Liberals hike rent rate, promise to change system
TORONTO - Ontario's governing Liberals say if they are re-elected this fall they will change the way the province's rent increase rate is set after it took one of the biggest jumps in years Friday.
Municipal Affairs and Housing Minister Rick Bartolucci made the promise after announcing the rate by which landlords would be able to increase tenants' rents in 2012 would be 3.1 per cent.
That's more than four times higher than the 2011 rate of 0.7 per cent.
"We believe we have to revisit the legislation and fix the legislation so that the increase is in line with what's happening in the real world for those who rent," said Bartolucci.
The rent increase guideline is the maximum amount a landlord can increase the rent of most sitting tenants without seeking the approval of the Landlord and Tenant Board.
The Liberals were responsible for drafting the current system of setting rent increases when they adopted the Residential Tenancies Act in 2006.
This automatically tied the annual rate to the Consumer Price Index, which is calculated annually by Statistics Canada to show how much more ordinary products cost than they did the year before.
The idea was to make rent increases equivalent to the rate of inflation so tenants weren't shelling out much more for rent than they were likely getting paid in wages.
That system used to work well before and during the recession but no longer does because the higher price of products like gas have skewed the numbers, Bartolucci said.
He declined to give any more specifics about how they would be changing the system for setting rent increases, but said he would consult with landlords and tenants on the matter.
Landlord and tenant groups welcomed the possibility of change.
"The past few years, we haven't gotten enough through the guideline," said Vince Brescia, President and CEO of the Federation of Rental-Housing Providers of Ontario.
"It's really affected our ability to invest in an aging rental stock and we'd like to see the guideline changed to provide much more flexibility to the industry."
Costs for landlords have gone up, he said, in part because the province is now charging HST to landlords who pay for heat and hydro.
Even the 3.1 per cent increase won't be enough for many landlords, he said. The federation estimated, based on talking to their members, that costs for landlords went up by about seven per cent in the past year.
The organization would support a similar system to the one in place in British Columbia, where the rent increase rate is set by the consumer price index with another two per cent added on top of that.
The previous legislation, when it was originally proposed by the Liberals, allowed landlords to charge tenants extra rent for upgrades to their buildings for as long as it took them to recoup their costs.
An organization that represents tenants, the Federation of Metro Tenants' Associations, would like to see the new legislation address the issue of vacant unit rate increases.
The 2006 legislation made it so landlords could boost rents as high as they wanted when their units become vacant.
"Rents have actually been increasing higher than inflation" because of this, said Geordie Dent, the group's executive director.
The federation's board would like to see legislation that puts a cap on rent increases for new tenants and old tenants so that the rate of increase isn't as high as 3.1 per cent.
The board would also like to see other factors taken into consideration so that major rent increases only take place when unemployment is low and tenants can afford them as a result.
The Liberals could have mitigated the impact of Friday's jump if they had incrementally increased the rent rates, said the Progressive Conservative critic Joyce Savoline.
"It's a huge chunk to be asking families to pay in one increase," she said.
She said her party has yet to decide how they would change the current system for setting the rent increase guideline.
New Democrat Cheri DiNovo called the guideline increase a "sad day" for tenants, but also declined to say whether her party would change the legislation or whether the issue of the rent increase guideline would be specifically addressed in their election platform.
She would only say the party will be coming out with a policy on housing.
Bartolucci says the Liberals would change the legislation early in their next mandate if they are re-elected.
The average rate of increase on the rent increase guideline was 1.89 per cent between 2004 and 2011, a government press release said. Between 1993 and 2003, the average rate was 3.17 per cent.