What you need to know about the Rental Fairness Act and its implications.
The Rental Fairness Act, 2017 is a piece of legislation introduced on May 30, 2017, to amend the Residential Tenancies Act, 2006. This new legislation expands rent control to all private rental units, including those first occupied on or after November 1, 1991, and sets an annual cap on rent increases tied to the Consumer Price Index. The legislation also introduces additional protection for tenants, including enabling a standard lease and protecting tenants from eviction due to abuse of the "landlord's own use" provision.
Expanding Rent Control
As part of the Fair Housing Plan, the Ontario government expanded rent control to most private rental units in the province. As such, effective April 20, 2017, landlords in Ontario cannot increase the rent for most private rental units built on or after Nov. 1, 1991, by more than the amount set by the rent increase guideline. The annual cap for 2018 is 1.8 percent. Once a unit is vacant, landlords can legally raise the rent without limit.
The Landlord and Tenant Board can approve a rent increase above guideline of up to three percentage points above the cap for capital expenses (not including regular ongoing maintenance), unusually high increases in municipal taxes and charges, and the cost of security services. However, as of January 1, 2018, landlords are not able to apply for above-guideline rent increases for utility costs or in buildings with outstanding elevator work.
Effective as of April 30, 2018, landlords of most private residential rental units (single and semi-detached houses, apartment buildings, condos, and secondary units) – from individual landlords to property management companies – must use the standard lease template for all new leases. A standard lease for tenancies that have special rules or partial exemptions under the Rental Tenancies Act, including care homes, mobile home parks, land lease communities, social and supportive housing, co-operative and transitional housing is not required. For more info on the standard lease, click here.
Ending a Lease
To protect tenants from eviction due to abuse of the "landlord's own use" provision which saw some landlords terminate a lease only to turn around and re-lease the unit to a different tenant for a higher rent, the government introduced three provisions related to when a landlord terminates a lease for "own use":
- only landlords who are individuals can terminate a lease for "own use," not corporations;
- a landlord is now required to demonstrate that they need the unit for a minimum of one year;
- tenant must be compensated for one month's rent for lease termination, or be offered another acceptable rental unit;
- if a landlord acts in bad faith, they could face a fine of up to $25,000.
I encourage anyone dealing with rental leases to review the legislation and the recent changes.