to ensure that tenants in smaller rental buildings have the same opportunity as tenants in multi-unit buildings to automatically reduce their rents. The notices must be sent to landlords by September 15 and to tenants by December 15 each year. Tenants who are eligible for automatic rent reductions can reduce their rent effective December 31 of the year they receive the notice. Generally the reduction is applied beginning with the January rent payment. Amount of Rent Reduction The amount of the rent reduction for multi-residential class properties (i.e. properties with more than 6 units) is equal to 20 per cent of the percentage tax reduction. For example, if property taxes were reduced by 10 per cent, the tenant would be permitted to reduce their rent by 2 per cent (10 per cent x 20 per cent = 2 per cent). The amount of automatic rent reduction for residential class properties (i.e. properties with 6 units or less) is equal to 15 per cent of the tax decrease percentage. The 20 per cent and 15 per cent figures are set by the RTA regulations, and cannot be changed by the City. The City s role in notifying landlords and tenants The program notifying landlords and tenants of automatic rent reductions is jointly implemented by the Revenue Services Division (RSD) and the Shelter, Support and Housing Administration Division (SSHA). RSD manages the property tax database and calculates the rent reduction amount, while SSHA develops communication materials and resources, and manages the budget for the program. The City funds a tenant hotline operated by the Federation of Metro Tenants Associations (the FMTA) to respond to tenant inquiries on all matters concerning 27
Overview of the Residential Tenancies Act rights and responsibilities of tenants and landlords. Tenants can call this hotline to obtain information on automatic rent reductions. More information about the RTA rules for automatic rent reductions is available on the Shelter, Support and Housing Administration website at: www.toronto.ca/housing/rentlower.htm Staff Contacts: Property Taxes: Raj Mathavan, Supervisor, Planning and Policy Development, RSD, at 416-395-6738 Residential Tenancies Act: Gwynne Cheung, Policy Development Officer, SSHA Division, at 416-392-0643 Contact for the Tenant Hotline: By phone: 416-921-9494 Link to FMTA website: www.torontotenants.org 28
Overview of the Residential Tenancies Act HISTORY OF LEGISLATIVE REFORM & COUNCIL RESOPNSES Since the enactment of the Tenant Protection Act (TPA) in 1998, concerns have been raised about various aspects of the law, including excessive rent increases, fast-track evictions and poor maintenance in rental buildings. When the current Ontario Liberal Government took office in October 2003, it promised to repeal the TPA and replace it with new legislation to provide real rent control and protection for tenants. In June 2004, in response to the Province s consultation on reform of the TPA, City Council recommended changes in 15 key areas concerning the rules that regulate rents and other tenancy issues: www.toronto.ca/housing/pdf/report-citys-response-tpa-consultation2004-2.pdf. The submission also included a Planning report that dealt specifically with the issue of conversion and demolition of rental housing: www.toronto.ca/housing/pdf/uds-responseprov-consultation-paper.pdf. The report recommended that the provincial government bring forward permanent legislation to provide Toronto and other interested municipalities with the power to control the conversion and demolition of rental properties. This recommendation was not addressed in the RTA. Nevertheless, the new City of Toronto Act, proclaimed on January 1, 2007 and the amendments to the Municipal Act do provide the City and other municipalities with such power. Section 111 of the City of Toronto Act states that: The City may prohibit and regulate the demolition or conversion of rental housing properties with 6 or more dwelling units. In January 2006, City Council submitted more amendments to the TPA based on Councillor Walker s recommendations: www.toronto.ca/housing/pdf/clr-walkercommunication.pdf. In addition to the submissions, on March 9 2006, Council hosted a special Tenant Forum for tenants and housing advocates resulting in more than 450 tenants supporting Council s recommendations to change the TPA and save the existing supply of affordable housing. Proceedings of the Tenant Forum and recommendations were forwarded to the Province: www.toronto.ca/housing/pdf/forum-proceedings-2006- appendix-a.pdf. On May 3, 2006, the provincial government introduced Bill 109, the proposed Residential Tenancies Act, and held public hearings in Toronto in late May and early June. A written submission on behalf of Council was made by Mayor David Miller to the Standing Committee on General Government: www.toronto.ca/housing/pdf/writtensubmission_060206.pdf. It was reinforced by Councillor Michael Walker, Chair of the City s Tenant Defence Sub-Committee, through his deputation to the Standing Committee on June 5. 29