The problem is that rental housing in Toronto is expensive.

There.

I’ve answered the difficult question.

Can we leave now, or do I need to write another 3,000 words?

Well, the problem at the very least stems from the fact that housing in Toronto is expensive, as pretty much every problem in our housing market does.

But while affordability has always been and probably always be the biggest issue in our rental market, today’s problems have more to do with the process of a tenant securing a rental and a landlord finding a tenant.

If you haven’t found yourself in the rental market in the last five years, either as a landlord or a tenant, then what I’m about to explain will be news to you.

Simply put: the process of a tenant finding, and a landlord filling, a suitable accommodation in Toronto is harder than it’s ever been.

Now why is this, exactly?

And if I’m looking for a “reason” for the reason, or symptom of the symptom, allow me to say this rather bluntly:

Everbody – landlords, tenants, and those in between, are fully aware that in 2024, any tenant can stop paying their rent tomorrow and there’s nothing the landlord can do about it.

Some will disagree, but I would hazard a guess that they work in tenant advocacy and just don’t like the optics of that statement above.

But it’s not wrong.

The landlord can’t call the police.

The landlord can’t change the locks.

The landlord can’t take the tenants’ belongings and put them all on the front lawn.

The landlord has one remedy, and that’s to file with the Landlord & Tenant Board, and we all know that it will take 6-12 months to get a hearing.

So that is what I mean when I say, “…there’s nothing the landlord can do about it.”  At least not immediately, since it takes time.

There are bad tenants and there are bad landlords.  I’m not taking a side on this, and in a recent podcast, I read examples of both.

I’ve also never shied away from this topic on my blog.

Here are three posts just from last year:

May 10th, 2023: “Giving All Landlords A Bad Name”

May 12th, 2023: “Giving All Tenants A Bad Name”

September 18th, 2023: “Landlords & Tenants: The Modern-Day Hafields & McCoys”

But I’ve covered bad tenants, bad landlords, “horror stories,” and the inefficiency of the Landlord & Tenant Board many, many times before.  Today, I want to talk about the process of securing a rental and why there’s a major problem that nobody wants to talk about.

In order to do that, we need to connect these dots:

• The Landlord & Tenant Act, and the Landlord & Tenant Board, overwhelmingly favour tenants.

• The Landlord & Tenant Board has a massive backlog.

• There are no immediate remedies for landlords when tenants don’t pay rent.

• Landlords are becoming far more selective.

Connect those dots.  It’s not difficult, although a tenants’ rights advocate would suggest that I’m blaming legislation intended to help tenants for the selectivity of landlords.

But further connect these two dots:

• Landlords are becoming far more selective.

• The Ontario Human Rights Commision has published a list of “prohibited grounds of discrimination.”

• Many prospective tenants feel discriminated against.

Again, easy to connect the dots, right?

But what did we start out with today?

Rental housing in Toronto is expensive.

Alright, so put this all together and what do we have?

A mess.

A massive mess that happens every single time a property is listed for lease in Toronto, and I’m going to explain how and why.

As soon as a property is listed for lease, the listing agent is absolutely inundated with emails like this one:

Hi David,

I have a wonderful young working male professional who is interested in potentially viewing your listing.

Cameron has just graduated from Seneca Polytechnic and is embarking on a career in landscape management.

He is beginning work with ABC Landscping Inc. and will have a starting salary of $60,000 per year.

Cameron is a bright, intelligent, hard-working young man who is clean, quiet, and respectful.

He is looking to lease your unit for October 15th.

Please let me know if Cameron’s profile is acceptable and if we should book a viewing of your unit.

Thank you!

Artie Agent

You’ve seen me talk about this before on Toronto Realty Blog, haven’t you?

I’ve written many times about lease agents who want some sort of “pre-approval” before they bother viewing the condo.

I listed a condo for lease last week and received about ten of these emails and four or five phone calls.  In the end, I received four offers – on paper, four ACTUAL offers, from agents who showed the property to their clients.

That’s how the business works, and I for one will never agree otherwise.

It’s not my job to “pre-approve” tenants for three reasons:

1) I’m the agent, not the owner/landlord.  It’s their decision.
2) In the absence of an Offer To Lease, the entire exercise is moot – especially for those who haven’t seen the condo yet.
3) I’m opening myself and my client up to a discrimination charge.

And that is the fly in the ointment, folks.

That is a controversial topic today because, in my humble opinion:

Everything is discriminatory.

But it doesn’t stop thousands of agents, every single day, from sending emails like the one above.

Many of these agents won’t show a property to a prospective tenant unless they have received the “go ahead” or “blessing” (these are both terms that agents have used with me) and essentially been given a pre-approval.

Now, that’s their problem, right?

Call these agents lazy if you want to.

“I’m not going to waste my time showing a condo to a client if you and your landlord won’t consider us,” one agent told me last week.

Boo-hoo?  Or fair point?

We’ve discussed this on TRB before.

Last time I wrote about this, I had several readers commenting, “It’s the agent’s job to show the property.  If they don’t want to ‘waste their time’ then they should quit the business.”

