There are a few ways that I could start today’s blog.
I’ve been attracted to adages, sayings, and other wordplay as of late.
“No good deed goes unpunished.”
That’s definitely one that describes the content of today’s post.
“Nice guys finish last.”
That’s also quite apt.
“Give them an inch, they’ll take a mile.”
Oooh, I like that one! You’ll see in a few moments why that makes sense.
We’ve talked in the past about the rights of tenants in the province of Ontario and how overbearing those rights are. Now, to be fair, there are those on the so-called “other side” of this equation who think that the rules don’t go far enough in favour of tenants, but for the most part here on TRB, over the last few years, the consensus has been more toward landlords being punished.
The “Ontario Fair Housing Plan” launched in 2017 brought in a lot of new protections for tenants but with those protections came punishments for landlords.
Not only that, the Landlord & Tenant Board has overwhelmingly, almost hysterically at times sided with tenants in just about every dispute, no matter what. It is my honest opinion that a tenant could be cooking meth in a landlord’s condo, and the Landlord & Tenant Board wouldn’t approve an eviction.
I’m not exaggerating, folks.
A colleague of mine tried to evict a tenant who blew through the side of the house with a shotgun, and the Board said, verbatim, “He deserves another chance.”
Share your own horror story in the comments upon the conclusion of this post. They’ll go a long way toward showing the non-believers and/or the newer readers that we’re right.
Today’s story is actually quite tame by comparison, but it underscores the problems that exist in our current “system,” and if you allow me to do so, I’ll show you how the current iteration of our landlord/tenant system is setting us up for failure in the long term.
Hell hath no fury like a landlord scorned.
If there were no landlords, there would be a lot less rental housing. Let me connect the dots and you’ll see why and how.
This week, I received a call from somebody who I can only describe as the nicest stranger I’ve spoken to in quite some time.
Do you know the type?
You can just hear it in their voice. From the moment they say, “Hey, how are ya?” you feel a level of sincerity and positivity that gives you comfort.
I can honestly say that within about two minutes of speaking to “Paul,” I had lowered my guard and we were chatting like two friends.
He’s a landlord. He’s been a landlord for twenty years, all with the same downtown Toronto condo.
He’s had multiple tenants over the years, some good, some bad, but after twenty years and with retirement on the horizon, he’s decided to sell his condo to pay for a property in Europe that he’ll be moving to next year.
He told me a little bit about his experience in real estate, his experience as a landlord, and the tenants he’s had over the years.
We talked about the condo market, the recent change from a seller’s market to a balanced market, and eventually, we spoke about marketing.
I explained to him that the way to maximize the sale proceeds of the condo is to maximize the marketability of the condo, and that means taking a vacant unit, repairing, cleaning, painting, and staging.
I asked him, “When is your tenant leaving?”
He said, “He’s not. He hasn’t given notice or anything. He’s been there for five years.”
I knew exactly where this conversation was going. I’ve had this conversation many times before. And while I don’t want to come off as the big, bad wolf who encourages landlords to evict their sweet little tenants, even the most ardent tenants’ rights supporter would agree that explaining the Landlord & Tenant Act to a potential seller is my job.
“You can’t evict him to sell,” I explained. “The buyer of your condo can give the tenant two months’ notice, from the first of the month, to vacate if that buyer intends to live in the condo, or have a member or his/her immediate family live in the condo.”
“But that would mean selling the condo with him inside the unit,” he said.
I agreed.
“There’s a problem with that,” he told me. “I leased this guy the condo five years ago and eventually he found a lady and she moved in with her son, who’s 9-years-old now.”
I told him that my standard lease clauses dictate that “only the individual named on title shall reside full-time in the unit,” and that the tenant should have asked permission.
“Yeah, well that’s one thing. But another thing: they had a child together, and that kid is now 2-years-old. So there’s four of them living in the unit.”
“Isn’t this a one-bedroom condo?” I asked, a little confused.
“Yup,” he confirmed.
There’s no judgment here, or at least that’s not my intention. Toronto is expensive and people have to make do however they can. But from a legal perspective, an individual who rents a condo in his or her sole name can’t have ten people move in! Tell me I’m a jerk for suggesting that this pleasant family can’t live in here, but it’s a slippery slope, and one that can lead to the next individual renting a property in his name moving in a dozen people and building army barracks in the living room.
