Report
to/Rapport au :
Health, Recreation and Social Services Committee
Comité de la santé, des loisirs et des
services sociaux
Submitted by/Soumis par : Councillor Alex Cullen, Bay Ward
Contact
Person/Personne ressource : Councillor Alex Cullen, Bay Ward
(613) 580-2477, alex.cullen@ottawa.ca
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SUBJECT: |
RESPONSE TO THE RESIDENTIAL
TENANCY REFORM CONSULTATION PAPER |
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OBJET : |
Réponse au Document de consultation sur la
réforme de la location résidentielle |
REPORT RECOMMENDATION
That the Health, Recreation and Social Services Committee recommend that Council endorse the Ottawa Tenancy Reform Movement response to the Residential Tenancy Reform Consultation Paper
RECOMMANDATION DU RAPPORT
Que le Comité de la santé,
des loisirs et des services sociaux recommande au Conseil d’appuyer la réponse
du mouvement de la réforme de la location résidentielle d’Ottawa concernant le
Document de consultation sur la réforme de la location résidentielle.
BACKGROUND
On April 18, 2004 the Government of Ontario released the Residential Tenancy Reform Consultation Paper (available at Access Ontario or via www.rentreform.ontario.ca), beginning a much needed discussion on a fairer system for tenants and landlords. The Government is currently in the midst of holding town hall meetings across the province to hear from landlords and tenants. The deadline for submissions to the Government (through the Ministry of Municipal Affairs and Housing) is June 15, 2004.
Ottawa has always had a strong voice for landlords and developers through lobbying groups such as the Ottawa Regional Landlords Association, the Eastern Ontario Landlords Association, and the Fair Rental Policy Organization. Unfortunately there has not been a united voice for tenants in Ottawa and there are concerns there will be an imbalance in this consultation process as a result. It is for these reasons that Ottawa's community health centres, legal clinics, tenant associations and housing providers in Ottawa founded the Ottawa Tenant Reform Movement to give voice to tenant concerns in this important consultation process. OTRM has developed a position paper to be submitted to the Government's consultation process, and is seeking City Council's endorsement.
Nearly 40% of Ottawa's residents are tenants (118,735 rental units in Ottawa, according to the 2001 Census), representing nearly 300,000 people. There is a need to ensure that their interests are fully represented in this consultation process.
CONSULTATION
The position paper was developed by OTRM in consultation with Ottawa's 16 community health centres, 5 area legal clinics, tenants associations and housing service providers.
FINANCIAL IMPLICATIONS
There are no financial implications for the City of Ottawa.
SUPPORTING DOCUMENTATION
Attachment 1 - ORTM position paper: Response to the Residential Tenancy Reform Consultation Paper.
DISPOSITION
Upon approval by Council, the City Clerk will transmit Council's resolution plus the attached position paper to the Ministry of Municipal Affairs and Housing.
A Coalition of Community Health Centres, Legal Clinics, Tenants Associations and Housing Service Providers
Response to the Residential Tenancy Reform Consultation Paper
Position Paper to the Health, Recreation, and Social Services Committee
June 3, 2004
Background:
In the last provincial election the Ontario Liberal Party ran on a platform that included significant changes to the Tenant Protection Act. The newly-elected Government of Ontario promised to eliminate vacancy decontrol (which allows a landlord to raise rents without any form of control), changes to the rent increase guidelines, changes to the dispute resolution system, and legislation to stop conversions and demolitions of rental housing. How the Ontario Government brings about this legislation will have a significant impact on tenants and affordable housing for years to come.
On April 18, 2004, the Government released the Residential Tenancy Reform Consultation Paper (available at www.rentreform.ontario.ca), beginning a much needed discussion on a fairer system for tenants and landlords. The Government is currently in the midst of holding town hall meetings across the province to hear from landlords and tenants. The deadline for submissions to the Government through the Ministry of Municipal Affairs & Housing is June 15, 2004.
The Government has also announced that the rent increase guideline will be reduced by 2% for the year 2005. This is the ‘bonus’ amount that is allotted each year to landlords on top of the inflationary rent increase. The Government is also investing ten million dollars in a province-wide Rent Bank and a further two million dollars to assist struggling tenants with their utility costs. These are interim measures that recognize the economic hardships tenants have experienced under the current system. The real change will come through legislative reform.
