Can a landlord first evict tenant and then seek rent for failure to give notice?

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The above tweet references an article in today’s Toronto Star. Obviously I have made no effort to independently verify the facts. Frankly, I hope the facts in this article are NOT true. Nevertheless, assuming the truth of these facts, I think this deserves some comment.

The article begins with:

One of Toronto’s biggest landlords has an in-house collections agency that pursues evicted tenants for two months’ rent because they didn’t give “proper notice” when they were kicked out of their apartments, the Star has learned.

MetCap Living Management, which has more than 10,000 rental units in the city concentrated in Parkdale and Scarborough, and Suite Collections operate out of the same Richmond St. E. office. Suite’s president, Brent Merrill, who also sits on MetCap’s corporate board, says everyone must give 60 days’ notice to vacate an apartment, even if they’re being evicted.

“It is MetCap’s position that residents who breach their lease or give improper notice are required to pay the rent for the unit until it is re-rented or until the date that would have been the last day of the tenancy had proper notice been given,” wrote Merrill in an email to the Star. “We believe that we are following the law in the Province of Ontario.”

The Ontario Ministry of Municipal Affairs and Housing said the practice does not appear to be appropriate.

“If the landlord gives proper notice of termination and the tenant voluntarily moves out in accordance with the notice, the tenancy is terminated on the effective date of the notice. No rent is payable after the termination date, other than existing arrears,” said spokesman Mark Cripps.

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2016 Ontario rent increase guideline set at 2%

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Well, at 2% it’s much higher than the “politically motivated 2011 Ontario rent increase guideline of .7%.

Okay, this is interesting news. But does it really matter that much? In most cases probably not because real estate is a long term investment, and when it comes to Toronto residential rents:

1. Your best Toronto rent is not necessarily your highest rent; and

2.You need to be thoughtful about when, whether and how much to raise residential rents anyway.

And as a reminder:

On the one hand:

But, on the other hand:

Procedure at the Ontario Landlord and Tenant Board @LandlordU

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I believe that the landlords should work hard to avoid Ontario’s Landlord and Tenant Board. Although not intended to be unfair to landlords, it does provide protection to Ontario tenants. The procedure is costly and dangerous. Although landlord lawyers at Landlordrelief will assist you with tenant eviction, we work hard to avoid this necessity.

In order to avoid the Ontario Landlord and Tenant Board, Ontario landlords should:

1. Be careful in how they select residential tenants.

2. Treat their residential tenants with respect and dignity.

3. Respect their properties so that the tenants will respect the properties.

4. Work WITH tenants to end difficult tenancies, rather than work AGAINST tenants in an adversarial proceeding.

Notwithstanding this advice, I came across three posts from Ontario Justice Education Network that helps people (both Ontario landlords and tenants) prepare themselves for a landlord and tenant hearing.

Here they are:

If the landlord doesn’t respect the property the tenants won’t respect the property

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The Toronto Star article referenced in the above tweet is a reminder of the principle that:

“If the landlord doesn’t respect the property then the tenants won’t respect the property”.

This means that if you want your tenants to respect the property, you as the landlord should demonstrate respect for the property. Remember also that the value of a rental property (unless it is also a single family home) is proportional to the amount of the rents. The amount of the rent is proportional to (among other things including accessibility to public transit) the “quality of life” in the building. The key to successful landlording is attracting and retaining good tenants. Tenant turnover is very costly for landlords. All small landlords should review the principles for finding and selecting good residential tenants.

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The relationship between public transit and real estate investing

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The above tweet references an article in the Toronto Star describing the growth of “Go Train Service” in Southern Ontario. This is great news. It will certainly connect communities East and West of Toronto with the downtown Toronto core. It will improve the opportunities to live West of Toronto and commute to the City. At the present time, commuting from Hamilton to Toronto is somewhere between difficult and impossible. (Speaking of Hamilton, there is likely a market for renting to Ontario university students. But, first make sure that are familiar with any zoning bylaws that might affect renting to students.) As always, ensure that your respect the principles for how to select residential tenants.

This will also be good for real estate values. It has become increasingly difficult to afford housing in Toronto proper. Furthermore, there is a huge discrepancy between the cost of owing and he cost of renting. This is traditionally an indicator that the price of real estate is at a high valuation. Would improvements in public transit  make real estate outside Toronto a better investment? I believe that it would.

The article in the Star includes:

Matti Siemiatycki, a University of Toronto professor specializing in urban planning and transit, says the impact of GO expansion on real estate will be felt everywhere along the system. He expects it will be gradual, and will hit some places far more than others.

The overall impact of the investment, though, is hugely positive for everyone, he says. “If you make a place more accessible, people will want to live there.”

Siemiatycki says the transit plan is so big and costly it will take a long time to come together. The pieces include laying track, securing rights of way and co-ordinating space for more passenger trains between freight trains. The plan also means renovating stations, building maintenance yards, buying trains and equipment and adding staff.

Metrolinx spokesman Burke says work is already underway. A third track is being added between the Guildwood and Pickering stations. Construction starts soon on a new East Rail Maintenance Facility that can handle electric trains. A Stoney Creek facility will store, service and maintain trains, as will a new one in Mimico.

