With Ontario’s affordable housing crisis, should rent control return for new apartment units?

With the end of the calendar year approaching, CityNews has received several calls from Ontario tenants in recent weeks about large apartment rent increase notices being issued by landlords.

In Etobicoke’s Humber Bay Shores neighbourhood, tenant Kevin Coltellaro is among those who are feeling the squeeze amid an ongoing back-and-forth with his landlord.

He rented an apartment off of Marine Parade Drive in late 2020 and signed a lease that saw him pay $2,700 a month. But earlier this year, Coltellaro said he received an email from his landlord.

“That’s a lot as it is (the $2,700 monthly rent), but they’re like, ‘We’re going to raise your rent to $3,000.’ So $300 increase, it’s like a 12- or 13-per-cent raise, increase in the rent, and they said, ‘We could be charging $600 more, but since you’re a good tenant,’” he said.

However, he said he didn’t receive a proper, written 90-day notice, so he kept paying the original lease price and didn’t include the additional fee requested by email. Coltellaro went on to say he was told he was in back charges.

“All I did was just get met with argument. I mean, it’s ‘You don’t know what you’re talking about, I have 14 years of experience, paralegal, and I’ve been doing this,’” he said.

The dispute over the extra $300 for each of the five following months eventually led to an eviction notice.

“They said if I don’t pay all the money I owe them by Sept. 26, they’re going to evict me. I have to be out. I didn’t respond to that,” he said, noting he filed a complaint with the Landlord and Tenant Board.

Coltellaro said he was told the new rental price if he wanted to stay, would be $3,800 — a nearly 41-per-cent increase compared to the price just two years earlier.

“They’re using it to their advantage to price gouge me out, and now they’re forcing me out of my unit. Now I have to move in the middle of winter because they can raise it by however much they want,” he said.

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“I said look, ‘You know, do you have any compassion?’ And [a representative] said, ‘There is no room for compassion here this is a business for profit.’ I said, ‘You know you’re in the business. By the way, your business is the business of people’s livelihood, it’s their home.

“Show me the paperwork, and I’ll respond to that … You want to play by the rules and use the rules to your advantage, then play by the rules.”

Frustrated by the experience, he said he called Progressive Conservative Party of Ontario Etobicoke-Lakeshore MPP Christine Hogarth’s office as he learned about a loophole that allows new apartment units created for occupancy after Nov. 15, 2018, to escape provincially imposed rental increase caps.

Coltellaro said after multiple requests over several months, he was told the rules laid out by the Ontario Ministry of Municipal Affairs and Housing. He said he was told the rules aren’t changing soon and that her office couldn’t help further on the specific issue, adding he felt his questions weren’t answered.

CityNews contacted Hogarth’s office Friday afternoon and Monday afternoon to ask about the interactions, and a spokesperson said they conveyed information given by the ministry and that they couldn’t intervene on the Landlord and Tenant Board case since it’s currently before the tribunal.

With respect to his landlord, he said he was dealing with a company called Cityscape One / Cityscape Real Estate Ltd. Brokerage. CityNews contacted the company Friday afternoon and Monday afternoon to ask about Coltellaro’s situation.

Salma Dar, a barrister and solicitor with Dar Law Professional Corporation, sent a statement to confirm the landlord is Cityscape Canada Real Estate Ltd. and that company staff complied with the law.

“Mr. Coltellaro was sent the appropriate documentation for the rent increase,” the statement said.

“The tenant has filed a T2 application; however, it appears he has not named the correct legal entity, which is the landlord, as noted above. We have only received notification of the application being filed. We cannot respond to something we have not seen.

“The landlord will be filing its own application for non-payment of rent, among other matters. This matter will be resolved before the Landlord and Tenant (Board) tribunal.”

The statement went on to say the rent was increased “based on comparables,” adding all of the comparable units were a minimum of $3,300. It said units eight and 23 floors higher in Coltellaro’s building were renting for $4,000 and $3,950, respectively.

No further clarity was offered on the initial request for $300 extra a month and the process for asking for it.

Why was the cap lifted on units created after mid-November 2018, and what’s allowed now?

CityNews contacted the Ontario Ministry of Municipal Affairs and Housing to ask about the ability of landlords to impose large rent increases and to ask how the policy change affecting new units and tenancies after Nov. 15, 2018, has resulted in increased housing supply or eased the burden for renters.

Nazaneen Baqizada, a spokesperson for the ministry, said the government is “constantly working to increase housing supply across Ontario while keeping its promise to preserve rent control for existing tenants.” She said there had been highs in new rental builds.

Baqizada went on to point to changes in Bill 184 that “strengthen tenant protections by discouraging ‘renovictions’ and bad faith evictions,” adding landlords convicted of breaking the law could be fined as an individual up to $50,000 or a corporation could be fined up to $250,000.

