MINISTRY OF MUNICIPAL AFFAIRS AND HOUSING
BUILDING AND CONCRETE RESTORATION ASSOCIATION OF ONTARIO
LEGAL CLINICS' HOUSING ISSUES COMMITTEE
CANADIAN FEDERATION OF STUDENTS-ONTARIO
ONTARIO COALITION OF SENIOR CITIZENS' ORGANIZATIONS
TORONTO CHRISTIAN RESOURCE CENTRE
METROPOLITAN TORONTO APARTMENT BUILDERS' ASSOCIATION
FEDERATION OF METRO TENANTS' ASSOCIATIONS
CONTENTS
Monday 19 August 1996
Rent control
Ministry of Municipal Affairs and Housing
Building and Concrete Restoration Association of Ontario
Ms Heather Adamson
United Tenants of Ontario
Legal Clinics' Housing Issues Committee
Goldlist Development Corp
Canadian Federation of Students-Ontario
Ontario Coalition of Senior Citizens' Organizations
Toronto Christian Resource Centre
Metropolitan Toronto Apartment Builders' Association
Federation of Metro Tenants' Associations
Mr P. K. Dave
Mr Peter Tabuns
Joint Construction Council
City of Toronto
Tenant Advocacy Group
STANDING COMMITTEE ON GENERAL GOVERNMENT
Chair / Président: Mr Jack Carroll (Chatham-Kent PC)
Vice-Chair / Vice-Président: Mr Bart Maves (Niagara Falls PC)
*Mr JackCarroll (Chatham-Kent PC)
*Mr HarryDanford (Hastings-Peterborough PC)
Mr JimFlaherty (Durham Centre / -Centre PC)
Mr BernardGrandmaître (Ottawa East / -Est L)
*Mr ErnieHardeman (Oxford PC)
*Mr RosarioMarchese (Fort York ND)
*Mr BartMaves (Niagara Falls PC)
Mrs SandraPupatello (Windsor-Sandwich L)
*Mrs LillianRoss (Hamilton West / -Ouest PC)
*Mr MarioSergio (Yorkview L)
Mr R. GaryStewart (Peterborough PC)
Mr Joseph N. Tascona (Simcoe Centre / -Centre PC)
Mr LenWood (Cochrane North / -Nord ND)
Mr Terence H. Young (Halton Centre / -Centre PC)
*In attendance /présents
Substitutions present /Membres remplaçants présents:
Mr DaveBoushy (Sarnia PC) for Mr Stewart
Mr AlvinCurling (Scarborough North / -Nord L) for Mrs Pupatello
Mr GerardKennedy (York South / -Sud L) for Mr Grandmaître
Mr BruceSmith (Middlesex PC) for Mr Flaherty
Mr DavidTilson (Dufferin-Peel PC) for Mr Tascona
Mr WayneWettlaufer (Kitchener PC) for Mr Young
Also taking part /Autres participants et participantes:
Ms MarilynChurley (Riverdale ND)
Mr TonySilipo (Dovercourt ND)
Clerk / Greffier: Ms Tonia Grannum
Staff / Personnel: Mr Jerry Richmond, research officer, Legislative Research Service
The committee met at 0902 in room 151.
RENT CONTROL
The Chair (Mr Jack Carroll): Good morning, everyone. Welcome to the standing committee on general government and our meetings on proposed changes to the rent control legislation.
MINISTRY OF MUNICIPAL AFFAIRS AND HOUSING
The Chair: Our first order of business this morning is to welcome the minister, Al Leach, to give us a presentation and explain exactly his proposals. Mr Leach, the floor is yours.
Hon Al Leach (Minister of Municipal Affairs and Housing): Good morning, Mr Chairman, ladies and gentlemen. It's a pleasure to be here after a nice, relaxing July. I hope everybody enjoyed their summer to date because it looks like we're going to get right back to business.
Thank you for the opportunity to open the public hearings into the tenant protection package proposed by the government.
Let me begin by expressing in advance to the members of this committee my appreciation for the many long hours you will no doubt spend on the issues as you travel across the province in the weeks ahead.
Our government is committed to the democratic process and in particular to the exercise of democracy at the grass-roots level. Following my comments this morning, the staff of the ministry will make a presentation on the details of the tenant protection package which I believe you will find extremely informative.
During the past year I've met with a great many tenants and property owners to seek their views on the housing situation in Ontario. During those meetings two things became abundantly clear to me: (1) The current system doesn't work for tenants and it doesn't work for property owners; (2) Tenants and landlords are never going to completely agree on how to fix it, yet at the same time both tenants and landlords are confronted with a system which is seriously flawed. Here are just a couple of examples:
More than 10% of all rental stock needs substantial repair work and more than $10 billion in repairs is needed to rental buildings across Ontario.
There are any number of apartment buildings in this province with literally dozens of work orders for maintenance and there are several buildings with hundreds of such work orders.
Unless we fix the system, property owners won't invest in buildings and they will not build new rental units. They mean what they say. Last year only 20 private sector rental units were built in the city of Toronto.
Vacancy rates in many of our cities are extremely low. With no new apartments being built, tenants have fewer and fewer choices about where they live. The system has to be changed. For tenants, no change means no choice.
It can take months to have a basic dispute between a tenant and a landlord or a tenant and a tenant settled in court.
Yet, when we bring these obvious problems to the attention of tenants and landlords and we ask for solutions, tenants suggest imposing absolute, ultrastrict rent controls that will ensure property owners can't get a dime. Landlords, on the other hand, suggest getting rid of the entire rent control system and all the regulations that go with it.
I have no doubt that the members of this committee will hear those same sentiments repeated many times as they travel across the province in the weeks ahead. It's the "Just give us everything we want" solution. Ladies and gentlemen, our government will not be giving either side everything they want, but what we're going to do is fix the system in a way that is fair and fix it in a way that is balanced.
During the next few weeks this committee will hear many things. You'll hear that the Ontario government is planning to throw tenants to the wolves, that tenants are going to be trapped in their apartments, that tenants are going to lose their homes and that senior citizens are going to be thrown out of their apartments. That is ridiculous, and we all know it.
Earlier this month the government announced the rent control guideline for next year; it is 2.8%. That's unchanged from the guideline of 2.8% this year. There has been some form of rent control in Ontario for more than 20 years, and during all that time the lowest guideline ever is 2.8%.
Why is our government keeping the method by which the guideline is calculated? We're keeping it because it works. It ensures that if a tenant is getting a rent increase, it is a very reasonable and fair increase.
This is not the end of rent control. People will not lose their apartments. The sky is not falling. It is our intention to improve the system for both tenants and property owners. In fact, this is just one part of a comprehensive effort by our government to make things better right across Ontario. The goal is more accountability to the taxpayers, more efficient systems and better government. Our intention is to fix the whole system, not just tinker with changes here and there.
The tenant protection package before this committee changes the Rent Control Act, the Landlord and Tenant Act, the Rental Housing Protection Act, the Municipal Amendment Act, the Residents' Rights Act, the Land Lease Statute Law Amendment Act, as well as the Building Code Act and the Planning Act. Simply the names of all those acts provide a pretty good indication of just how confused the current system is. There's no doubt that most people have no idea whatsoever how some of those laws affect them, or even that they exist.
What we're proposing is a Tenant Protection Act which consolidates everything into one package that is fair to tenants, landlords and taxpayers. The central elements of this package are pretty straightforward: Tenants must be protected from unfair rent increases; buildings must be properly maintained; we must encourage more rental housing to be built; and finally, the entire system must be simplified and made less expensive for the taxpayer.
That's our plan in a nutshell. The most important aspect of our plan is tenant protection. It is fundamental to our approach.
We recognize that many aspects of the current system work well in protecting tenants and we're going to keep those: Tenants will only get one rent increase each year, as they do now. Tenants must be given proper notice of a rent increase, as they are now. Tenants are protected by a cap on rent increases above guideline for capital repairs, as they are now. Tenants can apply for rent reductions for inadequate maintenance or reduced services. Tenants can apply to challenge illegal rent increases and illegal charges, as they are now. These measures are important for tenant protection, and we want to continue them.
What we do not want to continue are those measures which discourage an owner from properly maintaining an apartment building or from building new ones which give tenants more choices in where to live. That's why we're proposing that when a tenant moves out and a unit becomes vacant, the owner is free to set a new rate.
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This is an important change, and I want to be clear about our intentions. When a tenant moves out of an apartment, the apartment is obviously vacant. Under the current system, the vacant apartment is locked into a rent which was being paid by a tenant who is no longer there. The current system protects the apartment. I'm saying we need to protect the tenant, not the apartment. We need to protect the tenant as long as the tenant lives in the apartment, but when the tenant moves out and the apartment is vacant, it's vacant. The owner must be free at that point to negotiate a new rent, and when a new tenant moves in, that new tenant is protected by rent control. The rent can only be increased by the guideline, and the tenant has all of the other protections afforded all other tenants.
