Be careful when renting newer condo or home‏

Nov. 1, 1991, is a very important date for rental properties in Ontario.

If your home, condo or apartment was built after that date, rent review does not apply. So, instead of the maximum increase of 0.7 per cent permitted in 2011 for most rental units, there is no limit on how much a landlord can increase the rent after the first 12 months of your tenancy.

Let’s say you rent an apartment in a building constructed before Nov. 1, 1991,and your rent is $1,000. The maximum your landlord can raise the rent this year is $7, to $1,007.

However, if your unit was built after that date, your landlord can raise the rent as much as he or she wants — to $1,500 for example.

In all cases, the landlord has to use the proper forms under the Residential

Tenancies Act and must give the tenant at least 90 days’ notice of any
increase. If the required notice is not given, the entire rent increase will be declared void later.

There are now thousands of condominium units in Ontario built after Nov. 1,
1991, that are being rented to tenants. If you are thinking of renting one,
consider a clause in your lease that puts a maximum on how much the landlord can hike your rent each year.

For landlords, this right to increase arbitrarily should not be abused. It should be limited to what the fair market rent for a similar type of unit would be. For example, let’s say you rent a two-bedroom unit in Toronto for $2,000. After one year, similar two-bedroom units in the area rent for $2,200. You are having problems with the tenant. Can you raise the rent to $3,000 in order to effectively terminate the tenancy?

In my opinion, if the landlord tries to just get rid of a problem tenant by unreasonably increasing the rent well above fair market value, they may have difficulty terminating this tenancy for non-payment of rent later. A judge may look at the entire process as acting in bad faith.

I am fairly certain this Nov. 1, 1991, exception to rent review will become an issue in the October provincial election. I wouldn’t be surprised if rent review is extended to cover these units as well.

We have a real problem in Ontario in that few new apartment buildings are being constructed. Builders make more money building condominiums. There
needs to be creative thinking by our politicians to encourage and provide incentives to building more rental units in Ontario. This will benefit both landlords and tenants in the long term.

Until this happens, tenants must be careful to protect themselves when renting units built after Nov. 1, 1991. Landlords must always make sure to use the proper forms and give 90 days’ notice before any rent increase.

Mark Weisleder is a lawyer, author and speaker to the real estate industry. If you have any questions about real estate issues, mark@markweisleder.