That aside, the second issue here was the rent.
“He’s paying $1,700 per month,” the landlord explained. “He came to me during the pandemic and said he couldn’t afford the $2,100 anymore. I told him I didn’t want to reduce it, but he said that the government was telling people not to pay their rent if they needed to put food on their table, so what the hell was I supposed to do?”
I asked him why the tenant was still paying $1,700.
“Once I reduced it, I couldn’t raise it back! I came to him sixteen months later and said ‘It’s time,’ but he told me I had no legal recourse to raise it back.”
This condo would probably rent for $2,300 per month today, and given the strength of the rental market, I believe there would be multiple offers.
“So what do I do?” Paul asked me. “How do I get him out of there?”
“You can’t,” I told Paul. “Legally, there’s nothing you can do.”
Paul was silent. He seemed to be collecting his thoughts and eventually, he said, “I don’t understand this. I own this condo. It’s mine. I want to sell it. I’ve been a nice guy here. I’ve got no problem with him having a family of four in there, and I gave him a break on the rent. I’ve bent over backwards for him. What am I supposed to do here?”
I told Paul, “You can list the property on the market, as is, give twenty-four hours’ notice for showings, and sell to an end-user who will evict the tenants.”
Paul asked, “But I wouldn’t get the same price though, in this current condition, and with them living in there on top of each-other, right?”
I told Paul the unfortunate truth: “Nope. Not even close.”
I explained that I’m a big believer in buyer psychology and that in today’s market, even though we’re talking about the same 500 square foot condo either vacant, gussied-up, and staged, or tenanted and lived-in, we’d see a massive difference in sale price; likely $50,000 or more.
He believed it. He’s no dummy.
No buyer walks into a 3-bedroom family home condensed into a 500 square foot 1-bedroom condo and comes out thinking, “That’s my dream home!” Buyers want pretty, shiny things. Buyers want clean, bright, and light!
I explained the difference between forms N9, N11, and N12 to Paul, and how each form worked.
I told him that if he wanted to think outside the box, he could use N11 – Agreement To Terminate Tenancy, or N12 – Landlord’s Notice To End Tenancy.
Paul could end the tenancy by serving the tenant with N12, but Paul or a member of Paul’s immediate family would have to occupy the unit for 12 months.
Paul could use N11 and come to an “agreement” with the tenant, however possible.
It turned out, Paul was one of two owners on title and that Paul’s sister had a son who needed a place to live in September. Paul asked, “Could we evict the tenant and have my sister’s son move into the unit?”
I confirmed that this was possible, so long as his nephew stays there for twelve months.
“So I could get my sister’s kid in there for a year then sell the condo in the fall of 2023?”
I confirmed that this was the case.
“This sucks,” Paul said. “It’s my condo, and yet I have to jump through hoops and keep the condo a year later than I want, all to satisfy these rules?”
Paul was correct!
Paul told me how he had treated this tenant incredibly well over the last five years. He never raised the tenant’s rent, he lowered the rent, as mentioned, during the pandemic, and was hands-on the entire time.
“The tenant told me one day that the fridge was making a noise. I thought, ‘He’s been great, I wanna do right by him,’ so I bought him a brand-new stainless steel fridge even though the one in the condo worked just fine.”
Paul told me all sorts of stories that started and ended with him being an incredible landlord over the years, and I gave him the unfortunate and hard truth: none of this affects the laws within the Landlord & Tenant Act.
I suggested that Paul call the tenant and have a conversation with him, just to feel him out.
Paul did exactly that.
And then Paul called me the next day.
“This guy, honestly! Paul began. “He’s telling me I have no right to sell his home and that he’s not going to allow me to displace his family,” Paul explained.
The tenant had sent Paul an email with numbered points referring to areas of discussion in their phone call.
This is the point that really got me:
“Our life is currently built around living at this unit so we have no plans to vacate and will not do so.”
It’s totally fair but it just shows you how some tenants think.
This tenant seems to feel that this condo is his.
More the point, there’s a large portion of society that believes in landlords as these evil-doers who exist on title only and should have zero rights to the property. People believe that a tenant’s house is his home and that the landlord comes second.
But where are the rights for the landlord in all of this?
Is possession nine-tenths of the law? The person making the house a home is the defacto owner?