This change will improve maintenance. The property owner now has an obvious incentive to maintain both the apartment and the building in order to attract a new tenant at a new rent.
I realize there are those -- sitting on my right, I think -- who would argue that by doing this we have also created an incentive for landlords to harass tenants in order to get them out of their apartments. Well, it's going to cost landlords a whole lot to try, up to $50,000, because that's the new maximum fine we're proposing for illegal activities by a corporate landlord. That's double the current penalty. We're also proposing to expand the existing enforcement unit to investigate tenant complaints. We're simply not going to tolerate the harassment of tenants in this or any other manner.
We want property owners to renovate their buildings, extensively if need be. As I mentioned earlier, one of the main problems with the current system is that the housing stock is run-down. It needs at least $10 billion in repairs. There are buildings in this province which are actually boarded up because the current system prevents the property owner from doing major renovations or redeveloping the site, and that's not helping anyone.
We want owners to do the work and we want the tenants living in those buildings to be protected. That's why we're proposing that tenants in a building which is to be extensively renovated be given extended tenure, and in buildings which are converted, we're proposing that the tenants have the right of first refusal to purchase their units. Make no mistake about it, we're going to insist that landlords properly maintain their buildings by making the penalties for poor maintenance tougher than ever before.
Under the current system, the owner of a building can only be charged for violating a work order. We're proposing to change that and make the violation of a property standard in itself an offence. We're also proposing to give property standards officers more powers to enforce the maintenance and repair of rental buildings and to punish serious offenders of property standards bylaws. We would like to see a new maximum fine in this area of $100,000, and I hope the members of this committee will agree.
One of the most frustrating and confusing elements of the current system for both tenants and landlords is the method of settling disputes under the Landlord and Tenant Act. Disputes under the act are settled in court, and as we are all aware, the wheels of justice can turn slowly. It's not unusual for tenants and landlords to spend month after month after month resolving a dispute.
We're proposing to create a faster, more efficient process which moves disputes out of the courts and into a less formal system of adjudication. We want to streamline the system so that disputes between tenants and landlords and disputes between tenants and tenants can be settled quickly in a forum where everyone can feel comfortable.
At the same time, we want to continue the valuable protections which tenants enjoy under the Landlord and Tenant Act: Tenants continue to be protected from arbitrary eviction; tenants maintain their right to privacy; tenants must be given proper notice when a tenancy is terminated; property owners remain responsible for keeping their premises in good condition; property owners continue to be limited to collecting only the last month's rent as a deposit and remain prohibited from seizing a tenant's property for arrears in rent.
Our intention is to speed up the process, to make it simpler and easier to understand and, not least of all, to reduce the backlog in our courts and free up valuable court time.
As I mentioned at the beginning of my comments, one of our main goals in changing the system is to encourage the construction of new rental housing, especially in our larger cities. The vacancy rate has hovered below 2% in many urban areas and is currently below 1% in the city of Toronto. We must create a climate for new rental housing. In order to get developers back into the building business, private rental units will have to be as attractive to build as condominiums or private homes.
Let me be clear. I'm under absolutely no illusion that the changes we are proposing in and of themselves will trigger a boom in the construction of new rental housing, but they do constitute a very important first step in the right direction. In conjunction with the other reforms we will be proposing, these changes will help encourage builders to build.
What our government wants to do is reform a heavy-handed regulatory system that acts as a disincentive to the whole industry. Rent control is just one part of the bigger picture.
We are also looking at the issue of property taxes for rental buildings. In that regard I'm pleased to announce today that I'm referring the issue of property taxes on multi-residential buildings to the Who Does What panel chaired by David Crombie. I'm asking the panel to review the issue and make recommendations to the government on how property taxes on residential buildings can be changed in a way that is fair and in a way that is equitable and in a way that will help stimulate the construction of new rental housing in this province.
As well, we will continue to reduce and streamline regulations associated with development. We've already made a substantial start by taking action to change the Planning Act and we are reviewing the Development Charges Act.
All of these initiatives, combined with the changes we are proposing to the system of rent regulation, take us another step closer to creating the climate for the construction of a new supply of rental housing in Ontario.
Let me end my comments by giving the members of the committee the bottom line as I see it. We now have a system in place which tries to protect tenants, but at the same time it's a system that results in run-down housing stock; it's a system that results in poor maintenance; it's a system that creates low vacancy rates and millions of dollars in additional costs to the taxpayer. What we want to do is to continue to protect tenants while resolving the problems, and that means cutting red tape, improving maintenance, encouraging investment in new rental housing and giving the taxpayers a reasonable system at a reasonable cost.
That's what we're trying to do, and we want to make sure that we get it right. That's where the work of this committee will come in. We're anxious to learn what people think about our proposals and how they feel we can improve them. I look forward to hearing the recommendations of this committee.
I thank you for your attention and I now, Mr Chairman, would like to turn the proceedings over to the ministry staff for a detailed presentation on our proposals.
Ms Anne Beaumont: Good morning. My name is Anne Beaumont. I'm the assistant deputy minister of the housing policy and programs division. I want to thank the committee for inviting ministry staff to make a presentation this morning. Let me introduce my colleagues to you. With me are Janet Mason, who is the director of the housing policy branch, and Scott Harcourt, manager of the existing stock section in that branch.
In our presentation today we'll describe the rental housing market in Ontario, make a few comments on landlord and tenant legislation in the province and then review the proposed systems objectives and provide you with a technical overview of the consultation paper which you have all seen.
Ontario's private rental market consists of approximately 1.3 million rental units in over 300,000 buildings. Over three quarters of all renter households are located in the metropolitan areas of Ontario. Almost 45% of them are in the Toronto metropolitan area.
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Many people, when they think of rental buildings, think of high-rise buildings, but in fact only 23% of rental units are found in large high-rise buildings of 100 or more units. About 80% of rental buildings are made up of four or fewer units, and most landlords in Ontario own a small number of units, typically five to nine units in a small building.
Rents generally fall in the range of $600 to $800 a month for a two-bedroom unit. In Toronto and Ottawa, the largest markets for rental housing, 75% of the market is at or below $800 a month.
Forty per cent of all rental households across both private and social housing sectors in Ontario receive some type of housing subsidy from the government. In the private sector, 37% of those households that are not subsidized spend more than 30% of their income on shelter. On the other hand, 40% of tenants pay less than 20% of their income on shelter.
Ontario's rental stock is made up of both conventional and non-conventional supply. Conventional supply is purpose-built rental housing. Non-conventional includes rented houses, condominiums, apartments in houses and conversions of non-rental properties. Since the late 1980s, there's been more non-conventional supply because of more condominium rentals and more apartments in houses. The conventional supply has been mostly non-profit development.
A serious problem, as the minister indicated, from the standpoint of supply is that private rental construction in Ontario is at a virtual standstill. Last year, only 1,420 private sector rental units were built in Ontario. Only 20 of these units were in Metro. That's units, not buildings. At the same time, about 120,000 people moved into the province.
This decline in new supply has led to tightening vacancies in some Ontario rental markets. For example, the vacancy rate in Toronto is currently 0.8%, although there is at the same time a significant turnover of apartments. In other cities, such as Thunder Bay and London, there's a healthier vacancy rate.
Over 60% of the rental housing stock is 25 or more years old. This proportion will obviously grow as the stock ages and few new units are built. Clearly the need for major repair is closely linked to the age of the housing stock. Older buildings need major investments in large systems. A particular problem is 1960s and 1970s high-rise buildings, which are facing major structural problems related to concrete corrosion in garages and on balconies. Significant investments are also required as a result of government legislation, for example, a fire code retrofit.
Having commented on the stock, let me move to the consultation paper. As the minister indicated in his remarks, the paper proposes a comprehensive reform of all legislation which regulates landlord and tenant relations in Ontario. In order to know where we're headed in terms of legislative reform, it's important to understand where we've come from, so it's useful to look at the history of tenant protection legislation in Ontario. We've provided you with details of this in your packages.
Currently rent increases in Ontario are regulated by the Rent Control Act, which was proclaimed in 1992. This act is administered by the rent control program staff of the ministry. But rent regulation was introduced to Ontario with the Residential Premises Rent Review Act in 1975. Since then, Ontario's system of rent regulation has undergone numerous and substantive changes with the Residential Tenancies Act in 1979, the Residential Rent Regulation Act in 1986 and the Rent Control Act in 1992.
In general, it's fair to say that each act expanded the scope of the legislation and put more regulatory requirements into place. The decision-making process also changed with each act.
