In the wake of recent developments regarding laneway housing, it appears that the city of Toronto may finally be ready embrace the phenomenon that has taken other major Canadian cities by storm. Laneway housing could very well be the shot in the arm that Toronto landlords and renters alike have been looking for. (more…)
With real estate prices being out of reach of even well-salaried Torontonians, we’re at the start of the era of long-term renting. This makes it extra important to vet tenants properly, make sure your prices are set right initially, and all of your legal obligations as a landlord are met in terms of the upkeep and ongoing maintenance of the property. It’s also the right time to start looking at a property management company to protect your investment. (more…)
A recent study predicts that commercial rents in Toronto could soar as much as 50% in the next three years. Unlike the hot residential market, Toronto’s commercial properties are priced reasonably right now due to a reasonable supply, even though Toronto currently boasts the lowest commercial vacancy rate in North America. While we are at the peak of the Toronto housing market, the commercial market isn’t nearly as hot and the time is right to snap up property before it does heat up. With rents going up so much, it will do so sooner rather than later.
Life gets busy. Sometimes you just aren’t able to get up to your cottage as much as you would like. And then there is the off-season – you have a property that is sitting there being completely unused. You could rent out the cottage for a week or a weekend at a time and have it make you money when you aren’t using it – but you do have to get a few ducks in a row first.
Determine if your cottage can be rented
Renters expect a home-like experience at a cottage these days. If it doesn’t have wi-fi (and we’re talking wi-fi that can stream Netflix), the prospect of renting it out is usually dead in the water. Bedrooms, bathrooms and the kitchen should be in good repair; if any appliances need a bump in a special spot to work, you’ll have to replace them if you want to rent out your retreat. While you can list it as a rustic spot with limited Internet, at the very least all appliances, water systems, and sewage handling should function without a page-long list of instructions.
Talk to your insurance company
If you plan on renting out your cottage, you’ll need to clear it with your insurance company or broker and likely take out additional insurance. If any extensive damages happen to your property while you have renters in there, it may not be covered by your insurance company under your current cottage insurance plan.
Line up local contractors
If you are in Toronto and your renters are in Muskoka Lakes, you probably don’t have the time to drive up there and fix a toilet. Line up local contractors who can preferably be contacted on weekends who can take care of fixes for you. Better yet, see if local realtors can refer you to a good property management company in the area. Be sure to line up your contractors and other services well in advance of your renter’s arrival date; cottage country isn’t like the GTA in terms of availability and they could have shuttered their business even if it’s still in the Yellow Pages.
Take care of yourself legally
Go to a real estate lawyer and have them draw up a cottage rental contract. Be sure to talk to your insurance company first as they may have stipulations that have to go into the contract. Have the renters sign it before they get the keys. Determine how much you should take for a security deposit – standard practice is $250 or 10% of the rental fee, whichever is greater. Since this amount needs to be returned, determine if you want to charge cleaning fees or make the cleaning fee part of the rental fee itself. To determine your rental fee, look at what similarly sized cottages are renting for in your area on cottage rental websites.
Even if the tenants leave it sparkling clean, you’ll probably need to get someone to check in on the property before the next tenants arrive, so a local cleaning service may be a good idea for cleaning in-between renters. They will also be able to alert you to any damages to the property. Most cottage renters expect to pay the full amount of the rental before they get the keys, and to have their security deposit refunded within two weeks of their last day. If there are damages above and beyond the security deposit, your contract can demand that they be paid, but the matter will likely end up in a small claims court if there is a dispute.
To avoid disputes, it is best practice to get timestamped photos of each room, and particularly the kitchen and bathroom, before the keys are handed over. This will help your case if a tenant tries to claim damage was there when they got there.
Vet your renters right
AirBNB is easy to use – but it doesn’t let you properly vet your renters before you hand over the keys. There are a number of cottage rental websites – including cottagerental.com – that allow you direct contact with your renters. If you have the time, it is better to meet them in person than it is to deal with them over email. But since this isn’t a long-term rental situation, you are usually safe as long as you get the rental fees and security deposit in advance.
