A few weeks back, I wrote a piece (link here) describing how rent controls in Ontario impacted landlord flexibility, while incentivizing tenants to stay longer in rental units.
The article was written to answer a question from a condo owner whose tenants were entering into year three, without any rent increases throughout the period of the lease.
The owners, facing escalating carrying costs such as property taxes and maintenance fees, wanted to know what their options were to increase rent.
My response was based on the rules established in April 2017, when the then-provincial government made sweeping changes to how rent controls operated in Ontario.
In summary, the changes brought all residential dwellings under the fold of rent control, whereas before, only units built before 1991 were subject to the legislation.
Fast forward to last week Friday, the provincial government took an about face turn from the previous administration with the following wording:
…. the government [will pursue] reintroduction of the rent control exemption that will apply to new rental units first occupied after today.
Announced in its 2018 Ontario Economic Outlook and Fiscal Review, essentially, rent controls have been rolled back by the government. Here’s the new playbook:
- Current tenants will still be protected, thus, landlords will not be able to increase rents of currently occupied units beyond the annual provincial percentage guideline.
- Residential units that have never been previously used for rental purposes, will not be subject to rent controls.
- In other words, and this is key, for units coming on the market for the first time, on or after the day of the announcement, rent controls will no longer apply.
Put another way, if you’re an owner who has never rented out your current condo or basement apartment before, and you decide to list it today, your unit will be exempted from rent controls.
Further, if you’re taking ownership of a brand-new built property that will be used as a rental investment, then rent controls will also not apply.
The government’s ambiguous wording of: “…new rental units first occupied after today”, has led some to infer that only brand-new builds will be subject to the revised rules.
“First occupied after today,” applies to any residential property (both new and old) that hasn’t been previously used as a rental dwelling.
Of course, this bit of news will be a hooray moment for some, and a fairly disconcerting moment for others. There’s no middle ground.