The Landlord and Tenant Act is another significant piece of legislation regulating residential tenancies. It provides security of tenure to tenants and it regulates landlord and tenant rights and obligations. This legislation is administered through the court system, and that act took effect in 1970. Since that time it's had a number of amendments.
The Rental Housing Protection Act regulates condominium conversions, demolition and renovation of rental housing. This act was introduced as temporary legislation in 1986 and became permanent in 1989. This legislation requires that municipalities become decision-makers in the area of landlord and tenant relations.
The Residents' Rights Act extended rent control, security of tenure and anti-conversion protection to residents of previously unregulated care homes and became law in 1994.
The Land Lease Statute Law Amendment Act became law in 1994 also after passage of a private member's bill. It provided protection to residents in mobile home parks and land-lease communities, mainly conversion protection.
The sixth core piece of legislation is the Municipal Amendment (Vital Services) Act of 1994, which ensures that vital services such as heat and hot water are provided to tenants.
I'd like to shift gears a little now and provide you with an overview of the government's objectives for reforming modern tenant legislation in Ontario.
The most important objective is to protect tenants from unfair and high rent increases, harassment and unjust evictions, and to provide strong security of tenure. This means, as the minister indicated, that those provisions currently in the legislation which provide these protections will remain, including the guideline, the cap on rent increases, and the existing structure of landlord and tenant rights and responsibilities. Anti-harassment provisions will also be strengthened under the new legislation.
A second objective is to focus protection on tenants rather than on units. As a general principle, the proposed system moves away from regulating the unit, whether it's occupied or vacant, to protecting sitting tenants in their apartments.
Thirdly, it's necessary to create a better climate for investment in existing buildings and construction of new rental housing. Necessary capital works are not being undertaken and ongoing maintenance is not taking place in existing buildings because of landlords' uncertainty about their ability to recover capital costs under the current rent control system. The best protection for tenants is a healthy housing market.
We commissioned a study known as the Lampert report to identify barriers to the development of new rental housing. Many financial and regulatory barriers were identified, but the number one barrier identified in that report was rent control.
The fourth objective: Rental buildings will be properly maintained. The government believes the best way to achieve this objective is to build incentives into the system so that good maintenance makes business sense to landlords and to give municipalities stronger powers to enforce property standards when the buildings are not maintained.
A fifth objective is to provide a faster, more accessible system to resolve disputes between landlords and tenants. Currently, under the Landlord and Tenant Act, the court process for settling disputes is complex and difficult for tenants and small landlords to understand. As well, the complexity of the current rent control system can make it difficult for landlords and tenants to exercise their rights.
Finally, the government wishes to deliver more cost-effective administration with less red tape. Currently it costs $17.4 million annually to administer the rent control program. The administration of landlord and tenant matters through the courts is also costly. There's considerable duplication of issues among these six acts, especially between the Rent Control Act and the Landlord and Tenant Act. As an example, maintenance provisions are dealt with under both pieces of legislation in slightly different ways. To address these problems, the government wants to create a simpler system with less bureaucracy.
This concludes my part of the presentation. Janet Mason and Scott Harcourt will now provide you with a technical overview of each of the policy areas in which the government is proposing to amend the legislation.
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Ms Janet Mason: Good morning. My name is Janet Mason. I will take you through the rent control and maintenance provisions in the consultation paper. I'll start off with rent control.
The overall approach of the government in amending the Rent Control Act is to move away from regulating the rent for units to protecting sitting tenants. In protecting tenants from unfair rent increases, many of the existing provisions will be maintained. The proposed system will allow the market to set the rent in certain circumstances. Finally, it will reduce the complexities found within the current system so that it is simpler and less expensive to administer.
In terms of protecting tenants, there will continue to be an annual rent increase guideline for sitting tenants. It will be calculated in exactly the same manner as the current rent control guideline is. There will be a base of 2% for capital expenditures and an inflationary component for operating cost increases. This year the guideline is 2.8%. As the minister indicated, the guideline for next year will also be 2.8%. Tenants will also continue to be protected with a limit of one rent increase per year and the 90-day written notice provision for a rent increase will be retained.
There will be landlord applications for above-guideline rent increases, as there is in the current system, and these will continue to be limited to two items: capital expenditures and extraordinary operating cost increases.
Like the current system, which provide an overall cap of 3% above the guideline, capital expenditures will continue to be capped. The cap for capital expenditures will be 4% above the guideline. In other words, based on a guideline of 2.8%, the most a landlord will be able to obtain for a capital expenditure will be 4% above this, equalling 6.8%. There will be a two-year carryforward, as in the current act.
The second justification factor for above-guideline rent increases, extraordinary operating costs, will be limited to utilities, municipal taxes and user fees for such things as garbage collection. The amount of the increase allowed for this factor, however, will not be capped. A landlord has little or no control over these costs; therefore, the government feels the costs passed through should not be subject to a cap. Experience has also shown that rent increases due to extraordinary operating have tended to be very low, usually within 1% or 2%.
The proposed system continues to allow tenants to make applications to have their rent reduced. The grounds for rent reduction applications will be inadequate maintenance, reduced or withdrawn services and extraordinary operating costs decreases for municipal taxes. These are the same as under the current system, except that tenants will no longer be able to make rent reduction applications for utility cost decreases. Under the current system, landlords have been reluctant to carry out energy and water conservation projects because they could result in rent reductions.
Finally, tenants will continue to have the right to make applications for illegal rent increases and illegal charges.
I mentioned that the proposed changes to rent control will allow the market to set the rent in certain circumstances. This will apply when a unit is re-rented to a new tenant. Landlords and prospective tenants can agree on the amount of rent charged when a vacant unit is rented. However, once the unit is rented, rent control will apply based on the new rent. This new provision protects sitting tenants while at the same time allows landlords to charge a market rent when a vacancy occurs.
The market will also be able to set rents in new buildings and newly constructed rental units. It is proposed that a permanent exemption from most provisions of rent control be provided. Tenants in these buildings would be covered by provisions requiring 90-day notice for a rent increase and limits on increases for sitting tenants to once a year, but not by the annual guideline. This provision is similar to the exemption for new accommodation in the Rent Control Act currently, except that this act currently is limited to five years rather than being permanent. The intent of this provision is to encourage new rental construction.
A new provision is being proposed to allow landlords and tenants to agree to a rent increase above the guideline if tenants are willing to pay for certain capital expenditures or new services. For example, they could agree to kitchen renovations or having new carpeting installed. In these circumstances, an above-guideline rent increase application won't be required. The landlord and tenant just need to agree between themselves on the improvement and sign a form indicating this as well as what the rent increase is. The rent increase will be limited by the 4% cap above the guideline. There will be a five-day cooling-off period in which tenants will be able to change their mind. Agreements could be notarized by the government. This provision will encourage landlord and tenant negotiation and would reduce the number of applications to the government.
There are also a number of provisions set out in the consultation paper which are designed to reduce complexity in the system and reduce costs. The rent registry will be eliminated over time. Right now the rent registry records the maximum rent for rental units. The maximum rent is the most a landlord can charge a tenant and is based on past guideline rent increases and any justified above-guideline increases. In many cases the maximum rent is well above the rent the landlord is actually charging. With proper notice under the current act, a landlord can increase a rent up to maximum at any time, even though they may generate a rent increase significantly above the guideline and cap on rent.
It is proposed that maximum rents be frozen at their current levels and that the landlord retain the right to charge maximum rent only until a unit is re-rented for the first time. Eliminating the concept of maximum rent will eliminate the need for a rent registry and reduce the costs of running the rent control system. The registry currently costs $1.5 million per year.
Costs of the rent control system will also be reduced by discontinuing orders to prevent rent increases, commonly referred to as OPRIs. This provision under the Rent Control Act required the government to freeze rents whenever there was an outstanding municipal or other work order. The government believes that there are more effective ways to encourage proper maintenance emphasizing municipal property standards enforcement. I will speak to this in just a moment.
Finally, administrative complexity in the rent control system will be reduced by eliminating the concept of costs no longer borne for capital expenditures. Costs-no-longer-borne provisions require the tracking of each capital expenditure for each rental unit so that the amount of the item can be taken out of the rent when its anticipated useful life has expired. This is costly for the government and confusing to both landlords and tenants. Therefore, the government is proposing to discontinue this practice in the proposed legislation.
These are the major highlights of the proposed rent control changes. I'd now like to provide the committee with a brief overview of the changes in maintenance provisions.
As Anne and the minister indicated, Ontario's rental buildings are getting older and maintenance is increasingly becoming a concern. The proposed tenant protection package will address maintenance issues in several ways. I already mentioned that the new legislation will encourage landlords to reinvest in their properties. Allowing above-guideline increases of up to 4% together with the ability to move to market rents when a unit becomes vacant will give landlords the revenues needed for maintenance. The requirement to negotiate the rent level with a new tenant on a vacancy will also be a strong incentive to proper maintenance of the unit.