Don’t do long-term rentals if you can avoid it
Renting out your cottage for a week or weekend at a time isn’t a big deal. Renting it out for a matter of months to a year puts you squarely in landlord territory, which means that the Residential Tenancy Act applies and you are on the hook for repairs, complaints, and much more. If you want to seriously pursue renting your cottage long-term, contact a property management company local to your cottage to discuss it with them. A long-term rental will also incur additional insurance costs, so you should also contact your insurance company if you are considering this to get a quote.
If you’re looking into a rental or investment property in the Toronto area, contact Highgate Property Investments. We’re both Realtors and a property management company, so we’ll help you find the best income-generating property for your needs – both commercial and residential.
Many people who own one or two GTA or Toronto rental properties try to “go it alone” when it comes to managing their properties. This can be for various reasons – they think they’re saving money, they think they can handle the duties of property management, or they think that property management companies only handle multi-tenant apartment buildings. All three of those notions are incorrect. (more…)
Knowing what to include with your GTA or Toronto rental property is an important part of making it the most attractive prospect in a competitive market. There are many arguments for and against including utilities with your property, and both sides have valid points.
The argument for including utilities
Many prospective tenants will readily admit that rental listings with utilities included are often much more attractive than units without – it takes away the stress of paying multiple bills. Including utilities with your property will increase the amount of tenant applications you receive, and will allow you to rent out your property faster.
Rentals with utilities included are often ideal for those renting to students and other first-time renters, as many young people don’t want the hassle of paying separately for utilities. Shared homes, such as you would find in student housing, make the process even more complicated. The inclusion of some utilities also allows for landlords to charge more for rent, since they must account for things like utility increases, taxes, and convenience costs.
The argument against including utilities
Many landlords have stated anecdotally that tenants who have utilities in their own name are often more responsible as they are more likely to pay bills on time and without issue. Including utilities in your rent can also present the problem of tenants overusing utilities by leaving lights on and overusing heat and air conditioning, affecting your profit margin in the long run.
Not including utilities also frees up landlords from having to deal with utility companies, allowing you to free up time for more important administrative duties. This also means that tenants are more likely to quickly inform you of any problems with their utilities, such as leaky faucets, broken furnaces and heaters, etc., as it directly affects them.
Properties without utilities often appear to be less costly than those with them included, making your unit stand out among the crowd. This also means that you will not have to continually increase rent to meet the rising costs of electricity and other utilities.
The final, and probably most important argument against including utilities is the amount at which you are allowed to raise rent annually. A spike in utility rates may not be covered by the annual rent increases allowed by the Ontario government. What utilities should you include with your rental?
With both sides of the argument stated, it’s time to decide what utilities should actually be included with your property, if any. It may also be important to take a look at what property owners in the area are offering for their units – it may be wise to match them if the competition is fierce.
Paying for things like gas and water are often ideal for landlords, as the costs are predictable because of their seasonal nature. With new rent control measures, including anything but these utilities may pose a problem if utility rates increase beyond your allowable annual rent increases. Paying things like the water bill can also give you immediate insight into any potential problems such as leaks that tenants may not notice in their own utility bills.
Unless you’re ready to communicate openly with your tenants about potential utility ceilings and limits, it may be wise to avoid paying utilities wherever possible. It will attract more responsible tenants, create less frustration for you, and make your property seem more affordable to prospective renters. At the end of the day, it’s all a matter of which option is more convenient and affordable for you, the property owner.
The Ontario government recently introduced the Fair Housing Plan, which includes sweeping legislation for the real estate market – most of which will have an impact on landlords in Ontario. One of the measures was the Non-Resident Speculation Tax (NRST) of 15%, which is meant to curb speculation by foreign investors in southern Ontario.
The brass tax of the NRST
The NRST has been in force since April 21, 2017. It imposes a 15% tax on real estate purchases of any property that would be considered a single-family residence that is purchased by a foreign national, entity or corporation. The full text of the NRST is available here.