Ottawa has always had a strong voice for landlords and developers through lobbying groups such as the Ottawa Regional Landlords Association, the Eastern Ontario Landlords Association, and the Fair Rental Policy Organization. Unfortunately, there has not been a united voice for tenants in Ottawa and there are concerns there will be an imbalance in this consultation process as a result. It is for these reasons that Ottawa’s community health centres, legal clinics, tenants associations and housing providers in Ottawa founded the Ottawa Tenant Reform Movement to give voice to tenant concerns in this consultation process.
· Education of tenants through community information sessions, letter writing campaigns, and workshops;
· Education of municipal and provincial politicians;
· Advocating for fair rents and a fair tribunal process;
· Respond to the Residential Tenancy Reform Consultation Paper.
Why is Tenant Law Reform Necessary?
The Tenant Protection Act (in place since 1998) is unfair to tenants, has resulted in a rash of evictions over the past 5 years, and is putting continual upward pressure on rents that particularly penalizes low income tenants and those on fixed incomes.
It was based on the theory that making rental housing more responsive to the market would result in increased supply of rental housing. This has not happened. In fact there has been a rash of conversions of rental accommodation to condominiums, which are far more lucrative to developers than maintaining rental housing. Although renters make up 40% of Ottawa’s population, only 7% of new housing development has provided rental housing – and little of it is affordable. Further, for every new apartment built, there are 1.5 apartments lost through conversion.
The current legislation allows continual upward creep of rents due to rent increase guidelines that are too high and amount to an annual bonus for landlords. As a result rents have escalated 26% between 1998 and 2003 for a three-bedroom apartment. Ottawa has the second highest average rents in the country for one-bedroom units.
As well the legislation makes it easy for landlords to get increases above these guidelines, and includes a dispute resolution process under the Ontario Rental Housing Tribunal that is intimidating to tenants, costly, and inaccessible. Last year more than 62,000 tenant households faced evictions hearings at the Tribunal and 60% of these were ordered evicted by the Tribunal without a hearing.
In his June 2003 Annual Report, the Ombudsman of Ontario was highly critical about the practices and procedures of the Tenant Protection Act. He described the current regulations as “unreasonable and improperly discriminatory”. He urged the Government to take all steps within its power to have the legislation amended to correct the current inequity.
Almost one in four tenant households in Ontario is paying more than 50 percent of their income on housing - these are households at risk of becoming homeless. Canada Mortgage and Housing Corporation indicates there are 51,000 households in Ottawa facing significant housing problems.
· Full rent control that is not connected to vacancy rates or empty units;
· Elimination of the 2% ‘bonus’ allotted to landlords;
· Changes to Above Guideline Increases;
· Eliminate the current Dispute Resolution System;
· Eviction should be the remedy of last resort;
· Preserve affordable existing housing stock.