Reference was made to the proposal to allow tenants to continue to make applications for rent reductions where buildings are not adequately maintained. What I want to elaborate on here is how the tenant protection package will strengthen the ability of municipalities to enforce their property standards bylaws. Non-compliance with a standard, and not just the violation of a work order, will be made an offence. This will improve municipalities' ability to obtain search warrants where there are reasonable grounds to believe substandard conditions exist. Owners could be charged on the spot, possibly, for example, through issuing a ticket, although this would only be one of a number of options available to a municipality.
Property standards officers will no longer have to issue a notice of violation before issuing a work order, although they could still choose to issue formal warnings, and the requirements for serving such orders will be streamlined.
During an inspection, officers could be accompanied by qualified experts who could conduct their own tests and studies. The costs of inspections could be passed on to the owner. Maximum fines will be increased, up to $50,000 for individuals and $100,000 for corporations. The court where the conviction is entered will also be able to issue an order prohibiting the continuation or repetition of the offence.
Municipalities will be able to carry out emergency work themselves and collect moneys owed either as property taxes or through a property lien. This will help recover the cost of work done on private property.
The province will continue to enforce its own standard for rental buildings in unorganized territories, municipalities without property standards bylaws and municipalities which provide only partial coverage, for example, where bylaws only apply to exteriors. Where municipalities exist, the province will charge them for the services provided.
I'd now like to turn things over to Scott Harcourt.
Mr Scott Harcourt: Thank you, Janet. Good morning. My name is Scott Harcourt. I'll take you through the proposed changes to the Landlord and Tenant Act, the delivery system, conversion protection and legislation covering care homes and mobile homes and land-lease communities.
The overall approach to the Landlord and Tenant Act is to continue the current rights and obligations of the parties. A new delivery system is being designed, but for the most part substantive rights are not being changed. The government remains committed to preserving security of tenure and other rights for tenants. No changes will be made to the existing grounds for eviction for most tenancies or to the notice periods related to evictions. Security deposits will continue to be limited to the last month's rent deposit. Seizure of tenants' property for arrears will continue to be prohibited. Landlords will continue to be responsible for keeping premises in a good state of repair and fit for habitation. Tenants' rights to privacy will be preserved.
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Changes that are being made will focus on three areas: First, there will be clarification of existing provisions which have been interpreted by the courts; second, new rules will be established for compatibility with policy changes in other parts of the legislation; finally, the act will be rewritten to make it simpler and easier to understand. The bulk of the legislation was written some 25 years ago and needs to be updated.
What are some changes being proposed by the government?
Subletting and assignment rules will be changed. Because the landlord can reset the market on a vacancy, there will be provisions which will allow the landlord to also reset the rent at market when there is a sublet or assignment and the term of the original tenant's lease has ended. This is to avoid the situation of tenants passing on low-rent units to friends and family members, a phenomenon well known in New York City. These rules will also be changed to allow a landlord greater control on who occupies the unit. If a tenant sublets or assigns without the approval of the landlord, the landlord will be able to evict the unauthorized occupant.
Second, rules for disposal of abandoned property will be clarified. Right now, when it is unclear whether a tenant has left and property is left behind, landlords are uncertain about what the right thing is to do because the act is silent in this regard. New provisions will be added which allow landlords to dispose of abandoned property without liability if they have obtained a writ of possession and have held on to the tenant's property for at least 30 days.
The third major change to the Landlord and Tenant Act strengthens anti-harassment provisions. Current anti-harassment provisions have proven ineffective in many situations. The provisions are ambiguous and require tenants to file applications with the courts. A tenant must also prove the landlord's intention to harass, which is difficult. To give anti-harassment measures more teeth, a new tenant application will be created for relief of harassment and an abatement of rent. An enforcement unit will be created to investigate tenants' complaints and intercede on a tenant's behalf.
Finally, maximum fines for illegal activities will be increased. This will be increased to $10,000 for an individual and $50,000 for corporate landlords.
I'm now going to move on to talk briefly about the new delivery system which the government is proposing. The goal is to create a system independent of the courts to handle both rent control and Landlord and Tenant Act matters. Right now, rent control is administered through a branch of the Ministry of Municipal Affairs and Housing, while the Landlord and Tenant Act is administered through provincial courts. Not only is this inefficient, but landlords and tenants find it confusing, as it isn't always clear whether disputes should be brought to the courts or to rent control. A combined system will provide one-stop shopping for both landlords and tenants.
The primary objective of the new delivery system will be to speed up the process. Both landlords and tenants have complained that the current systems are too slow. Many courts in Ontario are backlogged, causing delays in the eviction process and other proceedings. Likewise, rent control decisions take too long, due to procedures in the act being very convoluted.
Of course, creating a single system in itself will not necessarily reduce backlogs and delays. The government is working on procedures that will ensure that all types of applications and disputes are dealt with faster. This includes simplifying decisions and applications and other forms; more emphasis on front-end screening and evaluation, such as encouraging mediation; scheduling hearings sooner; and simplifying decisions by making the rules clear for all parties.
Committee members will note in the consultation paper that the design of the new delivery system is the area in which the fewest proposals have been made by the government. It is the government's intention to consult the public on many issues related to the design of this new system. Many of the decisions will not be made until after the public hearings are undertaken by this committee. For example, what should the relationship of the new delivery system be to the government? Should it be attached to a government ministry, such as rent control is currently, or should it be an independent agency? What should be the appointment process for adjudicators? What should be the rights for a party to appeal decisions? Should there be an internal appeal system or should it be to the courts? Should appeals be allowed based on matters of law only or should they also be allowed based on matters of fact? How can public access be ensured? Should there be full-service offices with fewer locations or should there also be multiple-service offices with more locations? Finally, how should application fees be applied?
The government is proposing to repeal the Rental Housing Protection Act. This is the legislation which currently provides a process and controls conversions, demolitions and major renovations. It is administered by municipalities and is subject to provincial approval criteria. The government believes that the Rental Housing Protection Act has become a major barrier for many landlords who want to improve the quality of their buildings or make better use of the land that their building is on.
In some cases, as stated by the minister, owners have boarded up their buildings because the legislation will not allow them to redevelop their sites. It is proposed that the municipal review process be eliminated. Landlords would be allowed to make changes subject to building, official plan and other municipal approvals.
However, to ensure tenants are protected, it would be required that landlords provide extended tenure and other compensation to tenants. For condominiums and cooperative conversions this extended tenure could be a few years or perhaps even a lifetime. The government has not made a decision in this regard. For other changes, financial compensation of some form may be more appropriate.
Changes are also proposed in the rules that apply to care homes. Care homes include retirement residences, rest homes, facilities which provide rehabilitation and therapy and boarding houses which provide care. They do not, however, include nursing homes, which are regulated under the Nursing Homes Act.
Up until 1994, care homes were not regulated under provincial tenancy laws. At that time the previous government extended rent control, the Landlord and Tenant Act and the Rental Housing Protection Act to care homes. It is proposed that residential tenancy laws continue to protect residents of care homes. However, the provision of care is essential in these facilities, and special rules are required to recognize the differences between care homes and other rental accommodation.
In terms of coverage, it is proposed that the definition of "care homes" remain the same, with one exception: The legislation will clarify that temporary rehabilitation therapy facilities are exempt. These facilities, which include alcohol and drug rehabilitation centres and women's shelters, have experienced significant problems trying to function under the legislation, so it is proposed that these facilities be exempted.
For other care homes, Landlord and Tenant Act provisions will continue to apply, but a number of special rules are proposed. One of these rules will be to allow landlord access to a tenant's room for purposes of providing bed checks and care where this is agreed to by the landlord and the tenant. The current law does not allow for this. The change will allow tenants the level of care which they require and expect.
A second rule will allow for in-house and outside transfers of residents to alternative facilities due to changing care needs. This is also disallowed under the current law if the resident doesn't agree to this. The need to allow transfers must be balanced, however, with appropriate provisions to ensure that residents are only moved when necessary, that there is due process for residents and that they are assured of getting the right kind of accommodation. How this transfer process should work has not been decided by the government as yet. It will be finalized after the public consultations.
Another new rule will amend notice requirements for care home residents where they are required to terminate their leases in non-voluntary situations such as the death or transfer of a resident. Right now the law requires 60 days' notice. It is proposed that this be reduced to 30 days in these circumstances.
Finally, it is proposed that there be a fast-tracking of eviction cases where a resident poses a threat to other residents. This will be done administratively by dealing with cases on a priority basis. Due process will be preserved. It will not involve changing notice periods for termination or through shorter hearings. It is felt that fast-tracking of such cases is necessary because of the vulnerable population in care homes and often congregate or shared living situations.