Refugees and immigrants are not subject to the NRST. Additionally, a rebate program is available for foreign nationals who obtain Canadian citizenship – they can receive a rebate of the tax if they become a citizen within four years. Students enrolled in a Canadian institution for at least two years are also exempt from the NRST. A foreign national student would only receive the rebate after two years of full-time attendance at a Canadian university or college.
The NRST’s geographic scope expands well beyond Toronto and the GTA. It includes the following municipalities:
Vancouver foreign buyer’s tax sparks GTA’s NRST
After a foreign buyer’s tax of 15% was levied to cool housing prices in Vancouver, there was evidence that firms marketing Canadian real estate shifted their focus to Toronto. However, the Toronto Real Estate Board surveyed Toronto area Realtors and found that only around 5% of real estate transactions conducted in 2016 were from foreign buyers.
Around a quarter of those purchases were rental investments, with the rest being purchases of homes for the individual or a family member. The percentage of foreign buyers was much higher in Vancouver – it was just above 15% before the B.C. government introduced its foreign buyer’s tax in 2016. It subsequently dropped to about 4% as of December 2016 – only a percentage point below the TREB’s estimated percentage of foreign buyers in Toronto and the GTA.
The Ontario government first showed a distaste for introducing a similar tax in 2016, preferring to let market forces prevail. However, winds changed as the public became increasingly concerned with skyrocketing housing and rental costs in Toronto and the GTA and the Fair Housing Plan was introduced in April 2016 with the NRST as a prominent plank in the Plan.
Various Reactions to the NRST
The Toronto Real Estate Board didn’t have anything specific to say about the NRST in its statement reacting to the Fair Housing Plan, but did say that more empirical data is required before policy decisions are made. We didn’t really know the numbers of foreign nationals that were buying into the Toronto and GTA markets prior to the enactment of the Fair Housing Act; that data will be available to the government once the Plan has been in force for a few months.
Tim Hudak, CEO of the Ontario Real Estate Association, had this to say about the NRST. “The main culprit behind rapidly rising house prices is the GTA’s unbalanced market – housing supply cannot meet demand – not foreign buyers.”
TD Economist Beata Caranci argues in favour of the tax, stating that it has worked well in international jurisdictions such as Hong Kong, Singapore and Melbourne to cool housing markets but not to slow them down. However, she added in a joint statement with other TD economists that “Ultimately, it is unknown what degree of home sales are related to this speculative behavior.”
Will the NRST cool a hot housing market?
Tim Hudak’s argument for supply not meeting demand seems sound, but it remains to be seen how much of that demand was generated by foreign investors. Parsing it out further, how much of that demand is being generated by foreign investors speculating on the market? If 25% of homes purchased by foreign nationals in 2016 were rental property investments, that’s an income-generating venture which allows for more rental supply for tenants, not speculation.
Until the data comes in, we won’t have any numbers – and that is the TREB’s point. The B.C. government did it right by gathering data prior to enacting its legislation, and found that a high percentage of property purchases were coming from foreign buyers. The Ontario government has put the cart before the horse, and will no doubt reap the tax rewards of such a move, but it isn’t evidence-based policy decision making.
One thing is certain – the NRST is an effective tool to curb speculation for those who were looking to speculate in the Vancouver market and shifted gears to Toronto. However, the number of transactions which occurred because of that shift is unknown – we’ll know soon enough. In the meantime, bidding wars will continue in Toronto and the GTA, and the only change is that foreign buyers may not be parties to those wars.
Spring is here! For homeowners, it’s time to inspect their properties to see if the cold weather has wreaked any havoc on their homes – and barring that, time to turn on outside water, clean up patios and decks, and get the home ready for enjoying the outdoors.
Rent increases are necessary to keep pace with the rate of inflation on the costs of maintaining your rental unit. Annual rent increases should be built into each rental contract, and they have to be in accordance with Ontario Ministry of Housing guidelines – in most cases.