A subsequent discussion with Paul and the tenant revealed that the tenant would likely object to any attempt to evict him, legal or not, and the tenant went on to regale Paul with stories about how their lives are intertwined with this condo, this building, and this neighbourhood. The tenant told Paul all about their favourite attractions, restaurants, and activities, and how uprooting them from this unit would negatively impact their lives.
But is this really on Paul?
Does a tenant have a right to link his lifestyle and happiness to the lease agreement upon signing?
I don’t think this has anything to do with Paul. But a lot of folks out there think that it does.
Paul tried to appeal to the tenant’s softer side, and he explained that the $1,700/month rent was supposed to be discounted for only a few months, but it had been 2 1/2 years. He told the tenant that he was buying a property in Europe to retire to and that he needed the sale proceeds from this condo to pay for that.
None of this had any effect on the tenant, who simply ignored the good deeds that Paul had done for five years, and let it be known that he wouldn’t let Paul’s retirement plans get in the way of his family of four continuing to live in a one-bedroom condo for significantly under-market rent.
You might say, “David, can you blame him?” And on that, you might not be wrong.
But if that’s the case, then we have seriously messed up our system.
We have built a system in this city where the government has essentially absolved itself of any liability to construct and oversee a large segment of the housing market.
The government, at some point in the last two decades, has shifted the public burden to the private sector.
Instead of building and maintaining housing, whether that housing is at or below market, the government has allowed developers in the private sector to determine everything in our market, from where to build, to what to build. As a result, we’re seeing the size of condos shrink (did you ever think we’d see 250 square foot units?) and some developments are seeing 70-80% of units constructed as one-bedrooms.
As a result, the perfect buyer for small, one-bedroom condos has become investors.
And the result of that, of course, is that individual investors are now playing landlord to a large percentage of Torontonians, where we might argue that in another day, at another time, in another world, this would be the job of the government itself.
Whether this was the plan all along or whether this was a convenient round-about, the result is the same: the government has tasked the private sector with a job that, in most places, falls under the public purview.
And over the last few years, the government has made it so incredibly punitive to be a landlord in this province that more and more people are getting out of the game.
Paul told me, “I’m a nice guy, I’m just not cut out for this. I’m not a killer. And you need to be one, out there today, with all this happening.”
Some of you will say, “Good riddance! People ‘getting out of the game’ is great for the tenants!”
But somebody has to own the condo that somebody else wants to rent. And if the government doesn’t want to own, maintain, and oversee a large chunk of our housing stock, then who?
I believe that the government has dumped a public sector responsibility on the private sector, and then enacted cumbersome and punitive laws on those in the private sector who are choosing to pick up the tab.
Yeah, I know: people make money investing in real estate. We’re not going to cry poor for “investors” who profit.
But we’re almost at the point where the person who lives in the property has more right to the property than the person who owns it. And the protections for tenants continue to ramp up, each and every time, minimizing the benefit of owning that property, and increasing the risk.
I kid you, not. If we reach a point where we drive all the landlords away, we will not be better off in this city. The informed folks know this. The naive want to make up their own logic tests.
With 400,000 people coming into Canada every year from here on out, and most of them ending up in Toronto and Vancouver, where are all of these people going to live? And with the government making it so hard to get a tenant out of a property, once they’re inside it, just how much more stringent and selective do you think landlords are going to be?
As for Paul, I have no clue what he’s going to do.
What would you do, if you were Paul?
JF007
at 6:20 am
Serve notice to terminate if tenant doesn’t move go to LTB either way it’s a year or more sorta affair to get co do back so why not status quo or a 50k less sale price are not acceptable outcomes..
David
at 7:06 am
Like you mentioned, there are 2 options, the N11 route or the N12 route.
Given that there is almost no chance that the current tenant would accept any kind of keys for cash for less than $20K, I think that it might be best to N12 him and wait for the inevitable appeal to the LTB.
Unfortunately Paul gave WAY too much info (i.e. that he wants to retire to Europe) and if the current tenant is in any way savvy, he might set up an alert on a real estate website to see if the unit gets listed in the next 12 months.
Of course, there is a back-door route to avoid the 12 month wait – suddenly your nephew discovers he has a fear of heights and can’t live in the condo, or he has a job change, family issues…etc. etc.