Rent control protection is also proposed for care home residents. As with the current legislation, rent control will apply to accommodation but not care services or meals. Conversion protection will apply to care home residents. As with other accommodation, protection will focus on sitting tenants through extended tenure and compensation. However, an additional requirement for the landlord to find alternative and comparable accommodation will be stipulated for care homes.
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The last subject area I'm going to talk about today is mobile home parks and land-lease communities. As with care homes, the government is proposing to continue to cover these facilities under existing tenancy laws. Rent control, Landlord and Tenant Act protection and conversion protection will continue to apply. However, because of the distinct operating characteristics of these facilities, special rules are required. One of these special rules will be a higher cost pass-through cap for capital expenditures related to infrastructure upgrades required by a public agency.
Many of these facilities are required to substantially upgrade their water supply and sewage disposal systems. The very high cost of these upgrades, sometimes in the range of hundreds of thousands of dollars, combined with the low base rent, often $100 or $200 per lot, means that the proposed 4% cap that Janet spoke of, which is applicable to other accommodation, simply doesn't work for mobile homes and land-lease communities. The government is therefore proposing that a higher cap apply in these circumstances. However, the actual level of the cap will not be decided until after the public consultations.
The last rule being changed that I want to mention deals with the placement of For Sale signs. Right now, these signs are often placed in the property surrounding the homes. This gives the false impression that both the property and the home are for sale. The new rule will restrict the placement of For Sale signs to the window of a home.
This concludes the ministry presentation on the proposed tenant protection legislation.
The Chair: Minister, is that the end of your presentation?
Hon Mr Leach: If I could just wrap up in a couple of minutes. What the government has proposed to do, and is doing, is putting a consultation paper on the street for all of the major stakeholders to have input into the system. The paper is not perfect. There is room for improvements. We're looking for input from everybody, and I think the most important role that this committee will have is to provide positive input into the development of a package that is going to be fair for tenants and fair for landlords.
What we have to do is create a system that has fairness and equity for everyone. We have an opportunity now, as the three parties forming government, to work in a positive manner to make sure that tenants are protected to the utmost, which is our priority, and also to create a system that will create the building of new rental stock, because without new rental stock, there will never be any choice for tenants. The landlords right at the present time, I think, are in an upper-hand position where, because of the total lack of supply, they don't particularly have to be concerned about the wellbeing of tenants, because there are a lot more tenants than there are apartments.
The best protection that tenants can have is an abundant supply of new buildings. I think you can see that in a couple of communities in Ontario -- in Ottawa, for example, as a result of other actions, where there is a substantially high vacancy rate -- that landlords are competing for tenants, they're providing free rents, they're providing incentives such as microwaves and televisions and so forth to attract tenants. I think that's a good indication that the marketplace will truly determine what rent should be if there is a good supply. Under the current laws and regulations that we have in Ontario, there is no way that anyone is going to invest in the building of new rental accommodation. We have to develop the ways and means to do that, and at the same time, we have to ensure that the tenants' rights are paramount and protected.
The Chair: We now have one half-hour per party for questions or comments, starting with the official opposition. We have Mr Curling and Mr Kennedy. I'm not sure who's going to lead off.
Mr Alvin Curling (Scarborough North): I will do so, Mr Chairman. I want to start by recognizing the ministry staff, who have been around this -- déjà vu for them -- for maybe the third time, meaning that there are three different parties you have dealt with. I would in the process advise the minister that he could listen to those bureaucrats because they're hardworking and dedicated people and they have known the results of listening to the people outside, and consultation is extremely important. Sometimes it's hard to get it through to the minister's head. I'm not talking about a specific minister but ministers in general.
Yes, I'll be sharing my time with my colleague.
I want to say how pleased I am to respond on behalf of my party, the Liberal Party, and also on behalf of the many tenants across this province. I have noticed that the minister himself has survived the cabinet shuffle and retained his portfolio. This is the Minister of Housing who said that we should not be in the housing business. Maybe there is no one in the Tory caucus, I presume, who is able to protect the rights of tenants, who is able to bring about the environment for decent and affordable housing for all the people of Ontario. Hence, here we are back with Mr Leach, and I hope this time around, Mr Leach, there is lots to learn and a lot to do.
I'm here today to state as clearly and as forcefully and unequivocally as I can that we are opposed to this new-direction proposal. It's a proposal that will kill rent control and lead to higher rents across the province.
I listened very carefully as the minister described his proposal in such glowing terms and I wondered if he and I and the three million concerned and angry tenants across the province have been studying the same paper. Then I remembered that this is the same minister who when his government rammed through Bill 26 gave his assurance that it would not allow municipalities to bring in gas taxes. When our party and the NDP and many others said that it would, he said he would resign if it could be proven. So we got opinions from constitutional experts who said that, yes, indeed, Bill 26 would allow municipalities to bring in gas taxes. But the minister refused to keep his word. He refused to do the honourable thing and resign. In the end it was the minister who had to eat his own words and bring in his own amendments to change his own supposedly perfect legislation to keep it from allowing municipal gas taxes.
So you will understand when I say that when it comes to this minister describing his proposal or giving his reassurances or promises, Ontarians have learned to take his word along with a few large bags of salt.
I'm sure that the minister's spin doctors and the Premier's spin doctors have been lying awake for many nights trying to figure out how to put a smokescreen around the more repugnant aspects of this proposal, but when you clear away the smoke, three inescapable facts remain:
(1) This proposal kills rent control. It doesn't modify it. It doesn't reform it. It doesn't improve it. It doesn't do any of the things that Mike Harris and Al Leach promised tenants in the election. It just kills rent control. It doesn't do it all at once. It does it more insidiously, one apartment at a time, building by building, in community after community across the province. This proposal kills rent control. That is its intent and that is its effect.
(2) Instead of encouraging landlords and tenants to work together, this proposal rewards bad landlords because the more often tenants move the more often landlords can raise rents and raise them as high as they want.
(3) This proposal will cause rents to skyrocket, especially in areas where there are low vacancy rates such as Toronto, where the vacancy rate is 0.8%, in Windsor, where the vacancy rate is 1.8%, and in Hamilton, where the vacancy rate is just about 2%.
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I could go on about the many flaws in this proposal, about how even tenants who do not move from their apartments will face annual rent increases of up to 7%, as the staff just told you a while ago, with the 2.8% and the 4% that they throw in, this at a time when inflation is barely over 1% and many workers are looking at wage reductions, not wage increases. I could go on about how this proposal will give landlords complete freedom to convert apartments into condominiums and to demolish existing apartments or about how even developers say that this proposal will not cause new apartments to be built. But I'm sure there will be plenty of time to discuss all of these matters during the course of our hearings. Instead I want to elaborate on the three key points I raised earlier.
As I mentioned a few moments ago, this proposal kills rent control. That is its intent and that is its effect.
Let's suppose, Mr Chairman, that a couple with a modest income lives in a one-bedroom apartment renting for $800 a month. They work hard and they save, hoping that one day they'll be able to afford that two-bedroom apartment down the hall that right now is occupied and renting for $1,000. Well, that magic day comes along and the two-bedroom apartment becomes vacant. So the couple go down to the landlord and say, "We'd like to rent the two-bedroom apartment." The landlord says, "That's great, but the two-bedroom apartment now goes for $1,200 a month." Under the Tory proposal, he can now do that.
They call the landlord but the landlord says, as you know, they can't afford that. They hear about another apartment in another building, so they call the next landlord. He says: "Yes, we have a two-bedroom that was renting for $1,000, but the tenant moved out and we're now charging $1,200. That's the going rate." This process is repeated across the province. Tenants move out; rents go up. Those who can't afford to pay more are virtually prisoners in their own apartments because their rent is guaranteed only as long as they stay in their own apartments. Any other apartment that might become available would suddenly experience a sharp rent hike.
We live in a province where approximately 25% of tenants move from their apartments each year. At that rate, you don't need a calculator to figure out how long it will take before the protective lid of rent control comes off -- virtually all of the apartments in this province, as you know, in a very short time. But then that is the intent of this proposal and that is its effect.
But there comes a time, and that time is now, when someone has to look the minister in the eye and say: "Minister, you have broken your promise to tenants. You haven't kept your word. This isn't what you told tenants you would do." Of course, this minister's and the Premier's words on rent control have changed course so many times that it could give you a whiplash. Indeed, they seem to have two different positions on rent control, one when they're looking for votes and another when they already have them.
In April 1995, when Mike Harris was courting the votes of tenants, he said, "We want to bring in a rent control program that will truly protect tenants and give them lower rents."
In October, when he was no longer looking for tenants' votes, Al Leach, the minister here, told the Ontario Home Builders' Association, "I've said it before and I'll say it again: Rent control has got to go."