But I had other readers arguing, “If a landlord won’t consider a tenant, then why not tell them that in advance?”

Well, because as I said before, everything is discriminatory.

And I’m not exaggerating here, folks.  I’m going to show you how there are very common, basic, universally-accepted metrics or measures that are actually illegal!

But first, let’s start with the easiest.

Ontario Human Rights Commission – Prohibited Grounds Of Discrimination

Link HERE.

• Race
• Colour
• Ethnic origin
• Ancestry
• Place of origin
• Citizenship
• Family status (being in a parent-child relationship)
• Marital status
• Creed (religion)
• Disability (including temporary, permanent, visible, invisible and perceived disabilities)
• Sex (including being pregnant)
• Gender identity (including persons who are bisexual, transgender, transsexual or inter-sexed)
• Gender expression
• Sexual orientation
• Age (including being 16 or 17)
• Being in receipt of public assistance (including any government-funded income program)

I think we can agree on all of these, right?

Saying “yes” or “no” to a tenant based solely on any one of these items is discrimination.

Except….well….hang on….

Does the last one get an asterisk?

Let’s work through a hypothetical, shall we?

Agent Andy has listed a basement apartment in High Park for lease for $1,950/month.  Most people hear “basement” and they think it’s a dungeon, but this is actually a really nice place, and it’s steps from the subway.

There are a ton of showings on the apartment, and several inquiries.

One of the inquiries is as follows:

Hello Andy!

I visited your lovely apartment with my client last night and we are very eager and excited to submit an offer to lease and have her call this “home.”

I wanted to share her profile with you so that you could let us know if we should proceed?

My client has just arrived in Toronto as she is a refugee from the other side of the world.  She was so fortunate to have escaped her war-torn, famine-stricken, impoverished country with her three children.

She does not have a job in place yet and will not be looking for one as she and the children are receiving $2,800 per month from the Government of Canada for assistance.

Please let us know if we should proceed with an Offer To Lease.  She will obviously not be providing any employment letter, credit check, or references.

Thank you!

Teresa Motherly

Look at all the ways in which this prospective tenant could be discriminated against!

But can she afford this apartment?

She receives $2,800 per month in assistance.  Can she carry a $1,950/month rental?

Well, let’s see…

A typically acceptable GDS ratio is about 32-36%, although this has been a moving target over the years.

Her GDS ratio, unfortunately, is just shy of 70%.

By this metric, which is universally accepted in the landlord community, she can not afford to rent this apartment.

That’s cool, right?

Can Agent Andy email Teresa Motherly back and tell her this?

Nope.

Why not?

Well, because despite the fact that every landlord looks at income as part of their qualification process, and that they would be insane not to, it’s actually discriminatory under the Code.

Ontario Human Rights Commission – Minimum Income Criteria

Link HERE.

Those seeking rental housing who are in receipt of public assistance, as well as other Code-identified individuals with low incomes, have been particularly affected by the application of minimum income criteria.

Many landlords apply a standard guideline that a tenant applicant should be spending no more than 25-35 percent of his or her income on rent.

Those who fall short of this ratio are rejected.

While this is rationalized as a necessary means of assessing an applicant’s ability to pay the rent, its use results in the denial of access to rental units to members of disadvantaged groups protected by the Code who frequently have lower incomes.

There is no evidence that individuals from disadvantaged or low-income groups, when spending more of their income on housing than a rent-to-income ratio would allow, are more likely to default on rent payments.

–

Didn’t I tell you we were going to wade into some dangerous waters today?

Who’s ready to say things they might not want on the front cover of a national newspaper, right?

According to the Ontario Human Rights Commission, a landlord may not use a GDS ratio for qualification purposes as it contravenes the code.

I mean, okay.

This is counterintuitive, but I’m listening.

The word “rationalized” is interesting.  It seems to infer that the use of a ratio is not actually necessary and therefore landlords seek to argue or “rationalize” its use to make it okay.

Seriously, who wrote this Code?

As for there being “no evidence that individuals from low-income groups are more likely to default on rent payments,” I wouldn’t mind seeing a study on this.

Or perhaps we could just use the smell test?

Who is more able to afford the monthly payments on a $2,400 per month condo: the candidate with a $50,000 salary or the candidate with a $250,000 salary?

The section above from the OHRC says there’s no evidence that low-income groups are more likely to default on rent payments, but I would really need a definition or a study on this to make sense of it.

The bottom line is this:

Every landlord in the city uses income as a measure of a tenant’s candidacy, and yet using a “guideline” or applying a “ratio” to that income is, according to the Ontario government, discrimination.

Alright, well how about another example?

Agent Andy has a 450 square foot, 1-bed, 1-bath basement apartment for rent in North York for $1,650 per month.

He receives the following email:

Mr. Andy –

I am inquiring about your rental property for lease.

My tenant clients are wonderful people.  They are three couples who are all gainfully employed in the technology sector, earning between $65,000 – $95,000 per year.

All of their employment letters and pay stubs are attached.

They can take possession immediately.

Please let me know if your landlord would consider these tenants so that I can book an appointment on the property.

Thanks!

Sergey Page, GGL Realty Inc.

