Landlords keeping tax breaks, tenants say

For Prabir Kar, the fight over $18.61 was a matter of principle.

In December, he received a notice from the city, one of 128,000 sent to tenants across Toronto, telling him he was eligible for a rent reduction because his landlord had gotten a break on property tax.

But when he paid January’s rent – $961.06, down from the $979.67 he had paid the month prior – he says his landlord returned the cheque.

“They refused to take my new rent,” the 41-year-old student said. It wasn’t until he and several neighbours complained to their landlord that he got the reduction.

The $18 a month wouldn’t make a big difference in his day-to-day life, he said. But that wasn’t the point: “It is my money,” he said.

Kar is among thousands of renters across the GTA who claim their apartment owners aren’t readily passing the automatic tax breaks along to their tenants.

The Federation of Metro Tenants’ Association has fielded about 3,000 calls since the city sent out notices. Of those calls, more than half of the tenants claim their landlords have been harassing them or obstructing them from paying the reduced rent, said tenant hotline coordinator Geordie Dent.

“They’re preying on the vulnerable,” said Heather O’Neil, a board member of the tenants’ association. “A lot of tenants are afraid they’ll be kicked out or get an eviction notice if they speak out. Too many tenants who don’t know their rights are getting shafted.”

However, an association of apartment owners says that, in many cases, the rent reductions shouldn’t have been offered and they are vowing to challenge the tax cut.

If taxes on a property with rental units go down by more than 2.49 per cent, provincial law states that landlords are obliged to pass the savings along in the form of reduced rent.

But when accounting for the decrease in property taxes, the city didn’t factor in its newly imposed multi-unit waste levy, which would offset the tax break, said Greater Toronto Apartment Association president Brad Butt.

The waste levy, introduced in the summer of 2008, is intended to encourage waste diversion by charging for garbage collection while picking up recycling free.

“In some cases, the levy is the equivalent of a double-digit increase (in property taxes),” Butt said, adding he sat down with the city in April 2009 to warn them about the looming problem.

“Unfortunately, they didn’t act on it and now we have this problem where tenants are totally confused about this and I completely understand why,” he said. “At the end of the day, this isn’t a landlord fighting a rent reduction. It’s about the costs never actually going down.”

Most of the affected apartment buildings have issued letters to their renters informing them the landlord planned to appeal the reduction to the provincial Landlord and Tenants Board.

“It’s a formal heads-up to the tenants that we plan to appeal,” Butt said.

So far, there have been about 35 appeals filed to vary the rent reduction, said Mira Gamsa, a manager for the Landlord and Tenants Board. The application deadline is March 31.

Kar, who lives in a highrise on Scarborough Golf Club Rd. near Lawrence Ave., received a letter from the company that owns his building recommending he pay the old rent until the tribunal hears the case.

Otherwise, if the rent is changed, he will owe money.

“If I have to pay the balance, no problem,” said Kar, adding that it’s better to have the extra cash now.

Canadian Apartment Properties Real Estate Investment Trust (CAPREIT), which owns several buildings where tenants allege they had cheques returned, did not return numerous requests for an interview.

Butt said a landlord should have never rejected the reduced rent, but said it’s a rare and isolated problem.

“There are going to be individual cases here and there … where wrong advice, wrong direction, improper things have taken place,” he said. “Generally speaking, I’ve had very few calls on this issue.”

If the reductions go unchanged, tenants will save about $1.68 million a month. While on a personal level, a $10-or-so-a-month reduction might appear small, it adds up quickly for apartments with dozens and dozens of suites.

“For me, it’s not too much. When you’re taking $10 from everybody, on all 16 floors, that’s a lot,” said Farzana, who lives on the first floor of an apartment on Macey Ave., near Victoria Park and Danforth Aves.

She asked her last name not be used for fear she might be harassed by her apartment owner.

It’s common among tenants, especially ones who might be new to the country, to be afraid of exercising their rights because they fear eviction, the tenants’ association’s O’Neil said.

“There are a lot of newcomers in my building and everybody didn’t know what to do. A lot of them don’t know they can complain,” said Elisa Oncel, who lives in an apartment on Gamble Ave., near Pape Ave. and O’Connor Dr.

Like other tenants who spoke with the Star, Farzana and Oncel said they now pay their new rent, but only after they confronted their landlord.

Meanwhile, the tenants’ association fears there are thousands of renters who don’t know they’re eligible for the rent cut, having mistaken the city’s notice and brochure as junk mail.

“When I got the letter, I thought it was a flyer,” renter Kar said. “I saw lots of people drop it in the garbage.”