It’s a fact of being a landlord in Ontario – at some point in your life, no matter how careful you are about screening tenants and collecting payments, you will likely end up having to deal with the Landlord & Tenant Board (LTB). The tenant may change the locks, not pay rent, or perform some other action that needs to be arbitrated by the Landlord and Tenant Board. Here are some tips for navigating an LTB matter.
The Landlord and Tenant Board is responsible for arbitrating disputes related to the Ontario Residential Tenancies Act, and it is an Ontario government agency.
Determine if your case is eligible for the LTB
In order to qualify for arbitration by the Landlord & Tenant Board, you need to be sure that you have properly established a relationship as a residential landlord and tenant. For example, if you are getting a divorce and you are trying to kick your spouse out of an apartment you are both renting, that would not be an LTB dispute, but it would be a matter for family law court. A rental contract is usually needed to prove a landlord and tenant relationship.
Filing a matter with the Landlord and Tenant Board
You will either have to respond to a complaint a tenant has filed against you with the Landlord and Tenant Board, or file one yourself. In either case, you may not require a lawyer if the matter is straightforward, such as the tenant not paying rent. However, it is worth noting that the current wording of the Residential Tenancies Act and the appeals process at the LTB is currently unfairly weighted towards tenants, so it is worth consulting a lawyer to see if the cost of representation is worth what you would recover if the LTB rules in your favour, particularly if rent in arrears or damages have already run into thousands of dollars and could potentially run up even higher during the lengthy LTB process.
The four most commonly used forms can be e-filed, and you will receive a small discount on the filing fees if you e-file. If your form isn’t on that list, you will have to download it and pay the full fee to file it by mail or in person. It is common to ask for filing fees to be paid if you are filing for non-payment of rent; if nothing else, this can be used as a negotiation tool during your hearing or mediation. When filling out the application, it is important to keep it fact-based and not to embellish with any personal attacks unless they have specific relevance in the case.
There will usually be an offer to settle the matter through mediation. If it can’t be settled through the mediation process, the Board will schedule an adjudication hearing. Both are usually scheduled within 25 days of a landlord filing the application.
Treat the Landlord and Tenant Board like a courtroom
When you appear at the adjudication hearing, the experience is very similar to Small Claims Court. Your case will appear on a docket for the day, and you will be given instructions as to what time to appear. You will be in the same room as other people who are also going before the tribunal with their cases on that day. If your hearing is scheduled towards the end of the day, there is a chance that it could be pushed off to the following day, so make sure you build that possibility into your schedule.
Treat the tribunal adjudicator with the same respect that you would treat a judge in another court. Do not speak directly with the opposing party unless so directed by the adjudicator, answer the adjudicator’s questions directly and don’t offer any emotional pleas. Answer all questions with facts about the case only, and don’t embellish.
Once the adjudicator has heard both parties, they will make a decision. If they don’t make it on the spot, they will usually come to a decision within five days. If they require additional documentation or other items, they will ask for them to be submitted before making their decision. This is why it is important to include all relevant documents, including rental contracts, a record of payments made and not made, and so on in your initial filing. The decision the adjudicator comes to is referred to as an Order.
After the Order is Issued
When the Order is issued, both you and your tenants have a right to either have the LTB review or appeal the Order. A non-paying tenant is likely to use the appeals and review process to buy more time. You both have 30 days to either appeal or order a review. At this point, it is advisable to bring in a lawyer if you aren’t already using one to ensure that the process doesn’t drag on longer than it should and that you are adequately represented. You can apply to the Landlord and Tenant Board at no charge if the tenant fails to meet conditions of an Order for further rulings to
Dealing with the Landlord and Tenant Board is actually a fairly simple process – file your application, show up for mediation or the hearing, and either have the situation resolved or it goes to appeal. However, it can be stressful for busy landlords who don’t have much time to take out of their work week. Hiring a lawyer can help you alleviate this stress, and is often worth the money.
If you want to screen for tenants in the future who are less likely to land you in front of the LTB, consider hiring a Toronto property management company like Highgate. We know what to look for and can also help you ensure that your property and terms are in compliance with the Residential Tenancies Act, reducing the possibility of tenant complaints. Give us a call today to find out more.