Landlord applications for rental hikes soaring
Property owners say above-guideline increases are necessary to renovate aging stock but tenant advocates call them ‘loopholes’ to boost value for investors
A
LETTER TUCKED into the mailbox of Lisa Dolan’s townhouse unit on the west Mountain relayed the news.
Her landlord had applied to increase her rent by $75.73 to $1,653.63 a month starting in March.
That’s a hike of 4.8 per cent — which eclipses Ontario’s annual cap of 1.8 per cent by three per cent — but is still permitted with the consent of the Landlord and Tenant Board.
“There really is a grey area where you think you’re protected, but you’re not,” said Dolan, who lives with her husband at the Limeridge Road West complex.
Landlords in Hamilton are increasingly resorting to above-guideline increases (AGIs) to recoup costs for capital improvements.
Last year, they made 29 applications for AGIs in the city, which is nearly twice as many as in 2017, when there were 16, according to data from Social Justice Tribunals Ontario.
The bids have marched steadily upward since 2012, a trend that shadows Hamilton’s real estate boom and spike in rents.
Landlords say the mechanism — which falls under the Residential Tenancies Act — is a fair way to renew Ontario’s aging rental stock. But tenant and anti-poverty advocates argue AGIs are a tool of gentrification that’s leaving renters in the lurch amid an affordable-housing crunch.
“Our wages don’t go up five per cent,” Dolan said.
Pulis Investment Group, the Brampton-based owners of the 125 Limeridge Rd. W. complex, has made the application through property manager Drake.
“The increases nowhere near cover the cost of the actual work but at least help soften the blow for the landlord,” president Kyle Pulis said Tuesday.
The “vast majority” of Ontario’s rental supply is 40 to 60 years old and “in desperate need of upgrades and repairs; hence the rise in AGIs,” he added.
Older buildings with more maintenance demands usually have lower rents that aren’t high enough to make repairs that can come all at once, says Adam Kitchener of Unlimited Real Estate Group.
“This is not a cash grab, nor is it a way to jack up the rents to push out older tenants at lower rents. It is simply a recovery of expenses,” said Kitchener, whose firm helps landlords manage buildings.
Martine August, an assistant professor at the University of Waterloo who studies gentrification, doesn’t buy it.
“Often AGIs are used to fund building improvements that are ultimately intended to attract new, potentially higher-income renters, while basic maintenance requests from tenants go unanswered.”
The rise in AGIs isn’t a sign that landlords are trying to “be made whole for building maintenance they cannot otherwise afford,” August said.
“Rather, it seems a sign that landlords are using loopholes in the (Residential Tenancies Act) to pass on costs of upgrading buildings to tenants, while reporting ever greater gains in revenue to investors.”
Some of the proponents behind the roughly 100 applications for AGIs in Hamilton since 2012 are smaller players, but many are not.
Investor-fuelled firms and trusts like InterRent, Skyline, Northview and Starlight figure prominently in the data.
In April 2017, Starlight reported it managed $7 billion in properties with about 34,000 multi-residential units in Canada and the United States.
Northview notes AGIs are part of its “value creation initiatives.” This also includes “high-end renovations,” boosting rents between tenancies when the province’s guideline doesn’t apply, and having residents pay electricity bills through individual hydro meters.
The rules for AGIs stipulate landlords can only claim “extraordinary” costs that don’t relate to regular maintenance — replacing a boiler or roof, for example.
The cost of cosmetic or luxury items aren’t eligible.
But just how these rules are interpreted becomes a bone of contention for Landlord and Tenant Board adjudicators to sort out at hearings.
Renter Allyson Rowley joined tenants at 157 Pearl St. S. in fighting their landlord’s AGI application in 2015.
InterRent sought the hikes to cover about $260,000 in work, including windows, toilets and common-area renos.
“One of our main arguments was that much of the work in question was basic maintenance,” Rowley said.
“Isn’t that what our normal rent should be helping pay for?”
The tenants, who hired a paralegal, did their best, she said, “but we are not lawyers, engineers, accountants, plumbers, electricians, or contractors.”
Last month, city councillors recognized this imbalance — lay renters facing landlords’ seasoned legal counsel — and directed staff to look into a $50,000 “tenant defence fund.”
Rowley, 62, says when she moved to Hamilton in 2013, she paid $1,165 for her two-bedroom unit.
This past August, two-bedrooms were going for as high as $1,890 in her building, she said.
The writer and editor at McMaster University says she’s worries about how she’ll get by if the trend continues upward in Hamilton.
“I am definitely concerned when I do finally become retired. I certainly will be on a fixed income,” said Rowley, who now pays $1,275 a month, not including hydro, laundry or parking.
She was motivated to tell her story after reading about rent strikers at the Stoney Creek Towers who are resisting an AGI sought by InterRent.
Like some of the long-term residents in the highrises just east of Centennial Parkway, Rowley says she declined a cash incentive to vacate her unit. “And I’ve only been there five years.” For landlords, the motivation is clear: Once tenants vacate units, there’s no cap on what landlords can charge newcomers.
For tenants, the incentive is a gamble: Once out, they’re subject to the same dynamic.
Dolan, on Limeridge Road West, is keenly aware of this as she and her husband consider their options.
“The sad thing is we’re going to have to move out of Hamilton.”
The ‘vast majority’ of Ontario’s rental supply is 40 to 60 years old and ‘in desperate need of upgrades and repairs; hence the rise in AGIs,’ according to Kyle Pulis, president of Pulis Investment Group. “Often AGIs are used to fund building improvements that are ultimately intended to attract new, potentially higher-income renters, while basic maintenance requests from tenants go unanswered.” MARTINE AUGUST Assistant professor, University of Waterloo, area of study is gentrification