Alright, so here we have six people with a combined income of $450,000 who can clearly afford to carry this $1,650 per month rental, as their cannot-be-used GDS ratio is a paltry 4.4%.

But do Andy’s clients really want six people living in their basement, in a 1-bed, 1-bath apartment?

Can Andy email Sergey back and tell him that they would prefer to only rent to one person?

Doesn’t that seem completely logical?

Nope.

It’s discrimination.

Remember this controversial article:

January 30th, 2017: “Couple In Early 20’s Denied Toronto Rental Due To Their Age”

It’s very old, but I remember this one vividly.

The leasing agent made many comments over email that he shouldn’t have, but notably this:

“After discussing it with my client, she’s decided that she would not like to have four young adults living in her apartment.”

Issues were made with the “young adults” comment but also with the idea of four people living in a 2-bed, 2-bath condominium.

But should a landlord be able to decide how many people can live in the unit?

It’s a grey area.

It’s also a slippery slope.

Municipal bylaws will typically require that a minimum measure of liveable floor space must apply to every occupant, but my research shows that a generally acceptable measure is about nine square metres per person.  That means, theoretically, you could have ten people living in a 950 square foot condominium.

Does any landlord want ten people living in his or her 950 square foot condominium?

Of course not.

But look back up at the Ontario Human Rights Code, specifically the bullet point for “family status.”

What if an applicant had a wife and seven children and wanted to rent your basement apartment?  Can you say “Sorry, no, that’s way too many people?”

Absolutely not, according to the Ontario Human Rights Code.

So consider the “slippery slope” for a moment.

If it’s acceptable to think that two couples should be able to rent a 2-bed, 2-bath condo, because it’s only four people, then what about five people?  What about six?  What about seven?

Where is the cut-off?

Who decides?

Do you see where I’m going with all of this?

There’s an argument to be made that just about every reason for saying, “Thanks, but no thanks” to a prospective tenant could result in a discrimination claim.

And that’s precisely why no landlord or agent will ever provide the “pre-approval” or the “blessing” that many tenants are looking to obtain before they risk “wasting their time” looking at rentals.

The Centre For Equality Rights In Accommodation (CERA) published a study on discrimination in the rental market where they spoke to active landlords about properties actively up for lease, and recorded responses to pre-planned questions.

Here are a couple of the responses that their report took issue with:

Landlord stated: “it is impossible for you to find an apartment without having fulltime employment”.

Landlord requested three months’ rent in advance and lost interest as soon as the applicant stated that she is unemployed. Landlord said, “if you don’t have a job then you can’t get an apartment”.

Note that these are two I have selected from a list of six.  But I chose these because, to be perfectly honest, I don’t think it’s necessarily wrong to hope that the tenant you’re leasing to has a job, is it?

There could be all kinds of extenuating circumstances here, of course.  We don’t know all the facts.

But are we really at the point where:

1. We can’t look at a candidate’s income to qualify them, and if they have a GDS ratio of 99%, we can’t say “no” based on that.

2. We can’t say “no” to a family of eight who wants to rent a 1-bed, 1-bath condo.

3. We can’t insist that a tenant, who pays their rent in money, has a job that pays them in money.

Is that right?  And more, I’m sure, if we had time?

My point is this: the Ontario Human Rights Code exists for a reason, and a good reason.  But what is logical, reasonable, and universally-accepted in the rental market can all fall under “discrimination” according to the code.

As a result, landlords all walk on eggshells, as do the listing agents.

When I tell a cooperating agent that we decided to work with another candidate, and that agent says, “Okay, that sucks, but can you tell me why and maybe I can give some feedback to my client?” I can’t say anything.  I can’t say it’s because the other candidate had a better job, or better credit, or a higher salary, or did not have a Facebook page dedicated to anarchy and overthrowing the government.

So I just say nothing.  And I feel so stupid doing it.

Unfortunately, I don’t have a solution to offer today, folks.

I’m merely here to explain the mess that we have created in the rental market, which of course, all stems from the fact that housing is too expensive.

During the course of writing this blog, a colleague asked me a good question:

While it’s against the code to apply a GDS ratio of 60.0% to the person making $48,000 per year, who wants to rent your $2,400 per month condo listing, shouldn’t the “blame” here be put on the person who is exceptionally financially unqualified to rent the condo in the first place?

Yes.

But that’s old-world thinking.  It’s way too logical and based on silly things like math.

New world thinking says, “It’s not his fault that the rental market is expensive.”

New world thinking says, “Don’t use a ratio on this poor kid, that’s so unfair!”

And up-to-date, present-moment thinking says, “Who cares if he can’t afford it – screw the landlord, seriously, those greedy bastards.  Housing is for living in, not investing in.”

I’m not making this up.  Those sentiments are out there and those actual comments are out there, verbatim.

What would happen in the housing market if there were no investors, starting tomorrow, and all those units disappeared into thin air – that’s a topic for another day, and a first-year university class on logic that most kids would fail.

But for today, let’s simply conclude by admitting that the rental market is a fantastic mess and one of our own doing, and to avoid having a discussion like we did today is not going to solve the problem…