A few months later a by-election came along in York South, and lo and behold, the minister was a born-again supporter of rent control. The Tory brochures cried out: "Rent control will continue. Tenant protection will be improved under the Mike Harris government." But this time, no one believed them. Ontario's three million tenants know that you cannot believe or trust any promise or commitment on rent control made by Mike Harris and Al Leach. If you could trust them, there would be one more Tory in the Legislature today. Instead, our own caucus has been bolstered by the presence of my colleague here, Gerard Kennedy. Gerard is here because the tenants of York South knew they could believe him when he said that Ontario Liberals would fight as hard as they could to protect rent control and to protect tenants.
The second point that I made earlier, and I want to return to it again, is that this proposal rewards bad landlords. There are in this province many, many good landlords. I've met them, spoken to them, watched them operate. They take pride in their buildings. They fix things when they are broken and do preventive maintenance so that things will not break. They make improvements in their buildings, including putting in better security systems. They are sensitive to their tenants' needs and they protect the majority of good tenants from a small number who may be too noisy or in some other ways violate the social environment of the building.
Now along comes Al Leach's new proposal. What does it say to those good landlords? It says, "You have been doing it all wrong. By being a good landlord and keeping your buildings clean and quiet, safe and in good repair, you have encouraged your tenants to stay in your building, and as long as they stay, their rent will be regulated. You ought to be a bad landlord," you have said. "Let the garbage pile up; let the pipes break down. When you have to make repairs, do it as loudly as possible and at the most inconvenient time for your tenants. Intimidate and harass your tenants at every opportunity. That way the tenants will start moving out, and each time an apartment becomes vacant, you can jack up the rent." That's the message this proposal sends to landlords.
I know the minister will say: "Hold on. They can't do that. I'm going to create an anti-harassment unit and increase fines for harassment." Don't provoke me, Mr Minister. We know about human rights. We know about all of those areas that people are lined up and can't even get their day in court. This government is disloyal to the process. This government is trying to pit tenants against landlords. The real enemy is not the landlord. The real enemy is not the tenant. The real enemy is this government.
Get serious, Mr Minister. Does anyone believe this government when it says it is going to be tough in enforcing tenants' rights? When a government that is striking down one environmental regulation after another and one enforcement unit after another says it is going to get tough on enforcement, can anyone believe it? When a government cuts back on funding for crown prosecutors and police forces, the very people who enforce our laws, and they say they'll be tough in enforcement, can anyone believe it? Even if the government set up such a unit, how long would it be before it was cut back so that the government could have more money, which it desperately needs, craves, to pay for a tax bonanza for the wealthiest Ontarians? How long would it be before the unit is simply eliminated because this government has so much faith that all industries can be self-regulated? Get real, Mr Minister. No one believes that your government will enforce anti-harassment procedures.
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This is the very government that cancelled affordable housing, about 380 projects, and told us that the private sector will build. They have told me, and I understand they have told you, that your plan will not stimulate any construction of affordable housing. The concern of affordable housing even goes beyond the gutting of rent control and the cancellation of the construction of affordable housing by this government. It extends to the maintenance and proper management of these non-profit projects which I'm visiting.
I've written to the minister about some concerns I have, especially one tenement project up in Mississauga -- terrible, poor management. I would urge the minister to take a very serious look at this. Of course I've written to the minister on this and I don't think he's had time yet to respond to some very serious allegations that are there now.
I return one last time to my third point, that this proposal will cause rents to skyrocket. You don't need to be a genius to figure that one out. Every time an apartment becomes vacant, a landlord can increase the rent by as much as he or she wants: $100, $200, $300, $400 or even $500 a month; the sky's the limit. The minister will say: "No, no, that can't happen. Market forces will keep prices low." Market forces can do wonderful things. Under the right conditions they can create jobs and offer a lot of opportunity, but unfettered, unchecked and unregulated market forces can do a lot of damage, a lot of things to people.
I might find the minister's approach more persuasive if the two guiding features of the marketplace were fairness and affordability, but they aren't. One of the simplest rules of the market is that where there is a shortage of supply and a strong demand, prices go up. That isn't ideology; it's a fact of life. Everyone from Karl Marx to Milton Friedman understands that. If you don't understand that, Mr Minister, go to any sold-out play or sporting event and ask the scalpers what they're charging for tickets. Rent control is more than just a sporting event. We're talking about people's homes, the places where they live and raise their families.
If you go to a Toronto Raptors game and the top-price tickets are sold out and you can't afford them, you can try to get cheaper seats. If all the seats are sold and you can't afford any of them, you can go to a bar where the game is being watched. If you can't afford that, you can always turn on your TV set. But where do families go when they've been squeezed out of the rental market? Where do they go when they can't afford the apartments that are available and the apartments they can afford are no longer available? Into the streets? Into basements? Into hostels? Where do they go?
If market forces unfettered, uncontrolled and unregulated ensured that there was a good supply of affordable apartments, rent control never would have been brought in in the first place. But this minister has a short memory. He forgets that back in 1974, when there were no rent controls of any kind, vacancy rates in Ontario stood at about 1% and rents were skyrocketing. Then Bill Davis, who was headed for defeat in the election, promised to bring in rent control and was elected. Luckily for the people of Ontario, Bill Davis had something this government and this minister do not have: integrity and respect for good policy. Bill Davis didn't just campaign on rent control; he kept his word and brought it in. That's what separates this government from every other government, including the previous Tory government: It doesn't govern according to good policy; it governs according to ideology. It doesn't listen to people. It doesn't do the correct thing. It's too blinded by ideology. It clings rigidly to an absolute belief in the supremacy and perfection of market forces.
This brings me to my final point. You have to ask yourself, where did this proposal come from? Is it something just conjured up one night by Tom Long or maybe by Leslie Noble? Did it come out of a process of listening to tenants and their concerns? Is it the result of a sound process of policy review and development? The answer is, none of the above. This proposal is pure ideology. It's pure dogma. This is the product of a government that sees its role as afflicting the already afflicted in order to provide comfort to the already comfortable. That's how this government operates. It's so addicted to its own blind ideology that it can't see the side-effects that are killing the quality of life in this province. This government doesn't operate on reason; it operates on faith. It's all belief and no rational thought -- "Trust me." I'm not quite sure that tenants of this province are prepared to trust this government or this minister.
This government believes that by giving a tax bonanza to the wealthiest Ontarians, the money will somehow magically trickle down, creating wealth and jobs for everyone else. Never mind that it didn't work in Reagan's America. Never mind that it didn't work in Thatcher's England. Never mind the fact that the ideologues, this government, have true believers and faith. This proposal that we will be examining over the coming weeks is just another of their articles of faith. This blind faith brought forward a tenant rejection package so dreadful that the Tory spin doctors have been falling all over themselves trying to dress it up.
You can take a skunk and dress it up in lacy clothes, spray it with perfume, stick sunglasses on it and say, "Look at my nice French poodle," but a skunk is a skunk and bad policy is bad policy. That's exactly what this proposal is: bad policy. For all the lacy dresses and perfumes and sunglasses, it's still a skunk. Ontarians can still recognize a skunk when they see one. That's why tenants across this province are mobilizing in unprecedented numbers to oppose your policy and that's why I and colleagues are working closely with them and lending our voices to the cause.
I will close by reiterating the three points I made at the beginning of the statement: (1) This proposal kills rent control; (2) this proposal rewards bad landlords; and (3) this proposal will cause rents to skyrocket.
This proposal is bad for tenants and bad for Ontario. That is why I and my colleagues in the Liberal Party will fight against it. We'll fight to save rent control and assure affordable apartments for tenants in Ontario.
The Chair: Thank you. Mr Curling has left you five minutes, Mr Kennedy.
Mr Gerard Kennedy (York South): Minister, I would have preferred, under the best of circumstances, to ask you questions, but there's much in your presentation that begs explication. The people out there need to know where your government is coming from.
The dynamics that this paper omits completely, that it doesn't talk about are very simple. Rents in Metropolitan Toronto are 40% higher now than they are in other major centres across the country. That's a fact, and you omit it completely. When we look at the dynamics of the marketplace and we see that the return for landlords has been 10%, according to the Russell Canadian Property Index, higher than retail, industrial, office and mixed-use projects, that apartments have brought a reasonable return over the past 10 years, we wonder why the government in its role as referee -- it's unfortunate when the government has to have that role in terms of the marketplace -- when it looks at its role as referee, when it finds itself coming down so heavily on the side of one and not the other.
What people have to realize is that this hearing and this paper is couched in some of the worst doublespeak that we've seen from this government. There is no manner in which -- I asked the minister earlier in the House and so I have his answer -- this protects tenants. There is not one single measure in here that enhances the protection for tenants. There's nothing at all.
