As inflation and high housing costs continue to bite Canadians, Toronto resident Annie Gibson is concerned and frustrated at the prospect of the rent going up for her one-bedroom apartment.
The owner of her building in the west-end neighborhood of Parkdale is looking to increase the rent by 5.5 per cent — which is above the provincial guidelines set at 2.5 per cent — due to renovation work done.
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“Their rationale for the above guideline increase is they repaired the balconies in the building,” said Gibson, 41.
“I don’t have a balcony, but I’m still beholden to pay this extra money,” she told Global News.
The rent increase has not been approved yet by the landlord and tenant board, but Gibson and other tenants of the six-storey apartment building have taken issue, demanding the property owner, Akelius Canada, Ltd, to withdraw its application.
If the rent increase is approved, it will take effect retroactively to February 2023, a representative from Akelius confirmed to Global News.
For Gibson, that means a $65 bump in her rent, which she says she could squeeze out.
“I don’t think it’s fair to ask tenants to pay for cosmetic improvements.”
Akelius said it applied for an above-guideline increase of three per cent for repairs and rehabilitation of the building façade. The building was constructed in the 1950s.
“Older buildings such as 77 Spencer suffer from material deterioration and without these repairs will become hazardous and unsafe,” a company representative said in an emailed statement.
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For 2023, in Ontario, a landlord can increase the rent by a maximum of 2.5 per cent without needing approval from the landlord and tenant board, the province says. That’s the highest rent increase guideline in almost a decade.
However, in some cases, landlords can seek approval to raise the rent by more than the guidelines.
New buildings and most new basement apartments that were occupied for the first time after Nov. 15, 2018, are also not rent controlled, according to the provincial guidelines.
Cole Webber, a legal worker for the Parkdale community, said there’s a financial incentive for landlords to remove long-term tenants and re-rent those units at a higher price.
“The system that’s currently in place allows landlords to raise rents without limit once the unit is vacant in most apartment buildings,” he said.
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What are the limits on rent increases?
The rules for rent increase vary by province.
For example, in British Columbia, the maximum rent increase allowed this year is capped at two per cent and landlords can’t go above that limit if there is a fixed-term agreement or lease.
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Additionally, “landlords are no longer able to apply for an additional rent increase on a basis that the rent is significantly lower than other similar rental units in the same geographic area,” BC’s tenancy laws state.
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Meanwhile in Alberta, there is no rent control — meaning the province has not set a limit on the amount by which a landlord may be able to increase the rent after one year.
In Prince Edward Island, a bill was passed last month lowering the maximum allowable rent increase from one to zero per cent for 2023. But landlords can still apply for a rent increase greater than zero per cent.
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Despite the differences in tenancy regulations, there’s a common theme: Canadians across the country have seen a jump in the year-over-year average rent.
Last month, the national average rent rose by more than 12 per cent to $2.005 compared to December 2021, according to Rentals.ca’s January 2023 Rent Report. That was the second straight month that the average monthly rent exceeded $2,000 in Canada, which is facing a housing crunch with a shortage of both homes and construction workers to build new units.
Among the ranked cities, Kitchener, Ont., Halifax and London, Ont. saw the biggest year-over-year jump of over 30 per cent in the average rent for apartment and condo listings last month, according to the report.
The city that saw the lowest rent hikes were Gatineau, Que., which posted an increase of 5.3 per cent for December 2022, while Montreal saw a 6.6 per cent rise.
Amid a surge in demand, the national vacancy rate for purpose-built rental apartments also declined last year — hitting the lowest level since 2001, a report by Canada Mortgage and Housing Corp. (CMHC) released this week showed.
CMHC data also shows that the average rent for two-bedroom units in 2022 grew by 18.3 per cent when the rental units were occupied by a new tenant. That’s well above the average rent growth for units without turnover.
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Real estate experts say a number of factors are contributing to the high rent prices, including a large pullback in home buying with mortgages up, a population boom, and demand supply outpacing.
“Unfortunately, right now, the balance is in the landlord’s favor just because the demand significantly exceeds what we have in terms of rental inventory,” said John Pasalis, president and broker at Realosophy Realty in Toronto.
But some of it could also be “greed,” said Victor Tran, a mortgage and real estate expert at Ratesdot.ca.
“There’s definitely a good percentage of landlords out there that could be greedy and they could be just waiting for the perfect tenant and the exact … lease price that they’re expecting,” he said.
How to avoid rent increases
The advice for tenants from both Pasalis and Trans is to find a place that has limits on how much the landlord can legally ask for.
“You want to try to find a rent-controlled unit so you don’t have the risk of seeing a massive increase in your rent each year,” said Pasalis.
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Not having that added stipulation means the landlord can increase the rent by whatever amount they want every year, he added.
Tran said if the unit is in fact rent controlled, the landlords have to follow the rent increase guidelines.
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But even with the regulations in place, landlords can find ways of pricing tenants out, such as by applying for rent increases, Webber said.
“Landlords use a variety of strategies and tactics to push and price tenants out of their homes,” he said.
For any tenant facing an above-guideline rent increase, Webber’s advice is to talk to your neighbors, hold meetings, make decisions collectively, and look for ways to put pressure on the landlord outside of the legal process.
Back in Parkdale, Gibson and her neighbors have been doing just that — and in the coming weeks they’ll be looking at escalating their actions, Webber said.
The residents of 77 Spencer Ave. have already taken collective action by delivering a demand letter to Akelius’ office in Toronto before Christmas. A group of tenants have also held a meeting with managers from the company.
In a statement to Global News, a representative from Akelius said the company has been “actively working with the tenants to inform them of the process and to answer their questions.”
Gibson is growing frustrated.
“Nobody wants to pay the above guideline increase — we simply cannot afford it.”