changes to the rent control the political context - frpo · changes to the rent control the...
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ChangestotheRentControlThePoliticalContextJohnMathesonJune2,2017
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• Backgroundonthekey“hotbutton”issuesintheRentControlpolicy…
• Recentpoliticalandhousingtrends…• HowtheycombinedtocreatethenewchangestoRentControl…
• Somethoughtsonwhatmaycomenext…• Howtheindustrycanbestadvanceitsinterestsinthemonthsahead…
ThisPresentation
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• 1975:Rentcontrolscreatedasa“temporarymeasure”-- evolvedover80s.
• 1992:Duetocrisisofsupply,NDPcreatedafive-yearexemptiontorentalscomingontothemarketafter1991
• 1997:HarrisPCsmakepost-1991exemptionpermanent,andcreatevacancyde-control
• 2013:Guidelineiscappedat2.5%
RentControl:APoliticalFootball
VacancyDecontrol
ExemptionfornewunitsPost91
HardCaponGuideline
AboveGuidelineIncreases
• Thesefeaturesarekeypolitical“footballs”thatcomeupwhenunfavourable marketandpoliticalconditionsarise
• FRPOsucceededinfightingoffsignificantchangein2003and2007.Issuewasquietin2011and2014elections.
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RecentSituation
GTARealEstatePricesandthe
“crisisofaffordability”
DeclineinPopularity
oftheWynneLiberals
Badanecdotes
createdpoliticalopportunity…
ThesethreefactorscombinedcreatedtheconditionsthatledtotherecentRentControlchanges…
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Liberalslagginginpolls…
May2015
May2017 PC 42
LIB 28
NDP 23
Green 6
ForumResearch:VotingPreferenceQuestion…
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Liberalshavedrivenaveryaggressiveagendato“reset”• “FairHydroPlan;”reduceratesby25%• PilotonCreateGuaranteedIncome• Increaseminimumwage/newprotectionforlowwageemployees/easierunionization
• HealthandEducationSpending:Pharmacarefor“under25’s”• OMBchanges…• “FairHousingPlan:”MarketCoolinginGTAandRentControl
• PressureonLeader,morale,andfundraising• Needto“dosomething”• LeanLeft:“Aggressiveandprogressive”
ImpactoftheBadNumbers…
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• 2017:RealestatepricespostheftyyearoveryearincreasesinGTA- 33%yearoveryear
• Thepublicwasconcerned..
GTACrisisofHousingAffordability
GTARealEstatePricesandthe
“crisisofaffordability”
Badanecdotescreatedpoliticalopportunity…
• Severalisolatedincidentsofegregiousrentincreasesintheprivatelandlordmarketgarnersignificantmediaattentioncreatingpoliticalpressure
• Createdsomethingto“fix”and“blame”• NDPProposesPrivateMembersBillto
endthePost‘91Exemption…• Liberalsfollowsuit
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• IntroducedApril20,2017:Billedas16measuresaimedat“improvinghousingaffordability”
• Keyelements:• Anon-residentspeculationtax– foreigntax• Somemovestofacilitatedevelopment(property
taxchanges/rebatesondevelopmentcharges)• ExpandrentcontroltoallrentalunitsinOntario,by
includingthosethatwerepreviouslyunderthe1991exemption- Allrentalunitsnowsubjecttotheannualprovincialrentincreaseguideline,whichislinkedtoinflationandcappedat2.5%
• Nochangewithrespecttovacancyde-control.• Minorchangestoabove-guidelineincreases
FairHousingPlan
Taxon“nonresident”speculation
Measuresto“stimulatesupply”
ExpandRentControlby
repealingthe91Exemption
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• PCswontheSaultSte.Marieby-election- PCs:40- NDP:33- Libs:23
• InthepreviouselectiontheLibswonwithalmost60%
• NotyetcertainhowthiswillimpacttheLiberalsintermsoftheirstrategy…
• Willtheyslowdown?Or“pedaltothemetal”
HowistheLiberal“reset”going?
Newly elected Sault Ste. Marie MPP Ross Romano and Progressive Conservative Leader Patrick Brown celebrate their byelection win. (Erik White/CBC)
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• PotentialforachangetoVacancyDecontrol?OrAGGIs?- NDPareonrecordandwouldrepealit…- TheLiberalsareworriedaboutleftflank…- Rentcontrolpopularwithpublic
RentControl:CoulditGetWorse?
VacancyDecontrol
Nowtoelection During election(June2018)
Afterelection
LiberalsorNDPcouldintroduceBilltoendvacancy
decontrol
PossibleCampaignIssue
Willanewgovernment
act?Whatifit’saminority?