Annual Guideline Rent Increases
· When the Government is setting the limits for a rent increase, it is comprised of 2% (base amount) of the rent plus an amount for increases in building operating costs. Discussion centers on how much of the base amount a landlord should receive. Options are to keep it the same, lower it, or eliminate it. |
Our Position
· The 2% bonus should be removed in the new legislation. Rent increases have outstripped the rate of inflation. Landlords should not be entitled to increases beyond what is justified by actual increases in maintenance and operating costs. |
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Above Guideline Rent Increases
· Landlords can apply to raise the rent if they experience extraordinary utility costs. However if the utility costs decrease there is no requirement to reduce the increased rent. ·
Landlords can apply to raise the rent for capital
expenditures. These are defined as
repairs that have the life expectancy of a year or more. The rent does not decrease after the
repair has been paid for through the increased rent. (“Costs No Longer
Borne”). |
Our Position ·
Landlords should not be allowed to apply for rent
increases based on extraordinary utility costs since the increase is already
calculated into the building operating costs which are passed on to tenants
in the guideline increase. · Approved capital expenditures should have an ‘expiry date’ with a corresponding rent reduction. Tenants should be notified when the expiry date has been reached and of the resulting cost reduction. |
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Vacancy Decontrol · Currently, when a rental unit becomes available, there is no limit to the amount of rent that the new tenant can be charged. Concerns have been raised that vacancy decontrol leads to unfair rent increases being charged to new tenants and that current tenants are at risk of eviction so landlords can raise their rents. |
Our Position · Eliminate vacancy decontrol. There should be no cases where rents are not under the protection of legislation. A rent registry should be established to allow tenants and prospective tenants to know what the legal rents are. · It was posited that removing rent control would provide incentive for landlords to build affordable units. Supply has not increased, since condominiums are a far more lucrative investment for developers. |
Rent Regulation (continued):
Consultation
Paper
OTRM Recommendation
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Regional Decontrol · In order to stimulate the production of new rental housing and to encourage landlords to invest in the maintenance of existing rental units, rent controls could be removed in regions with sustained vacancy rates. · Vacancy rate data does not include 40% of the market known as the secondary market. This includes accessory apartments, rented condominiums, rented houses and duplexes. |
Our Position · Vacancy rates are determined by numerous factors including migration, economy and employment opportunities. Rent control has no bearing on the vacancy rate and does not address the most critical factor, which is affordability. · As the market tightens up, landlords will have incentive to raise rents even higher since it may be a last chance to do so. · Administrative nightmare to enforce regionally. |
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Breach of
Obligations · Landlords are required to keep their rental buildings in a good state of repair and they must comply with health, safety, housing and maintenance standards. · The Government is considering whether or not landlords should be allowed to raise rents if buildings are inadequately maintained and what penalties should be imposed on landlords who are negligent in their responsibilities. · Currently, the Housing Tribunal can order various remedies for breach of maintenance obligations, such as ordering a landlord to do the repairs or refunding part of the rent. |
Our Position · No rent increases should be allowed for properties that violate municipal property standards. In business, stricter regulatory penalties generally have the effect of encouraging early compliance. Under the current rules, there is little or no downside for a landlord failing to maintain a building. Where landlords know they may not be able to raise the rent, prompt repairs and regular maintenance are more likely to occur. This results in an overall improvement in the condition of rental properties, while responsible landlords still receive their statutory rent increases. · The Government should expand the power of the Tribunal to include items such as a prohibition of rent increases or a permanent rent reduction in extreme cases. |
Dispute
Resolution:
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The Default Process · The Tribunal will issue a default order if the tenant does not file a written dispute within five days. A default is an order that is issued without a hearing and can be issued immediately after the five days have elapsed. · Approximately 70% of tenants do not file the written dispute and a default order is issued. · Eighty-four per cent of eviction applications are for rent arrears and the amounts owing are usually small – the median amount is less than $800- but most applications result in an eviction order without the tenant having had a hearing or the opportunity to pay the amount. · The Ontario Ombudsman and tenant groups have stated that tenants are not given a fair opportunity to participate because the process is too confusing and the five day dispute deadline is too short. Denying tenants a hearing is unfair. |
Our Position · Eliminate the default system. Many tenants do not understand the system, which leads to unnecessary evictions. · With the current shortage of affordable housing, eviction should be a last resort. · If a tenant receives an eviction order they can bring an application to the Tribunal to set aside the order. The tenant is then required to demonstrate that he or she was not ‘reasonably able’ to participate. This means the Tribunal does not set aside the order if a tenant did not understand the requirement to file a dispute. This set aside test must be amended so the criteria is not as stringent. · The best way to address the imbalance would be to schedule all evictions for a preliminary hearing with mediation without the requirement to file a written dispute within 5 days. An order can be issued if the tenant doesn’t appear or does not file a notice of non-appearance. |
Preserving Affordable
Housing:
Demolitions and Conversions · The Government has stated it plans to ensure that municipalities with low vacancy rates are able to protect existing housing stock from unreasonable demolition or conversion to condominiums. |
Our Position· The Government should bring in laws requiring cities and towns to have an approval process for demolition or conversion, based on rules set out by the Government. Demolitions and conversions should not be based on vacancy rates. Vacancy rates may fluctuate, but the loss of an affordable unit is permanent. |