Ontario New Rental Rules & Airbnb Short term Rental Rules

Ontario New Rental Rules 2017

Ontario New Rental Rules came into focus this year with the Ontario Fair Housing Plan introduced in April 2017. On May 18, 2017, the Ontario government passed the new rental legislation, the Rental Fairness Act 2017.  Ontario government has expanded rent control to all private rental units in Ontario. These include those built after 1991 to ensure that the rental costs can only rise at the rate posted in the annual provincial rent increase guideline.

Reasons behind the Ontario New Rental Rules:

The rent increase guideline is the maximum landlords can raise a tenant’s rent without the approval of the Landlord and Tenant Board.

While the rent increase is capped at 1.5% for 2017, it has been set to 1.8% for 2018. The guideline is based on the Ontario Consumer Price Index, a measure of inflation calculated by Statistics Canada that reflects economic conditions over the past year. More details can be found on the Landlord and Tenant Board site.

The current heated real estate market has been witnessing soaring specially for condos in Mississauga, Toronto and rest of the GTA.  There is a lot of competition from people looking to rent and lack of inventory.

This has been creating a landlord’s market, pretty much the same way as we witnessed a seller’s market earlier this year.

In some extreme cases, tenants were being evicted on the pretext of “Landlord’s own use” and then units were re-rented for higher amounts, leveraging “1991 loophole”. This led to tenants feeling insecure about their future.

The Ontario Fair Housing Plan and the Residential Tenancies Act is basically helping protect tenants and also ensuring predictability for landlords.

Rental Fairness Act – Key Highlights of Ontario New Rental Rules

• No rent increases for any residential rental unit to exceed the provincially legislated annual maximum: 1.5% for 2017
• Enabling a standard lease to help both tenants and landlords know their rights and responsibilities, while reducing the number of disputes
• Protecting tenants from eviction due to abuse of the “landlord’s own use” provision
• Ensuring landlords can’t pursue former tenants for unauthorized charges
• Prohibiting above-guideline rent increases in buildings where elevator maintenance orders have not been addressed
• Removing above-guideline rent increases for utilities, to protect tenants from carbon costs & encourage landlords to make their buildings energy efficient

What does it mean for landlords?

While this new Act provides significant protection to renters, landlords are allowed to raise the rent when their units become vacant. Landlords also continue to have the ability to apply to the Landlord Tenant Board for above-guideline increases. However, they must show that this is to cover extraordinary increases in operating costs or capital expenditures.

The Act is being seen by some as reducing profitability of new buildings built for rental purposes.  With lack of new inventory in the rental market, we will not be able to address the supply and demand issue.

Airbnb Short term rental rules

Airbnb short term rental rules have also been in the news in recent days. While Airbnb short term rentals supports the tourism industry and brings in huge revenue, it is also driving away people looking for long-term rentals. The City of Toronto has been considering new rules following Quebec’s footsteps for the city’s short-term rental market, including properties listed on Airbnb.

Toronto’s Mayor Tory says proposed new rules would help strike a balance between the need for such accommodations and the disruptions they can cause to local neighbourhoods. He hopes that such a move would help stabilize neighbourhoods by limiting the number of people staying there temporarily, while also potentially putting housing units back on the market for longer-term tenants.

On June 19, 2017, City of Toronto directed Municipal Licensing & Standards and City Planning teams to consult with the public on proposed zoning bylaw amendments and licensing and registration framework. The proposed regulations are to:

• Amend the City’s zoning bylaws to create a new land use called “short-term rental” that is permitted in principal residences across the city

• Prohibit short-term rentals that are not in a person’s principal residence

• License companies that facilitate short-term rental activity, like Airbnb

• Create a registry for anyone who operates a short-term rental in their home

The City of Toronto is inviting feedback on the proposed rules for short-term rentals, such as Airbnb via an online survey. The survey will be available online until September 19, 2017. Your input from the survey will inform the final recommendations that staff will report to City Council in the fourth quarter of 2017.

It may not seem that obvious at first, but the long-term rental market will be impacted by the final Airbnb short term rental rules. So have your say, participate in the survey.