While it may be too early to call the COVID-19 pandemic over, most experts agree that we’ve seen the worst of it here in Ontario. After being locked down for much of the winter and spring seasons, things have been returning to “normal” more and more with the arrival of the province’s reopening stages – businesses have now reopened with large capacities, restaurants are allowing indoor dining, and the country in general seems to be recovering from the worst of the pandemic.
With things slowly but surely getting back to some normalcy, it might be time for Toronto landlords to begin the process of removing pandemic concessions and agreements made with renters. Before you go about going back to business as usual, there are a few important things to consider.
Concessions allowed for win-win situations for landlords and tenants
The COVID-19 pandemic hit everybody hard, with very few coming out unscathed. In the wake of the pandemic, many found themselves out of a job, with businesses having closed to the public for months. Not everybody was able to transition to a work from home model, and so many Canadians were left without a steady stream of income. This obviously made it difficult to predict whether rent payments could be made on time or in full, and so many landlords throughout the country looked to make special arrangements with renters.
These included things like giving tenants the ability to pay rent later than usual, make partial payments, and even defer rent altogether until restrictions were lifted and income was coming in steadily or other arrangements were made. Concessions allowed tenants to continue living in their current home throughout the pandemic, even amongst the many unknowns that they were suddenly being faced with, and ensured landlords that they wouldn’t suddenly be met with vacant units that were unable to be filled, leaving landlords without a stream of income they had come to depend on.
These win-win arrangements helped many get through the worst of the pandemic relatively unscathed, and in most cases, worked out well for both parties. After several waves of COVID-19 and a number of partial openings, the province seems to be returning to some normalcy, meaning that these pandemic concessions are probably no longer needed in the majority of cases.
How to go about removing concessions from renters
With things slowly going back to normal, it’s likely that your tenants have been able to go back to work in some form. If things continue on their current trajectory, it’s probably time to have a discussion about removing any concessions which were made. While it won’t be a fun conversation, it’s one that needs to happen, and something that was bound to happen eventually.
Before you decide to roll back pandemic rent agreements completely, it’s a good idea to do a cost-benefit analysis, which will help you outline the benefits of your concessions vs. the drawbacks or costs associated with them. You might find that you have enough wiggle room to keep some of the concessions for tenants who are still in need or who wish to be given more time. If the costs outweigh the benefits, then you know it’s time to roll them back. When performing your cost-benefit analysis, keep in mind that your tax bill might be higher next year due to the increase in real estate value in the city of Toronto.
The key to rolling back concessions made for renters is to use tact and abide by the law. With any luck, you and your tenants will be able to continue maintaining a healthy relationship, and all parties will respect that the concessions are being rolled back. Ideally, you will have had the foresight to draw up some sort of agreement which outlined the concessions being made and defined when they could be terminated. If there was never a formal agreement, it’s a good idea to keep records of any communication made between you and your tenants regarding the concessions being made.
Late and partial payments easy to roll back
Things like late or partial payments should be easy enough to roll back with any reasonable tenant. In situations where rent payment deferrals were given, some form of agreement between the two parties will protect you in the event that your tenant disputes the end of the concessions. If your concessions involve a reduction in rent prices, remember that you’ll only be able to increase rent by the amount set by the provincial government – even if your intentions were only to drop rates temporarily. Due to the provincial rent freeze, you actually have to keep these particular arrangements in effect until the end of the year.
While special increases can be approved by the Landlord and Tenant Board, the provincial rent freeze is set to end on December 31, 2021, meaning you’ll be able to adjust for a legal rent increase in 2022. Before you do so, you must give at least 90 days notice to your tenants – meaning your notice has to be in their hands by September 30 in order to increase rents for January 1, 2022. It’s critical to follow these rules set by the government when readjusting rent payments, as violating guidelines set by the government can land you in hot water and ruin your reputation as a landlord.
Before making any hasty decisions, it’s highly recommended that you speak with a lawyer and/or a property management firm about your next move – especially if your arrangements are complex, or you gave a large rent discount and need to try to get back to parity. Making uninformed decisions can lead to severe consequences and ruin your relationships with renters, while getting advice from real estate and legal professionals will ensure that things are done by the book and that your current relationships with your tenants can remain prosperous.
If you have any questions or concerns about removing pandemic concessions for your tenants, look no further than the Toronto real estate experts at HighGate Properties. We are a leading provider of Toronto property management services, with decades of combined experience in the real estate industry. We’ll help you identify which concessions can be removed with relative ease, which you’ll need to be more careful about, and how you can make 2022 a more successful year as a landlord.
To find out more about the residential and commercial property management services offered by HighGate Properties, get in touch with us today.