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Breaking News: Ontario Moves To Cap Rent Increases

December 11th, 2011 · No Comments · Ontario Landlords Association, Residential Tenancy Act (Ontario)

Today’s column was supposed to be about the the steps for proper tenant screening.  The column was going to go into detail on the various ways veteran landlords screen, the systems they use, and the way the categorize these systems in levels of importance.

Then the Big News came!

Tuesday was a slow news day.  The usual items.  What’s the fate of the Euro.  The NBA strike has ended.  How about those Maple Leafs.

Then, suddenly and without warning there was a news release from the Ministry of Municipal Affairs and Housing.

Here’s the official announcement

December 6, 2011 1:00 PM

McGuinty Government Proposes To Stabilize Rent Increase Guideline To Protect Tenants

Legislation to be introduced today would, if passed, ensure that the annual Rent Increase Guideline is capped at 2.5 per cent to protect tenants and families.

The proposed changes would also ensure that the annual Rent Increase Guideline never falls below one per cent. 

Tenants would benefit from greater certainty that would ensure affordable and stable rents so they have safe and affordable housing. For landlords, this would ensure a fair return so they can properly maintain rental properties.

The guideline would continue to be based on the Ontario Consumer Price Index. If passed, the new guideline formula would take effect starting in 2013.

Ontario continues to build new affordable housing and repair existing units for families with housing needs. The province’s investments in affordable housing have created thousands of jobs and resulted in the construction and repair of 270,000 housing units and the provision of 35,000 rent supplements for Ontario families on fixed incomes.

So what does this mean for me?

For your existing tenants, you can only raise rents once a year up to the amount the government allows you to.  In 2011, the amount is 0.7%.  In 2012, the amount is 3.1%  Beginning in 2013, no matter what the inflation rate is, the most you will be able to raise the rent is 2.5%.

What if inflation goes past 2.5%?

It means you are out of luck.  Even if inflation goes to 4%, 6%, 13% or whatever you are stuck with a rent cap of 2.5%

So what does this ‘really’ mean?

It means some tenants will be staying in rentals for years to benefit from this cap.  While other units might have tenants moving out and rents going up hundreds of dollars because of inflation and market pressures, your tenant might stay for years because your rents will be far less than the market rate.

What this really means is this: Screening your tenants is more important than ever!

There is a very good thread at the Ontariolandlord.ca website here.

 

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