The Ontario Legislature passed a new law on October 1 to freeze rents in 2021 for residential tenants. “Helping Tenants and Small Businesses Act, 2020” makes an amendment to the Residential Tenancies Act (RTA) to prohibit rent increases between January 1, 2021 and December 31, 2021, with some significant exceptions – including those issued in 2020. Landlords are permitted to give a notice of rent increase in 2021, as long as the increased rent will start in 2022.
After months of pressuring the province to introduce policies that will support tenants during the pandemic crisis, we see this change as a minor step forward. But it did not nearly go far enough in protecting tenants with the immediate issues they are facing and to keep them housed.
The Good: Freeze on Rent Guideline, 2018 Rent Exemption Inclusion and Cap on Social Housing Rents
Currently, the RTA allows private landlords in Ontario to increase the rent for most sitting tenants, once a year, by an annual rent guideline that the government announces every August based on the Consumer Price Index. At the end of August, the government was obliged by law to announce the rent guideline increase, which was set at 1.5% for 2021. This would have meant that if you pay $1,000 in rent for your apartment, your rent for 2021 could increase to $1,015. The new law will not allow the landlord to collect that $15 a month increase.
The law also temporarily freeze rents for units first occupied after November 15, 2018. Not all sitting tenants in Ontario are protected by the annual rent increase guideline after the Ford government removed rent increase protection for tenants who moved into a rental unit that was first occupied after November 15, 2018. This means the landlord could raise the rent annually for this tenant by as much as they wanted. If you pay $1000 a month for a new basement apartment, your rent could be raised by $300 after a year (instead of $15 if it was rent controlled), and instantly become unaffordable. Many tenants facing these unlimited rent increases are forced to move – what is called an “economic eviction”. For 2021, they are protected by the rent freeze.
The other group of tenants that will benefit from this Bill are those living in social and non-profit housing, including tenants who pay a Rent-Geared-to-Income (RGI) rent. Their RGI rent will be capped for 2021, even if their income increases.
By law, the landlord must wait 12 months between rent increases. Since an annual rent increase can happen throughout the year, the rent freeze will provide the most benefit to tenants whose annual rent increase happens at the beginning of the year. But if your rent increase usually happens near the end of the year (like November 1 or December 1), the increase will not happen in 2021, but the landlord can raise the rent in January 2022. This is not much of a benefit! The rent freeze should have been set up so that every tenant gets 12 months without a rent increase.
The Bad: Above-Guideline Rent Increases are allowed
One of the major shortcomings of the change to the law is that it allows landlords to apply for and collect above-guideline increases (AGIs). An AGI is a rent increase that is more than the permitted annual guideline increase, which is granted by the Landlord and Tenant Board (LTB) when the landlord applies based on their expenses for major repairs, renovations, replacements or additions that are not part of normal ongoing maintenance. Other reasons why AGIs may be permitted is to pay for an unusually high increase in municipal taxes and charges, or for the cost of security services. If you pay $1000 in rent for your apartment and the LTB grants a 9% AGI to your landlord (applied over 3 years), your rent will increase by $30 each year, which is in addition to the annual rent increase guideline. The new law allows most AGIs during the rent freeze period, except for those based on increases in municipal taxes and charges. Low-income tenants living in apartment towers are disproportionately impacted by AGI rent increases. Often these are seniors living on fixed pension incomes.
This overlooks one of the main problems with AGIs in practice – many landlords neglect their buildings and allow tenants’ homes to fall into a state of disrepair (while collecting full rent), and then apply for an AGI to put the overdue maintenance and repair expenses onto their tenants.
This significant exemption to the proposed rent freeze overwhelmingly benefits large corporate landlords that have the financial resources to weather the storm. Some of these corporate landlords already have received LTB approval for their AGI rent increases and will be allowed to apply for more AGI rent increases in 2021. There is no good reason why these rent increases were excluded from the freeze.
The law also permits a rent increase where a landlord and tenant mutually agree upon an increase in rent in exchange for an extra service such as parking space, storage space or on a specific renovation outside the landlord’s obligation to repair.
The Missing: Protecting Tenants from Evictions and Rent Gouging
These changes do nothing to help tenants with one of the root causes of tenants’ rental housing issues – allowing landlords to rent gouge on tenant turnover through vacancy decontrol. Ontario landlords are incentivized to get rid of long-term tenants to reap increased profits from new tenants. We urged the government to revise the Bill to eliminate rent gouging laws and to provide meaningful support to tenants in these unprecedented times, but our pleas fell on deaf ears.
Tenants experiencing financial difficulties during the pandemic crisis should not be forced out of their homes. That is why we continue to call on the Ontario government to reinstate the eviction moratorium. The new law extended a hand to small businesses by prohibiting evictions for commercial properties. But it continues to allow the LTB to churn out eviction orders and for the Sheriff’s Office to continue kicking people out of their homes. The pandemic is far from over, and tenants need to know that they have a stable home as we move into the colder months.