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• Ifnewdevelopmentofsupply(purpose-builtandcondorentals)fallsbehindwhiledemandincreases,thatwillputupwardpressureonmarketrents(onturnover)
• Upwardmarketrentswilltriggerapopulardesirefortheeliminationofvacancyde-control
• Badanecdotesmakebadpolicy:Oneextremerentincreasebyonenon-professionallandlordcreatedthepoliticalclimatethatstartedtheattackonthe91Exemption…
RiskFactors
MarketPressure
ConductintheMarket:
InaneraofsocialMedia,theday-to-daychoicesofoperatorsmatter,andhavethepotentialtoinfluenceprovincialpolicy
ToAvoidtheRemovalofVacancyDe-control…
• Somethingsarebeyondourdirectcontrol:• Supply:Weneedgovernmenttofacilitaterentaldevelopment
anddevelopersneedtodevelop…ifthereisacrisisofaffordablesupply,itwillcreatepoliticalmorepressuretoendvacancydecontrol.
• Howtheindustrycanhelpitself…1. Strategy:Unityaroundacommonstrategicapproachto
dealingwiththegovernment2. BetterPublicRelations:Investinimprovedpublicrelationsfor
therentalhousingsectorasawhole...3. RiskManagement:Landlordsneedtobeawareofthe
dangerouspoliticalcontextastheymanagetheiroperations–especiallyrentincreasesandtenantcommunications.
Letsnotcreateourowncrises…
Bill 124 Webinar
Proudly Sponsored by:
Bill 124Rental Fairness Act,
2017PRESENTED BY: JOE HOFFER
COHEN HIGHLEY LLP519-672-9330
VACANCY DECONTROL REMAINS BUT….
u Repeal of Rent Control Exemptions
u Rules for Post November -1991 NORI’suNORI given before April 20, 2017?uNORI given after April 20? Reduce
the increase.u “Rent” = all money paid to landlord
in exchange for occupancy (parking, locker, separate charges)
NEW EXEMPTION FROM RTA
u Amended exemptions from RTA for Housing Programs which include “rehabilitative or therapeutic services or services intended to support employment or life skills development”
u Four years max., very detailed requirements to qualify
u Relevant if you deal with Social Service Agency contracts
“PRESCRIBED LEASES”
u For “prescribed classes” of tenancyu “Prescribed Form” (can be augmented)u Shall be signed on or before tenant
entitled to occupancyu Tenant may demand prescribed form for
signing once during tenancyu Consequences if use wrong form of lease
u Rent penalty (max. 1 month, recoverable)u Lease termination at tenant’s option
NEW RULES: “LANDLORD’S OWN USE”
u 1 month rent penaltyu 1 year minimum (what if you move?
Sell? Die?) “Rebuttable Presumption”
u Freeze period = day of giving Notice of termination plus 1 year “after tenant vacates”
NEW RULES: “LANDLORD’S OWN USE”
u If during “freeze” period you u A) advertise unit for rentu B) enter into lease with another personu C) advertise the unit or the building for
saleu D) demolish the buildingu E) “take any step” to convert the unit
or building to non-residential use
u = bad faith, “reverse onus”
N5 AMENDMENT
u If N5 is served and conduct occurs within 7 days- file
u If N5 is served and conduct occurs after 7 days but within 6 months- file
u No longer an issue of application being dismissed if Landlord failed to apply for termination based on first N5
TENANT “VOIDING” EVICTION ORDER BASED ON RENT ARREARS
u Previously could stay the eviction by “filing a motion”
u Under amended rules, the motion must be accepted by the Board and the Board must refuse acceptance unless the tenant has paid all amounts under the Order
ORDER BASED ON PRIOR CONSENT ORDER OR SETTLEMENT (“s. 78”)u Minor amendment where
application against Tenant is based on previous application resulting in a consent Order or Settlement with a “section 78” provision.
u In addition to moneys owed, Board can now order payment of compensation for repair or replacement of damaged property if that was in previous application
AGI CHANGES
u Repeals “extraordinary” increase based on cost of utilities
u AGI based on “Municipal taxes and charges” remains
u Change to eligibility of capital expenditures (to allow Board to dismiss claims for “curb appeal” items): likely a broad discretion…
u Retrospective in nature to capture work done in reliance on current rules (now subject to new rules)
ELEVATOR/WORK ORDER ISSUES
u Must file evidence of status of any pending elevator (s. 21) TSAA Order or Board Orders regardless of whether compliance period remains open and regardless of whether the work is being claimed on the application
u If compliance period for elevators or other Board work order is expired, no AGI will issue until work is done, again regardless of whether the cost of such work is claimed in the application
ILLEGAL CHARGES
u S.134: Landlord cannot attempt to collect “any amount of money ‘purporting’ to be rent” for any period of time after tenancy (or tenant’s interest in the tenancy per “28 day notice”) is terminated and unit is vacated
u Likely intended to eliminate remedy for damages due to breach of fixed term lease (but does it?)
QUESTIONS?