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Instead what we have is a rejection of tenants' basic security and, Minister, there is an insecurity out there that this government has helped to contribute towards that this only compounds. In the ministry presentation, they spoke of 40% of rents being subsidized. A very large proportion of those are not subsidized at all, but instead are paid for with people's welfare money, and that welfare money was reduced by 22%. What we're getting to pay for those rents is the food money that people used to purchase their food with, and it has fuelled a 54% increase in people using food banks.
The dynamic which this minister has chosen to address is to change the way that tenants can look at their protection, and not only through rent control, or the decontrol, because the sophistry, the pretension that somehow you're protecting the tenant instead of the apartment, has got to be the worst case of doublespeak we've heard. The tenant gets protection except for when they need it the most, when they're out there vulnerable after losing a job, after a family breakup, after any natural circumstance, trying to find an apartment. What they're going to be paying is prevailing market rent, which you know and I know and everybody in this room knows will be higher than the rent that many of those people are paying now.
You say in your paper that you will restrict increases to one time a year. Mr Minister, I put to you that that's not true. Instead, every time an apartment changes over there will be a rent increase. That's the kind of market we have with 0.8% vacancy. When we say to people out there that somehow they're protected if they're in their apartment, we also know that isn't the case. In fact, people are facing, as my colleague has indicated, far above inflation increases already. You're adding another 1% and then you're allowing to pass through, uncontrolled, any other expenses that supposedly the landlord can't control. What about the expenses the tenant can't control? There's no reciprocity here.
Minister, when you talk about being able to protect tenants, when you talk about the need for maintenance, there is no provision here for municipalities to have extra resources to follow through. You can charge $250-million fines, and if there is no enforcement, there is no protection for tenants. People know now how hard it is to have their heat attended to, to have the kinds of things that are already in placed followed through, so there is no way that tenants will receive additional protection under what's happening.
The aspect of the paper that has to bear mention is the Rental Housing Protection Act being removed. Basically, what you're permitting is for people to be moved out of their apartments by landlords who choose to either demolish them because they have higher carrying costs or simply convert them to condominiums or other developments.
I remind you that there were 2,000 conversions before 1985 in Toronto and only 20 since under the changes, the Rental Housing Protection Act. Taking away that protection means every single tenant in Ontario is threatened potentially in terms of what's there. To have that happen at the very same time, when you're not addressing what we would like to be talking about today, which is a whole package about affordable housing, how indeed do we cause more affordable housing to be created in this province? By choosing, Minister, and your government choosing to start with rent control, to destabilize the relationship between tenants and landlords, you've clearly shown where this government's concern is.
This government's concern is not for a healthy marketplace, not for good dynamics between landlords and tenants, but instead for some short-term gain for some landlords. I can tell you, it's only some landlords who think these measures will bring them higher returns, because instead of moving and addressing what are structural problems, which your government in an earlier form chose to address through forms of rent control, what we have here is a lopsided provision that will only take on the concerns of landlords. Time after time as we read through these measures, it is landlords who receive the flexibility, landlords who receive the higher return and landlords who are given the extra measure from this ministry.
The minister spoke about costs. The minister said this would be cheaper. What landlords have been asking for, what this moves them towards, is a BC system of rent protection. That system costs more than the one in Ontario.
There is very little in this that lends itself to the constructive discussion that this committee should be putting forward. We will spend much of our time trying to get your ministry to put forward what exactly it believes will be accomplished in terms of these measures. There is no baseline here. The elimination of the rent registry means that we will no longer be able to know exactly what's happening in the marketplace. By choosing to move on these ahead of the time, prior to any other measures in terms of affordable housing -- Minister, there is one question I would like to ask you.
The Chair: Thank you very much, Mr Kennedy. Your half-hour has expired. Mr Marchese.
Mr Rosario Marchese (Fort York): First of all, I'm very happy to see my Liberal colleagues become unflagging boosters of rent control. It's good to have that support.
Secondly, I want to say that there is never a good time for tenants to be hit with a rent increase, but this is the worst of times. I want to give the context that will say to the people watching why this is the worst of times to be able to do it.
Unemployment is now at a record 10% level. It used to be at 3% and we used to find that acceptable. It used to be at 7% and we then said that was acceptable. It's now nearing 10%, meaning one million, 0.2% of the population, are unemployed. That's a whole lot of people unemployed. It means they're not able to feed their families as they would like to. It means they won't have the standard of living in this country that they should.
There are further complications to this. Wages are down. We're seeing an increasing wage gap between the rich and the poor. This is the worst of times to introduce this, given that the wages the majority of people are making are going down.
Firings of people who work for governments are happening at a record rate and you people are happy about that. The federal Liberal government is firing 40,000 people and you're sending away 14,000. My suspicion is will be up to 25,000 by the end of your term, and all of you are gleeful about doing that. I say it's the worst of times to do that because those people are not entering a marketing where the private sector is picking them up. They're firing them too. They're just as happy to become lean and mean as you are. So governments, Conservative ones, and the private sector are very happy to be throwing people on the streets. Who takes care of them? This wonderful marketplace that you're so proud of. The marketplace will fix things. Well, the marketplace will not fix it for the unemployed.
You have high unemployment, wages are down. You, the federal government and the private sector are firing people. You promised you would be creating 725,000 jobs. They're not coming. We knew they wouldn't be coming and they won't come, further compounding the unemployment problem of Ontario.
Welfare assistance has been cut by 21%, further endangering vulnerable people. Injured workers' benefits will be further reduced when you introduce legislation that will do that. Vulnerable injured workers will be getting less as a result of a measure you will introduce.
Seniors are beginning to pay user fees. You say: "Oh, it's a small, little fee. It's not so bad. Seniors can afford that." I tell, you seniors cannot afford user fees on prescriptions every time they go to get a prescription filled.
Now you're introducing a measure that will increase the rents of tenants. In this climate, do you, Mr Minister and civil servants, think that's a good thing? I tell you no. This is the worst of times. When the tenants who move end up having to pay more rent, it will hurt them individually, but it will hurt business as well because they will have less disposable income to spend.
Consumer confidence will be further eroded. The economy depends on consumers, 60% of it depends on consumer spending, and you've helped to squash that. You've contributed to further weakening the economy because there's no confidence out there. Nobody knows whether they're going to lose their job; as a result, they don't spend. When you hit them with those increases, they will have less money to spend.
This economy is going to be further damaged by the likes of this government and it will be very difficult to repair. You can talk about all the faith you have, about protecting the future of the children, but you're not protecting their future. You're making us all vulnerable, but our children in particular.
What did we do as a government? You said there was a shortage of supply of housing. We were building. We were building at a time when the private sector was not. We have known that the private sector has not wanted to build. Why? Because it's not making money. So we were building and we built interesting housing from our point of view. From yours, obviously you want to get out of the housing business. We built cooperative housing. In my view, it's one of the best forms of community living you can have out there. Some of you in those old days built terrible complexes and herded all the poor people into one area. It was the worst planning and the worst housing construction one could build. I don't know how anybody could have been happy with that. Cooperatives are good community living. Why?
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Hon Mr Leach: I agree with that.
Mr Marchese: You agree with that?
It brings a range of people with different incomes into one housing co-op, it brings a mix of different people and it brings and accommodates the various disabilities that people might have, such as HIV, in one building. That's a community. Your proposal will not do that; this proposal will not do that. You're going to be doing it on the back of the taxpayer, this famous taxpayer of yours. Those poor citizens who may not paying, I don't know what happens to them, but there are a whole lot of citizens who are not taxpayers, like little children, who are going to be suffering the effects of your proposals.
We built housing at a time when you didn't want to, when the private sector wasn't. You have a high hope that it will. I have to say to you that what they want is the follow-up, and the report by Lampert tells it. They want to reduce development charges. They want to equalize property taxes. They want to have the GST payable. They want to streamline regulations on building; you know what that means. They want to have the CMHC mortgage insurance fee. They want to lower administration due to reform of rent regulations etc and eliminate the provincial capital tax. That's big, heavy support you would be providing to the private sector, the same kind of support you don't want to provide to build our own housing which we would control. You want to give it away literally by doing all this. I suspect eventually you will have to do this, because otherwise they won't build.
They've told you that rent control is not enough, and you've pointed to that. You are gradually moving to what they want for them to build. We as a government are doing that without having to do any of these things. You thought that was expensive. This won't be expensive? It will. You're moving in that direction to subsidize your friends. But that's okay, because if you subsidize your rich taxpayer, that's not a problem, is it? That's what you'd be doing with your proposal.