She said landlords have to follow Ontario’s Residential Tenancies Act when raising rents. Baqizada encouraged tenants to clarify the status of their apartment if they’re unsure by asking for documentation (such as building or occupancy permits, home warranty documents etc.) or by applying to the Landlord and Tenant Board for a determination. She also said the ministry’s rental housing enforcement unit could respond to complaints too.

So under Ontario law currently, how must rental increases occur?

Douglas Kwan, the director of advocacy and legal services with the Advocacy Centre for Tenants Ontario, said there are five main points governing this:

• The rent increase can only happen once in a 12-month period
• Must be given in writing 90 days before the increase is to take effect
• Landlords must use N1 or N2 Landlord, and Tenant Board forms for advising of rent increases (N1 for units covered by annual increases and N2 for units exempt)
• Units occupied on or before Nov. 15, 2018, are subject to maximum increases (2.5 per cent in 2023)
• No cap on increases for new units after Nov. 15, 2018

For a new unit to be exempt from rent control, Kwan said it needs to have its own kitchen and bathroom(s) and an interior or exterior entrance that can be locked inside and out.

In the case of a detached, semi-detached or row house, he said the owner is required to have lived outside of where the first occupied unit was before Nov. 15, 2018, or the new unit must have been an unfinished area before it became occupied as a unit.

“It’s very difficult to prove when a unit is first occupied unless you know the previous tenant and they can tell you their story,” Kwan said.

“The only way to find out if it was first occupied or not is to see if there was a previous tenant because it’s not recorded on land registry titles … there’s no rent registry to mark that, and so you’re really relying on a landlord’s word whether or not it’s first occupied or not.”

Rules governing newer units, tenancies in Ontario not protecting tenants and affordable rental stock: advocates

Kwan said his organization is commonly getting calls from people in newer units asking if higher-than-expected increases are allowed.

“That process is perfectly lawful,” he said.

Kwan said the concept isn’t new, and in the 1990s, the same idea was introduced, adding it was in place for more than two decades after it was scrapped by the Ontario Liberals in 2017. He said only 7 per cent of residential buildings built in that period were for apartments.

“It didn’t have much effect to create and spur purpose-built rentals,” Kwan said, adding the 2018 rule has the same intention.

He argued every tenant should have the same protections regardless of the age of the building they live in.

“What we’re seeing played out is that we’re losing a lot of our affordable rental units because of this loophole,” Kwan said, adding vacancy decontrol between tenancies means landlords can charge whatever they want when it’s empty.

“What we’re seeing is that those two rent control loopholes are just exacerbating the affordable housing crisis.”

If the Ontario government wanted to help residents now, he said officials should explore dropping the two rules.

“With respect to rent control, it can be expanded, and tenants can find a market that’s more favourable to them, that’s more affordable to them simply with the stroke of a pen,” Kwan said.

“By closing these loopholes, the provincial government can make rental housing much more affordable for thousands of Ontarians the next day. You don’t need to wait for a building permit to be issued or for contractors to build an apartment building; affordable housing can happen tomorrow if these loopholes are closed.

“We’re losing our affordable housing stock, and these rent control exemptions have made matters worse.”

He called the current rental housing market “exceptionally unaffordable.” He said ever since 2006, under the previous Ontario Liberal government and the current PC government, there have been double-digit losses in apartments renting for $1,000 or less while there have been huge increases in units renting for $1,500 and more.

Compounding problems for renters, he said, are virtual hearing-related delays being seen at the Landlord and Tenant Board.

“It’s not helping anybody. The delays at the Landlord and Tenant Board impact landlords and tenants who are trying to assert their rights,” Kwan said.

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Jessica Bell, the Ontario NDP’s housing critic and the MPP for University–Rosedale, said complaints about this issue have become normal in her office. She and the Ontario NDP have called for rent control to be expanded to all buildings.

“Renters deserve to live in safe and affordable homes. If you’re a renter in Toronto today, you’re paying the most expensive rent that you have ever paid in your entire life,” she told CityNews, adding a household must now make more than $108,000 a year to afford the average two-bedroom apartment in Toronto.

“It is not healthy for people’s pocketbooks, it’s not healthy for our city to have middle-income and lower-income workers priced out of their homes.”

Bell said Ontario has an “affordability crisis,” and the government must invest more in affordable and supportive housing, increase private-sector builds, clamp down on investor-led speculation of the market and enact better protections for renters.

“Renters deserve to live in our city as well; they deserve to have affordable housing,” she said.

Meanwhile, Coltellaro — a permanent resident from the United States who moved here in 2003, said while he wants to remain in his unit, he’s feeling disheartened.

“When I moved here in 2003, you know I loved this city. I was everywhere on the TTC; I mean, I fell in love with Canada, I stayed, I got married, I had a kid, I built a life here,” he said.

“We’ve got our own problems down there, I get it, but this is not one of them … This city is so ridiculous. Yeah, I’m going back to the states 100 per cent, especially because of things like this … I can’t really thrive here,” he said.