Rentals Q & A

Why is the 2010 guideline higher this year?

The 2010 guideline is based on the changes in the Ontario Consumer Price Index for all goods and services running from June 2008 to May 2009, compared to the same time period in the previous year. Increased costs for energy in the first six months of this period have contributed to a guideline which is higher than last year.

Why is the guideline percent not the same as the inflation percent released by Statistics Canada on their website?

Statistics Canada releases the CPI data and the inflation rate on a monthly basis for Canada, the provinces and territories (major cities only). Data is usually released with a one-month lag. For example, the latest release of the CPI was on June 18th 2009, which showed the inflation rate for the month of May 2009. This is a measure of the change in prices (CPI) in May 2009, compared to May 2008. The inflation rate for May 2009 for Canada was 0.1 per cent, while it was 0.4 per cent for Ontario.

The annual rent increase guideline is based on similar calculations as used by Statistics Canada. However, for the guideline calculation, Ontario CPI data from the 12 months running from June to May (rather than January to December) is used. Thus, the 2010 guideline is a 12 month average of the inflation rates for the months of June 2008 to May 2009.

Using a period that runs from June to May provides a more up-to-date inflation rate for use as next year’s annual rent increase guideline than using the annual (calendar year) inflation rate released by Statistics Canada.

To what properties does the rent increase guideline apply?

The guideline applies to most private residential rental accommodation covered by the Residential Tenancies Act, 2006. The guideline does not apply to residential dwellings first occupied on or after November 1, 1991; nor does it apply to social housing units and nursing homes. For these units, the RTA does not limit the amount by which a landlord can increase the rents.

How does the Residential Tenancies Act, 2006, help tenants?

The Residential Tenancies Act, 2006, protects tenants from unfair rent increases by:

• Basing the annual rent increase guideline calculation on a real cost indicator, the Consumer Price Index;
• Tightening the rules for above guideline increases in rent
• Requiring rent reductions if utility costs decrease after a tenant’s rent has been increased to reflect high utility costs
• Require rent reductions for capital costs, such as a new roof, once such costs are paid off.

 

Fairness has been restored in the rental housing system by:

•  Eliminating the five-day default eviction process. All tenants who receive an eviction application are automatically given a hearing or can proceed to mediation.
• Requiring the LTB to consider the tenant’s circumstances before issuing an eviction order (e.g. tenant was in hospital and could not pay the rent).
• Allowing tenants to raise any relevant issues during an arrears hearing at LTB.
• Expanding the time tenants have to void evictions by paying their rent arrears and applicable landlord costs to the Board any time before the eviction order is enforced, and only once during the tenancy.

 

Maintenance in rental buildings has been improved by:

•  Allowing tenants to apply to the Landlord and Tenant Board to stop all rent increases if there are serious outstanding maintenance issues.
• Doubling the maximum penalties for landlords, who do not properly maintain their buildings, from $10,000 to $25,000 for individuals and $50,000 to $100,000 for corporations.

 How does the Residential Tenancies Act, 2006, help landlords?

 The Residential Tenancies Act, 2006, promotes investment in our rental housing market by:

• Continuing to allow landlords and prospective tenants to negotiate starting rents for all vacant units.
• Continuing to exempt rental housing constructed since November 1991 from the annual rent control guideline and most rent controls (however, for these units, landlords are covered by the RTA rules that allow one increase per year and require a 90 day notice).
• Continuing to allow landlords to recover capital improvements, extraordinary increases in utility costs or municipal taxes and security operating costs through above guideline increases.

 

Fairness is provided to the rental housing system by:

•  Creating a fast-track eviction process for tenants who are causing wilful or excessive damage.
• Expanding rent discount rules and making them more flexible to allow a maximum discount equal to three months’ rent per year.
• Changing the interest paid on last month’s rent from six per cent to the annual rent increase guideline (which is based on the Ontario Consumer Price Index).
• Broadening powers for landlords to enter units for maintenance purposes (with 24 hours written notice).