TT
at 8:00 am
The pandemic gave the leftist LTB the perfect excuse to never evict a soul. How they treat landlords in Ontario is criminal. And it makes no sense because we have a Conservative government who would never approve!!
A Grant
at 8:44 am
“The government, at some point in the last two decades, has shifted the public burden to the private sector.
Instead of building and maintaining housing, whether that housing is at or below market, the government has allowed developers in the private sector to determine everything in our market, from where to build, to what to build. As a result, we’re seeing the size of condos shrink (did you ever think we’d see 250 square foot units?) and some developments are seeing 70-80% of units constructed as one-bedrooms.”
I’m confused. As a long-time reader, I was under the impression that this was the planned end game for real estate development all along. No government dictating the size of units to builders. No set aside for affordable housing. After all, since housing is an investment, let the free market decide!
And now we’re all supposed to act surprised that the majority of new condo developments consist primarily of small one-bedroom units that cater to investors?
*In all seriousness, I would love to see the Vienna model adopted, where affordable housing isn’t stigmatized, but is of high-quality and available to almost anyone (approximately 50% of residents live in some sort of government-controlled or public/private partnership housing, if memory serves).
Condodweller
at 12:06 pm
I like the idea of making corporations pay into a fund to provide subsidized housing. After all, they earn insane amounts of profit and yet pay the minimum amount they can get away with for the salaries of their employees to the point where they can’t afford to rent where they work. This could work similarly to CPP. I don’t know what the numbers would work out to be but I’m sure big corporations can afford a few %. It would be to their benefit as it would ensure they have a workforce available nearby if they can afford to live near work.
Sirgruper
at 9:37 am
David
Paul was nice but also didn’t know how to manage his investment. After 20 years should you not know the rules? He could have given him a rebate of one month but never reduce rent. His option is clear. Take your lumps and sell at fmv for a tenanted unit to a user or an investor who knows the game. Why should he do as well as a well informed investor. Life is never fair. You can be nice in this world and firmly protect your interests at the same time. And if you don’t, then you bought yourself an education and an interesting story.
Bryan
at 12:13 pm
I was thinking the same in terms of the rent reduction. If it were me, I would have tried to make an agreement separate from the lease agreement to give the tenant $400/month of non-rent related financial support for 12 months or something rather than a reduction. Make the guy continue to give cheques for $2100 and then send $400 back so that you are the one in control of when the arrangement ends. As far as anyone at LTB is concerned, if the guy refused to continue to pay the $2100 after the 12 months ended, he would be in breach of the agreement…. not that they would do anything about it, but it does make a difference.
Rent money aside, the process of selling a tenanted property never made sense to me. The way it is set up now is that you basically have a landlord holding a gun to the tenant saying “I am going to sell this place in a week with a 30 day close and the new owners are going to kick you out before you can find a new place so you better leave now” and the tenant holding a gun to the landlord saying “I am not going to leave and your place is going to look terrible and you are going to lose money”. Of course both sides can (and almost always do) choose to be more civil in spite of the process, but it doesn’t seem to be a great setup to me. There should be a rule that says something like “Landlords have to give 6 months notice of their intent to sell a property, and if they give notice, the tenant (as long as they are not still within the term of the lease agreement) needs to be gone at the end of that 6 month period if the landlord wants them to be”. The tenant has time to find a new place without the threat of being suddenly uprooted, and the landlord gets to sell it vacant if they so choose. Seems like a no brainer to me.
Mxyzptlk
at 9:59 pm
“[Paul’s] option is clear. Take your lumps and sell at fmv for a tenanted unit to a user or an investor who knows the game.”
Totally agree. Unfortunate perhaps, but that’s life.
Condodweller
at 12:19 pm
@Sirgruper
I have read up on this when covid hit and there was a lot of discussion about how to do this legally. One argument was that people have to be extremely careful how they provide relief as a rebate, even if it was intended to be temporary, the net amount would be considered the “new” rent and it could only be raised by the guideline amount.
