Landlord costs could slow apartment sector
by Jennifer Paterson | Canadian Real Estate Wealth | May 12, 2015
Proposals to install “landlord licensing” in municipalities across Ontario could be catching on in Toronto, but one investor says the tenants will feel the financial impact, not the landlords.
“Initially, the majority of landlords would pass the new fees to their tenants by way of increased rents, which would take a year or two because of the rent controls limit, ” said investor Mark Weidenborner.
“But licensing would also prevent some new landlords from entering the rental business, which would reduce the supply of available rental properties a few years down the road, leading to higher rental amounts for tenants.”
The chorus is growing louder in Toronto, where many thing the lack of “landlord licensing” is strange, particularly those living in apartment buildings were landlords aren’t willing to pay the money it takes to ensure living conditions are kept to a decent standard.
“Tenants can’t choose to pay less than 100 per cent of the rent,” Geordie Dent, the executive director of the Federation of Metro Tenants’ Associations, told Torontoist.com.
“Landlords shouldn’t be able to choose not to give 100 per cent of the service they’re supposed to give.”
This conversation comes a few weeks after a bylaw was drafted in one Ottawa neighbourhood to hold landlords and tenants to a higher level of accountability.
Those advocating for the licensing say that landlords are the only private-sector professionals who don’t require a license. But the critics, including Weidenborner, say it is likely to only amount to a tenant tax.
“Licensing does not encourage better housing stock,” added one member of the Ontario Landlords Association. “We need policies that encourage more investment in high quality affordable rental housing in Ontario. Let's have some government incentives such as tax rebates to retrofit properties.”
Forms of landlord licensing already exist in many Ontario municipalities, including London, Ottawa and Waterloo. In Mississauga, the government charges $500 a year to license a basement suite. “This is a considerable amount of money for small landlords to pay and will raise rents considerably,” said a representative of the OLA.
For most landlords, a licensing system wouldn’t change the way they conduct business, added investor Brad Cartier. “But if it’s going to reduce the amount of illegitimate or crooked landlords in our industry, I am all for it,” he said.
“It should hold landlords accountable to a central body, without hindering legitimate investment. As with anything, it’s a delicate balance that we are bound to get wrong the first couple of tries.”