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Breaking News: Ontario Moves To Cap Rent Increases

December 11th, 2011 · 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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Begin to Learn the Art of Tenant Screening

November 27th, 2011 · Ontario Landlords Association, tenant screening, Uncategorized

You are now about to become a landlord.

Congratulations!

You put up your advertisment for your place on Kijiji and the local newspaper.  With a day or two you start getting some calls from people interested.

Hey, this is easier than you thought right?

You start meeting people, showing them around your property and then the dizziness begins.  How do you choose the best tenants?  How can you protect yourself?

What do you do next?

Most experienced landlords and property managers agree the single greatest and costliest mistake a landlord can make is to neglect carrying out a detailed screening of tenant applications.

It’s shocking to veterans in the industry how many new landlords don’t conduct adequate checks on prospective tenants!  There have been countless cases where a new investor rents out a property of say $500,000, $750,000…even $1,000,000 to someone based on a nice conversation and a handshake.

Do not allow yourself to be a victim!

Successful landlords screen their tenants carefully.  There are many ways to start.   There’s a wonderful thread over at the Ontario Landlords Association discussion forums on how experienced landlords do this.

You can read the thread here .

Not only is the failure of landlords to conduct simple credit and background checks bad business that inevitably results in predictable landlord-tenant disputes, it’s also a factor in the depreciation neighborhoods suffer and how adjacent property owners can actually lose value.

I can’t stress strongly enough how important it is to check out tenants.  More to come…

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Why is tenant screening is so important?

November 13th, 2011 · tenant screening

It seems so simple, doesn’t it?   You save up your money and want your money to ‘work for you’ instead of you working for money for a change.

You look at the stock market.  Wow, some big drops.  Scary.   So you look at GIC’s and other safe investments.   Small returns, is it even worth it?

Then you take a look at real estate.  In the major markets, residential real estate has doubled in price since 2000!  You get out your notebook calculator and see if you put 20% down, look at the math and you see the possibility of not only getting appreciation, you can get some nice cash flow.  You call your Realtor and they are on board an encourage you to invest in real estate.  You meet, you look at properties, you see what you think is a winner and you pull the trigger.

Holy smokes, you are now a landlord!

Now it’s time to find your customers, your clients…your tenants.

 

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