How would you go about doing this so that going back to the initial rate wouldn’t be challenged by a pesky tenant? If the landlord agrees to send them groceries every week would that not be construed as a rebate? This could have been a widespread problem during COVID but this situation could come up at any time when a reasonable tenant approaches a landlord asking for temporary relief due to job loss, medical reasons, etc. It would be nice to see some guidelines on this from the LTB. It’s all fine that Doug Ford encourages landlords to help out, but this should work both ways. At the very least it should count as favourable for the landlord where they provide relief only to be screwed by the tenant in return. No good deed goes unpunished indeed.
Steve
at 9:37 am
If I’m Paul I approach the tenant with a cash offer to sign the N11, half paid on signing half paid after they leave. If you think the difference in sale price is likely to be up to 50k I would offer something in the realm of 5k to start with. It sucks but it’s likely the fastest way out and if the tenant doesn’t reject it outright, well now you are just negotiating on price.
Reader2
at 9:46 am
This is a situation where cash for keys should come into play.
I feel mixed here as a property owner and former renter. The LTB can definitely lean far too much towards protecting tenants (such as in the shotgun example), however I do think some protections are necessary for protecting tenants. If we want to make renting viable, people need to be reasonably confident that they won’t be forced to move at a moment’s notice.
In fact, the lack of protection is what led me to become a buyer instead of a renter. I would have had no problems paying 5k+ in rent on a SFH, however I didn’t want to risk being uprooted in the middle of the school year, being stuck with furniture that doesn’t fit my new space, etc.
Vancouver Keith
at 9:58 am
Where I live, the city reckons that 12% of the population is underhoused. With home ownership at roughly 50%, that’s a quarter of the renter population that is living in a space that is anything from too small (4 people in 500 square feet) to bedbug, cockroach infested havens where drug dealers roam free. The market simply can’t provide good housing, at current land and building costs, to people at less than median household income. No one can make those numbers work.
I have sympathy for any landlord who runs into a “professional bad tenant.” The law is not on your side, and it’s especially difficult for the 60% of landlords who own two units or less. Being a small scale investor in real estate is buying yourself a part time job, and a difficult one at that.
The Vienna solution is 60 percent non market housing, the most interesting thing to me is that it’s financed by a one percent payroll tax, half paid by the employer and half by the employee. As much as Canadians like to complain about paying high taxes, given size of this problem it seems worth considering.
A Grant
at 10:16 am
Precisely re: the Vienna model. Frankly, 1% of my paycheck is a pittance considering what Austria has managed to achieve (and Vienna has one of the highest quality of life, according to the Economist, thanks in no small part to its housing affordability, I imagine)
Condodweller
at 12:24 pm
I suspect there might be pushback on this by homeowners. Why pay into something you’re not likely to benefit from? Or do they only charge the 1% to employees who are in subsidized housing? I think it would be a great solution though.
Vancouver Keith
at 1:04 pm
Imagine a society where a person making $40,000 per year in a big city could afford to live a short commute on public transit from work, paying $10,000 per year in rent. Imagine how much money this person would spend in the local economy, the savings on building expensive transportation links to suburbs over time, and how many more people would be able to survive. Lower levels of street homelessness, with attendant savings in health care, policing and social services. I dare say tax paying homeowners accrue considerable benefits from subsidized housing.
Condodweller
at 6:57 pm
Who owns the units? Are they government owned or private? If private I wonder how ownership change is handled.
The challenge here would be that I know of at least one programme where taxes are collected for a specific reason yet the money goes into general revenue and it never reached the targeted. area.
Vancouver Keith
at 7:11 pm
There are several major cities where there is a large percentage of non market housing. There are co op models, non profit housing organizations (non government), and government run. It used to be done in Canada, under the CMHC and over 20,000 units of housing per year were being built.
The program was cut under the Mulroney Conservatives, and axed entirely under the Chretien Liberals. Imagine if we had continued the program – today there would be over 500,000 more affordable rentals than there are today.
I pointed out the payroll tax more to answer critics who claim that we can’t afford to solve the affordability crisis. Of all the forms of welfare out there, providing affordable rentals to working people, up to the level of teachers, nurses and EMS staff in our major cities seems a wise use of taxpayer resources. Well built housing lasts a long time and means based rental income can be structured to cover all costs over time.
Libertarian
at 10:23 am
This is another example of why being a landlord has never interested me. So many other ways to invest my savings with no headaches and better returns.