In the end, better transit is a high tide that lifts all boats. When it comes to real estate, it’s one more reason to bet on the GTA.

A “high tide that lifts all boats” is good for both owners who live in their homes and for investors.

 

 

As the price of #TorontoRealEstate increases the demand for #TorontoRentals increases

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The above tweet references a timely article written by Susan Pigg of the Toronto Star. It appears as though we are coming full circle. You may recall that the Toronto housing market was in a vicious correction from 1990 – 1996. Those were very bad years with the price of housing falling significantly. Those who bought in 1989 were the most hurt. Prices fell so low that for a period in the late 1990s, it actually cost more to rent than to own. In other words the rent to purchase price ratio was very high. Translation – it was very expensive to rent. This was a significant factor in fueling what has been probably the longest real estate boom in Canadian (certainly Toronto) history.

We have now reached 2015. The ratio of rent to purchase price is now very low. Translation – it’s getting very very expensive to buy. Hence, the demand for Toronto rentals is high.  The question has now become:

Is it worth buying Toronto real estate at current price levels? It is now longer assumed that residential real estate is a good investment. Renting residential property can be the right choice for many.

The headlines include:

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Ontario Rent Increase Guidelines and rent control

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Welcome to 2015. As you know Ontario has “rent control” for existing tenants. This means that a landlord is limited to the amount that he can increase the rent in any given year. The limitation is designed to protect tenants.

Some things to remember:

1. Ontario has had rent control since the 1970s. That’s the reason why there are almost new rental complexes in Ontario.

2. The lack of “rental housing” in Ontario has been mitigated by the large number of condominiums being built. Many condominiums are being bought by investors and rented out. The demand for Toronto rentals has made investor owned condominiums viable. In other words, small investors (Landlord Relief provides property management services for small real estate investors) are contributing to the supply of rental housing in Ontario (especially Toronto). It will be interesting to see whether Toronto condominiums are a good investment. Opinions differ.

3. Rental properties placed in service after November 1991 are NOT subject to Ontario rent control. That said, the rent charged for every rental unit must be competitive with the rents of similar rental units.  Your success as a landlord depends on getting and keeping good tenants. It is important that you understand how to select your tenants carefully. Higher than market rent will result in more tenant turnover. Tenant turnover is your biggest cost for a landlord.

4. Every year the Ontario Government issues a “Guideline for Ontario rent increases. The Ontario rent control “Guideline” for 2015 is 1.6%. You can find Ontario rent increase  guidelines for previous years on this page at the Landlord and Tenant Board.

Should a landlord raise rents in the Toronto real estate market?

5. Rent control is a “use it” or “lose it” principle. In other words, if you don’t raise the rent for the year, that “rent increase” is gone forever. On the other hand, you must remember that “the best rent for a residential property is not necessarily the highest rent“. In some cases (if you have a really really good tenant) you may NOT want to raise the rent.  How you decide this? Here are some principles for deciding whether to raise rents. (But, I would suggest that the principle of “possible non-raising rent” only works if you are renting one unit. Read on.)

6. If you own a multi-until building you really are forced to raise rents every year. This is necessary to maintain the value of the building. Please remember that the value of a rental building is proportional to the revenue that the building generates. The higher the rent, the higher the value of the property. The lower the rent, the lower the value of the property.

7. Remember that the rent increase guideline tells  you how much you can increase the rent. It doesn’t tell you how to increase the rent in accordance with the Ontario Residential Tenancies Act.

Happy landlording for 2015!

 

 

 

Are #TorontoCondos a good investment in the #TorontoRealEstate market?

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The above tweet references an interesting article about the real estate market. What I find interesting is the part of it that recognizes that the Toronto real estate market is the sum of many different parts. Condominiums are one part of the market. Because rental properties are rarely built in Toronto (that’s the problem of rent controls) condominiums do provide a source of rental housing. Furthermore, those “rental condos” put into service after 1991 may not be subject to rent controls. Bidding wars have erupted to “rent” premium Toronto condos. But, the question remains:

Are Toronto condos a good investment?

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How a tenant can live rent free in Toronto

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Introduction – The Questions of Owning vs. Renting Continued

I once heard a Toronto renter comment that:

“I can pay rent or I can pay interest”.

One pays “interest” through a mortgage. At some point the mortgage will be “paid off” and the house will be owned “free and clear”. “Rent” payments will continue forever. Does this mean that “rent” (in the long run) is more expensive than “interest”? Not necessarily. Remember that “capital has value”. Remember that the “equity” in a home can be tapped for other purposes. I don’t think there is a clear answer to the question of whether “renting” or “owning” makes more sense economically. That said, life is about more than economics. There are many lifestyle, family and emotional issues that impact on the “rent” or “own” decision.

The Economic Analysis …

There are many who presume that owning is always better than renting. Is this always true? Not necessarily. I have explored this question in a variety of posts. There are clear instances where it can make sense to rent rather than to own. Real estate is a capital asset. The question is often how to make best use of your capital. Should your capital be tied up in your home? Should your capital be used for other investments?
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Tenant considerations in maintaining market value in rental properties

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From time to time I have written posts about “Buying and selling rental properties with tenants in them“.

The above tweet references a good article by Toronto Real Estate Agent Josie Stern.

Lots of good “common sense” advice including:
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