PROVINCE TABLES ITS “RENT FREEZE” LEGISLATION: HERE ARE SOME DETAILS
Note that this
legislation is first reading only and the Bill is subject to change.
Today the Province tabled its amendments to the Residential Tenancies Act (RTA) to implement its previously announced “rent freeze” for calendar year 2021. A link to the full text of the legislation is available here: Bill 204. Here are the main features of the amendments:
“Rent Freeze
Period”: It is currently limited to January 1, 2021 to December 31, 2021.
2021
“Guideline” Increase is 0%: The effect of this is to prevent the issuance of a Notice of
Rent Increase (NORI) that relies entirely on the Guideline. If you do not
have an AGI order (or phase in of an order) or a pending unapproved AGI
application currently in place and are only entitled to a Guideline increase,
you are unable to increase the rent at all unless you otherwise fall into an
“exemption” below. Note that because the Guideline is 0%, any
interest on a Last Months’ Rent (LMR) deposit that comes due during the Rent
Freeze Period is also $0.00 per s. 106 (6) RTA even if an increase can be taken
based on an exemption set out below.
Post November 15, 2018
Units: The rent freeze also applies to rental units that are otherwise
exempt under the legislation from guideline increases – notably buildings and
additions first occupied after November 15, 2018. Even though these units are
not bound by annual guideline increases they are caught by the rent freeze and
no increase may be given to take effect during 2021.
AGI Application Increases
permitted…pending Tax Applications are shut out: The rent freeze
provisions do not apply to a rent increase permitted by an AGI order or phase
in, or for a pending AGI for capital expenditures and/or security services. AGI
orders issued prior to the legislation receiving royal assent based on an
extraordinary increase in property taxes may be implemented, however, pending
tax AGI applications with implementation periods in 2021 are caught by the Rent
Freeze legislation. Landlords with AGI orders in hand or pending AGIs in place
may serve NORIs to take effect during 2021 but only for the AGI awarded or
applied for since the Guideline is 0%.
AGI Agreements to
increase rent for more than the guideline: Landlords will be
entitled to increase the rent by the AGI percentage where the landlord and
tenant entered into an agreement for an increase in exchange for certain
capital work (N10 agreements) and the increase takes effect during 2021.
Agreements to increase
rent for “prescribed services and facilities” are permitted: Where a landlord and a
tenant agree to a rent increase based on the provision of prescribed services
(parking spaces, AC units, cablevision, electricity, etc.) the increase is
valid even if taken during the Rent Freeze period.
Rent Increase on
Assignment of lease in a mobile home park/land lease community permitted: The RTA allows landlords
to increase rent in circumstances where there is a transfer of ownership of a
land lease/mobile home and a corresponding assignment of the land lease by a
maximum of $50.00 per month and such increases are permitted, as are increase
issued in an AGI order, but Guideline increases are restricted to 0%.
Rent Increases lost to
the Rent Freeze may be taken January 1, 2022 (unless the Province blindsides
the industry with an extension): You would need to issue a NORI by the end of September 2021 to
take effect January 1, 2022 for the 2022 guideline to be announced by the
Ministry next summer.
Uncertainty
Remains: The legislature seems to have recognized that there may be
implementation “issues”, so it has delegated any legislative
“tweaks” to address issues it has not dealt with in the RTA amendment
by way of regulation. There is no guidance for landlords who must file an AGI
and corresponding NORI in order to meet timelines imposed by the RTA (for
example, to comply with the 18 month window for filing), given that the
government may impose transitional rules by regulation. If a landlord is issued
a Notice of Rent Reduction by a municipality, the rent is subject to the rent
freeze and must be reduced accordingly, which amounts to a double loss for
landlords who receive such notices.
Did you
“waive” collection of rent increases following the start of the
pandemic? If so, consider un-waiving them before the Rent Freeze takes effect. Section
136.1 (3) of the RTA is amended to say: “No landlord shall increase the
rent charged to a tenant during the rent freeze period, even if notice of the
increase was given before the day…[the Rent Freeze legislation takes effect].
In cases where landlords gave rent increases which took effect prior to now,
but waived collection of the increase portion “until further notice”,
should consider giving notice to end the waiver effective, at the latest,
December 1, 2020. While it is arguable that revoking the waiver at some point
in 2021 is not a rent increase, many tenants and even some Board Members, may
not see it that way, so to minimize the risk, a December termination of the
waiver period is a safer choice.
LIMITATION PERIODS RE-INSTATED
The Government
previously enacted an emergency regulation to suspend limitation periods that
would otherwise affect the filing and submission deadlines for applications to
the Board. Today the Board issued the following update:
Please be advised that effective September 14, 2020, the Ontario
Government has revoked the Emergency Order suspending limitation periods. As a
result, suspended limitation periods and procedural timelines related to
Landlord and Tenant Board (LTB) proceedings resumed running on September 14,
2020. The suspension and resumption of limitation periods impacts all
statutory limitation periods, as well as all AGI timelines contained in O. Reg.
516/06 of the Residential Tenancies Act.
If a deadline related to your AGI application fell within the suspension
period (March 16, 2020 to end-of-day September 13, 2020), you are entitled to
an automatic extension of time to take that action. The extension of time is equal
to the number of days between March 16, 2020 and the original filing date. The extension period commenced on September 14, 2020.
The AGI Unit has now begun issuing new Notices of Written hearing by
e-mail in order of application filing dates.
Landlords should be
mindful that the additional time does not extend the proposed effective date of
an AGI or the underlying 18 month period in which to claim for capital
expenditures in an AGI application. Landlords should continue to carefully
review the eligible claim period to ensure they prepare the application for
timely submission to the LTB and serve the appropriate 90 day notice of rent
increase to implement the increase commensurate with effective date of the AGI.
Questions?
Contact
Joe Hoffer: hoffer@cohenhighley.com
Paul Cappa: cappa@cohenhighley.com
Kristin Ley: ley@cohenhighley.com
Mark Melchers: melchers@cohenhighley.com
A series of Bulletins we
have issued relative to Bill 184 and other residential tenancy matters is
available at this link: Cohen
Highley’s COVID-19 Bulletins