Owning my home is enough real estate investment for me. Although, I don’t consider it an investment considering how much it costs to maintain.
hugh
at 10:26 am
So Paul:
(1) became a landlord without understanding everything involved should he decide to sell his property,
(2) allowed the tenant to break clauses in the lease repeatedly over the years by adding more residents,
(3) made concessions to the tenant without putting anything in writing,
(4) has to take a slight discount on the selling price of the property that has likely more than doubled in value in the time he’s been profiting from ownership
…and we should feel sorry for him?
I’m not saying the LTB is without fault, but even before we consider any role they play here, Paul is the victim of his own choices, not the LTB rules or the tenant’s conduct.
London Agent
at 11:21 am
This and arguments above are interesting to examine if we consider that the shoe has been on the other (tenant’s) foot in the past and rather than try to educate said tenants, the government coddled them with bubble wrap.
You’re saying that Paul should have known the rules (I agree) but now that he has failed at that, he should suffer the consequences of his situation. But, no responsibility is placed on the shoulders of the countless tenants in the past who didn’t know their rights or responsibilities, were evicted from a property and then cried foul to the media. These occurrences have led us to where we are now with the LTB hand holding tenants for life.
Everyone assumes that the landlord should bear the burden of these situations because they have profited from increasing market rent and any cash flow after expenses of owning the unit. Has the tenant not also benefitted? It seems to me that they certainly have in this scenario. New appliances at zero cost to them, below market rent, living in their preferred neighborhood which is paramount to them enjoying their life.
I understand that there are both tenants and landlords that are taken advantage of in this system and that it is not perfect. I can’t abide the idea that a landlord should be the only one expected to understand what they are getting into and suffer any consequences that arise from their lack of knowledge.
Hugh
at 11:35 am
The tenant benefitted by…following the terms of the contract, sure.
I know there are absolutely tenants that are awful, and landlords that are victims. This isn’t that though. My comment was in regards to the blog post, not ‘the system’.
What responsibility should be placed on the tenant in this case? There’s no contract to enforce the rent amount (or if there is, Paul seems uninterested in pursuing it). The tenant has every right not to move out unless he’s required to, and he’s given no indication that he’s going to break the law. While Paul is going to suffer some financial consequences in the situation, the tenant is going to have to find a new home. The stakes aren’t the same, which is why many have a hard time feeling sorry for the landlord in a situation like this.
It also doesn’t sound like Paul has engaged with the tenant to negotiate — if he said “Hey, I’ll give you $10k to leave”, maybe the tenant takes it and Paul makes $40k on the deal. His lack of initiative and creativity is the problem, not the system.
This is just an ignorant investor whining that the world doesn’t work as he wished it did. It’s certainly not an example of unfair rules.
London Agent
at 12:49 pm
My comments were more about the general lack of responsibility that is expected of tenants in general and how they rarely have to face consequences for their lack of knowledge or choices.
But if you would like to debate the story here, it appears that the tenant is not planning to move at all (and we’re speculating here) despite what Paul might legally ask of them. And the stakes are meaningless here. The tenant must be aware of what might happen to their living situation if a landlord decides to legally evict them. This is the risk when renting, you don’t have control over your housing situation, despite what this tenant might think.
You’re literally making my argument for me by trying to give them a pass for not wanting to move.
hugh
at 2:14 pm
We can certainly agree that some tenants are ignorant and bad! But that’s irrelevant here.
As you said, we’re speculating. I’m not giving anyone a pass though. Paul is whining about the process and how much it’ll cost him. But Paul hasn’t issued an N12, so for all we know, the tenant is bluffing, and holding out for an offer from Paul.
Paul has done nothing and he’s all out of ideas!
Pete
at 10:57 am
To play devil’s advocate, many time you have said on this blog that people don’t take responsibility for their actions anymore. So isn’t it on a landlord to take responsibility and know what the laws are around being a landlord BEFORE they decide to become one? If it wasn’t a landlord situation, I can imagine a blog about entitled people who make decisions and then cry about it being unfair that they didn’t research all the variables and impacts.
Mxyzptlk
at 10:06 pm
Plus all we really have to go on is what Paul told David about what a wonderful (perfect?) landlord he’s been through the years. He could be, shall we say, stretching the truth. Or not. We simply don’t know.
JL
at 11:37 am
In this case I feel its not so much a problem that the “government has… absolved itself of any liability to construct” rentals (which market supporters, and David himself I think, never found to be the ideal solution anyway), but that the market setup/dynamics favored individual condo unit holders (investing and renting out) versus developers building purpose built rentals buildings.
The one positive thing about purpose built rentals is you have security of being able to stay there as long as you want (renovictions in some smaller buildings notwithstanding). By contrast, long term security is sorely lacking in condo rentals because they are not geared to be permanent rentals, and can be occupied or flipped by the owner. Perhaps not an issue when you’re renting a studio or one bedroom for a 1-2 year work or study term, but not conducive if you’re actually trying to make a life for yourself in one spot for an extended period. The story above captures this friction.
Edwin
at 12:11 pm
If I was Paul I would evict for personal use, then AirBNB the unit for 12 months before selling.
Daniel
at 9:13 am
You can’t do that.
There lies the problem.
Kyle
at 2:18 pm
I am not a Lawyer so take it with a grain of salt: https://www.ontario.ca/laws/statute/06r17
“Termination for cause, too many persons
67 (1) A landlord may give a tenant notice of termination of the tenancy if the number of persons occupying the rental unit on a continuing basis results in a contravention of health, safety or housing standards required by law. 2006, c. 17, s. 67 (1).
Notice
(2) A notice of termination under this section shall,
(a) provide a termination date not earlier than the 20th day after the notice is given;
(b) set out the details of the grounds for termination; and
(c) require the tenant, within seven days, to reduce the number of persons occupying the rental unit to comply with health, safety or housing standards required by law. 2006, c. 17, s. 67 (2).”
Ed
at 6:42 pm
+1
Jason
at 7:13 pm
Yup. Was thinking nobody mentioned the 4 ppl squatting in a 1-bdrm when the lease approved one guy. Readers here are too fast to blame the landlord and tell him to open his $wallet$
cyber
at 2:25 am
Toronto bylaws define overcrowding as more than 1 person per 9 m2 / 97 sf of livable floor space (excluding bathrooms and hallways). However, even IF the unit in question is a tiny 400 sf one-bedroom unit, LTB will still never evict if “the reason for the application being brought is that the rental unit is occupied by children and the occupation by the children does not constitute overcrowding” (RTA 2006, c. 17, s. 83 (3))
J
at 2:20 pm
As unfortunate as the situation is for Paul, he put himself in this situation with an investment strategy that eschews diversification and liquidity.
He put his nest egg in a single condo unit, rather than something more diversified, avoiding the only free lunch in investing. If he had invested in say REIT units instead, his investment would be diversified across many units, buildings, geographies and types. In this case the fact that 1% of the tenants are bums gaming the system would have a negligible impact. And cashing out would be a simpler transaction than buying his plane ticket to Europe.
As for amateur landlords and their role in providing rental supply, good riddance. When McDonald’s closes Burger King moves in the next month, that’s how capitalism works. Amateur landlords holding individual condo units is a misallocation of capital anyways. Purpose-built rentals avoid the problems mentioned above for investors (plus a lot more), while providing a better service to tenants (the tenant in the story above wouldn’t need to lose sleep over being kicked out of a PBR).
As for LTB / RTA favouring tenants, the “unfairness” can cut both ways. The penalty for an illegal eviction is up to 12 months rent + moving expenses. And that’s only IF the tenant finds out and IF the tenant pursues the claim. In this case a small chance of being fined up to $20,400 (12 months * $1,700/month) is a pretty sweet deal for the landlord.
Mr Eschaton
at 3:12 pm
The bias in this is painful to read.
1. This is a story about the most perfect landlord and the most selfish tenant, which you are basing your entire argument around. This is definitely not the norm. This “nice” landlord is 1 in a 1000, if not more. I’ve had gas leaks from my stove that took 3 months to fix with no quick way to pressure him if he didn’t, who replaces a working fridge out of the goodness of their hearts? My brother didn’t even do that for his tenant, his mom. Either fabricated or you’re leaving out details.
The laws were written to benefit Tenants because time and time again landlords could not be trusted to do the right thing.
2. This the first I’ve heard of someone lowering rent for the pandemic without a timeframe or some sort of clause. This failure is on the landlord and not an issue with the legal framework.
4. He is still able to sell his condo, the laws are not stopping him. Just that he can’t have it PERFECT for selling. This is a downside of renting it out he should have considered, and a small price to pay for having his mortgage paid for. Being unable to evict a tenant so you can sell it 2 months later is because of easily a rule like that would be to abuse. And, again, landlords have been shown to abuse evictions laws as much as possible. You know this.
5. Investor landlords are driving up prices of condos, making condos people would rather buy than rent out of reach. A mortgage for a condo was not much more than rent not that long ago. Most people renting would prefer to own.
6. You’re blaming the government for not controlling and managing all rental properties? You’re strawman-ing an alternate universe were there wouldn’t be landlords at all? Being a landlord is lucrative because you have to do work and maintain a property. It’s a job, not just capital. If someone doesn’t want to deal with the hassle of managing a property, then don’t buy one and buy some stock.
Daniel
at 4:41 pm
There is something so disturbing about how many people casually suggest that the landlord should pay the tenant $10,000 or $20,000 to leave. We are talking about an entire years rent here!
guy
at 5:53 pm
how much would you ask for to vacate your home?
Daniel
at 6:40 pm
It’s not your home.
It belongs to the landlord.
That’s the problem.
Yeessh I feel like I’m the only sane person in the room.
David
at 8:57 pm
The democratically elected politicians have decided that security of housing is more important than Joe Landlord being able to realize a $25,000 gain on the property sale.
Feel free to start the Landlord’s Party and go head-to-head against Dougie in 2026 with the wedge issue of being able to toss someone from their home because today is Tuesday.
I’ve been both a tenant and a landlord, one thing is clear. If you want to be a landlord, you need to follow the rules. If you want to be able to sell on a whim, invest in ETFs.
Condodweller
at 9:55 pm
It’s not that simple. There are lots of landlords out there who made the decision to invest based on the existing rules. The rules have now changed. I completely understand the tenant point of view but they agreed to the lease knowing that the owner could sell and they need to move out if the new owner wants it for personal use. Or the current owner does as well. Those who who need a “permanent” home to rent shouldn’t move into a condo.
Adrian
at 4:42 pm
This is a good illustration of the conflict you get when you have small landlords in charge of most of the rentals in the downtown core.
I’m not sure the solution is government run rentals but in an ideal world there would be a much greater availability of professionally managed, purpose built rentals that are superior for tenant security and are generally better managed than small landlord units. The issue is developers didn’t want to build them for years because you just couldn’t make money on them. We’ve seen an influx of purpose built rental construction over the last 5 years but that was really related to very low interest rates allowing borrowers to obtain good leverage and eke out a profit. Given the rising rate environment I can’t see developers wanting to build these projects anymore.. numbers don’t work now.
Maybe government intervention would best be saved for finding a way to incentivize the private sector to build and own more rentals.
Derek
at 10:35 pm
People are assholes
Condodweller
at 11:52 am
Unfortunately for Paul, he has a double whammy here given how much below rent he is getting now. On top of having to sell in as-is condition with a tenant in place, what investor would be interested in buying such a unit when they could buy many others at market rent?
I think comments about him deserving this situation due to his lack of knowledge is a bit harsh. These restrictive laws are recent and it’s possible he didn’t know about them. As long as things are going ok he doesn’t need to stay up to date regarding eviction notices.
Regarding the potentially discounted sale price, I put this in the same category as David’s recent post on people lamenting selling for less than others have sold for a few months ago. If the legal way to sell is with a tenant in place which means a lower sale price, well, it is what it is. Unless he can find a loophole to evict the tenant he has to take his lumps with the deal.
Regarding housing policy, that’s a whole separate topic about how the current situation could have been prevented and how we got here. I’m not convinced the government would be the best landlord, to be honest. Look at how the government-run retirement home situation played out during COVID or the recent roof collapse issues for TCHC.
I’m also surprised to hear about these “slumlord” complaints. While I’m sure these situations exist, I highly doubt any of them would be private owners renting out condos. The majority of condos being rented are relatively new luxury units. How bad can a landlord possibly let their units deteriorate in such a short time frame? I would think the worst case might be cosmetic which is most likely due to how the previous tenant mistreated the unit. I suppose if the owner doesn’t fix it up before renting it out there is no law against that. They wouldn’t maximize the rent potential but nothing says that the unit has to be in like-new shape.