You call this the tenant protection package. Very clever, but they won't be fooled. Tenants are not fooled. You say, "Our priority is to protect the tenants." I don't understand that. Tenants won't understand that either. They don't understand how this package protects them. This package says, "When you move, you're going to be hit with an increase." We don't know what that is, but I suspect it will be as high as they can get it. Does that protect tenants? I don't understand that. Perhaps you do, perhaps the civil servants do, but I do not.
The tenants understand that, because when they get an increase they say, "My God, this is an extra $100" -- or $200, whatever it is -- "that I'm going to have to take out of my pocket." A third of the tenants are already paying 30% of their income. This will compound it. How does that protect tenants? How do you have the nerve, the gall, to call this the tenant protection package? This is a package that protects your friends, who are not happy because you haven't gone far enough. Your friends the landlords are saying, "You haven't gone far enough; we need more."
The discussion paper is about increasing rents. The minister thinks rents are not high enough, so we're going to find a method to make sure they go up. One of my colleagues here mentioned that landlords are making enough money as it is. This is according to the Russell Canadian Property Index, described by the Globe and Male, a good paper of yours, as "a highly respected gauge of investment activity." Ontario's apartments have delivered a 10% annual return on investment over the past 10 years, outpacing all other sectors, including retail at 9%, industrial at 8.4%, offices at 5.2% and mixed-use projects like the Eaton Centre at 3.4%. Don't you think they're doing okay? I think they are.
Hon Mr Leach: You didn't hear the answer yet.
Mr Marchese: I'll be looking forward to the answer as we get along. I think they're doing fine. The profits are high enough for them to reinvest the money they're making into those buildings that they've allowed to become dilapidated. My feeling is that if they're making much more than so many other sectors of society, they should put money back. We shouldn't help the landlord any more; we should be helping the tenant. My view is that the government just wants to roll up a truck to the landlords' office and shovel off the cash. The trouble with that is that it's the tenants' cash they're giving away. So while the minister is filling the landlords' pockets, they won't be building any new affordable housing. This report tells us that. There is no evidence that simply eliminating rent control will build more affordable housing; there's no evidence whatsoever.
Hon Mr Leach: I said that.
Mr Marchese: I'm confirming what you said. If that is the case, why are we doing it? It's a first step; I understand.
Rent control by itself will not do it; there will have to be other subsidies, other support to give to the landlords to make it happen, which this Conservative government will be happy to do in step-by-step ways because it's too afraid to introduce a measure or measures that will do this all at once. They're afraid. That's why they've introduced a package. It's not a bill, it's a package, because they want to see whether or not tenants are going to have a revolution on this revolutionary Common Sense stuff or whether they're going to passively sit back and say: "It's not so bad. I can be hurt some more."
Tenants did not ask for this. Every tenant I have spoken to in every group I've been at has said, "We didn't ask for this." The minister comes to this committee and every comment he has made, wherever he has been, he says tenants have asked for change. They have not. If anything, they would have wanted to strengthen rent control, not weaken it. If you introduce a measure to weaken that they didn't want, why would you say tenants have been asking for change? They haven't. Why would tenants say, "Please, Minister Leach, give me an increase; I really enjoy them"? Why would they do that? It makes no sound economic, psychological sense that they would hurt themselves that way. You've been responding to the landlords as a first measure; that's what you've been doing. I know you're moving in that direction.
I think it's incumbent on the government to say what else it's going to do to make sure the private sector is going to build. Because when they hear the kinds of things you will want to do and help them with, they'll say: "Please, Mr Minister and Conservative government, build it yourself. It'll be cheaper in the end." Don't give them those kinds of subsidies that they're looking for to build; do it yourself.
We know that over 70% of the tenants will move in five years, from this report itself. What that means is that the majority of people will have moved by the end of the five years. What it means is that the majority of people, 70% or so -- let's say we're wrong by 5% or 10%; let's say 60% -- will be hit with an increase, which in effect means you will have eliminated rent control. On the other hand, you say, "Oh no, we've kept the protections." How are the protections there kept if 60% or 70% of the people move out in five years and will be hit with an increase? I'm told some figure that we don't know yet, but they will all be hit with an increase once they move, every time they move. How does that protect them? How does that protect that sitting tenant? That sitting tenant will become a sitting duck. They won't be able to go anywhere.
If there's harassment there, they won't be able to deal with it. Do you think some frail senior is going to get up and say: "I'm going to go to this anti-harassment unit. I've been told this will solve it for me." Do you think that's going to happen? It's not going to happen. People who are in abusive situations at home will be afraid to leave their situation. They're afraid now, but when they know they're going to be hit by an increase, do you think it's going to be easier for them to say, "I'm going to move because I'm going to be facing a $100 or $200 increase"? They're not. They're sitting ducks. They'll be more vulnerable than ever before. It isn't a good thing; it's a terrible thing.
You're leaving everyone unprotected: those who move with an increase and those who stay with the insecurities of staying, whether it's an abusive relationship, whether it's someone who's harassing them in the building, whether they want to leave a situation where there is a great deal of violence in that community and they say: "I've had enough. I want to leave." But they won't leave. How can they leave and go to another place where they're going to be facing an increase? Maybe you have answers for that. I'm waiting to hear them. I'm waiting to discuss that over the next three weeks, and the next couple of months when you will be introducing another bill. And I'm looking forward to the tenants and/or the builders, to hear their views on this matter, in the same way that you are.
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You will be eliminating the Rental Housing Protection Act, which will mean that many of the rental units that are now used for people who are of modest means will have less accommodation than before. This measure will not mean we're going to have more affordable rental units out there in the market. In my view, those rental units that would be affordable are likely not to be there. Who knows what will happen with those units? So this measure further compounds the problem of accessibility. You've eliminated everything we have begun in terms of non-profit and cooperative. That's gone.
The private sector is not ready to build, because you haven't given them enough. You're getting rid of the Rental Housing Protection Act, which will get rid of low-rental units, and you say you're interested in building more housing. How is it all going to happen? In the next five years in Toronto in particular we're going to see a housing shortage. But what I'm worried about is the public interest, and what's the public interest for me? It's not the millionaire. The millionaire will always find housing. The public interest for me is the poor person, the poor working person, the poor middle-class person, where the middle-class person is becoming poorer and poorer. That's what I'm worried about. How will they make ends meet: unemployed, working longer and longer on part time, fear of being fired or laid off soon by this government and other governments, federal and municipal, because the less money you give them, the less they will have? That's what I'm worried about.
But, you see, don't worry. For those who are likely to be harassed -- and in acknowledging that, by the way, in acknowledging that you have an anti-harassment unit and all that, you're acknowledging that harassment will happen.
Hon Mr Leach: Same with your government.
Mr Marchese: By introducing this measure here, you're acknowledging that harassment will happen by a landlord who is likely to want, who has an incentive, to throw people out so he can increase the rent. So you're saying: "Don't worry, we'll increase the fines. We're going to increase the fines. That will scare the geeweebies out of those landlords who will somehow intimidate or harass people, and that should do it. With that great, big fine of up to $100,000 nobody will harass those poor tenants."
That's not going to happen. Harassment will continue to happen. Harassment will continue to happen and it has always existed, not just in housing, but just general harassment, just general discrimination of different kinds. I'm reminded of your measure of getting rid of the Anti-Racism Secretariat because you said everybody was equal: "We don't need it because everybody's equal. It's such a foolish thing." It's so discriminatory to have employment equity, you said, because it discriminates. So we're going to get rid of all that and then we're going to get rid of the Anti-Racism Secretariat because everybody's equal and we have the Human Rights Commission there anyway and that takes care of discrimination. Such weak philosophical positions that you present.
So here you say: "Now we're going to create this anti-harassment unit. Fines are going to be very, very high, and everybody will be happy." They won't; it will continue. Because vulnerable people will not know how to access these things. Vulnerable people don't have access. You can say there's going to be a big fine, but if the little person is afraid down there in some little building, they're not going to know how to get there. They're not going to know how to access the system.
Hon Mr Leach: Why did you establish it?
Mr Marchese: Because we felt our rent control wasn't bad. Our rent control was good protection for tenants.
Mr David Tilson (Dufferin-Peel): An absolute disgrace.
Mr Marchese: So, now, from the point of view of the Tories, rent control is a disgrace, says M. Tilson. Sure it's a disgrace for M. Tilson because his friends are unhappy, because this is an us-and-them situation. This is the rich landlord, M. Tilson, who is the rep of the fellows, and us, those of us who are here to protect the larger public interest. The disgrace that's he's talking about is the disgrace and the damage we cause the little people that you don't give a damn about really. Because when they're going to face this increase, you don't give one little damn about those people.
Mr Tilson: You destroyed housing in this province.
Mr Marchese: You're destroying housing. You've destroyed every housing project that would have built affordable housing and you're going to eliminate that, causing a shortage in the future, and you're going to eventually provide to your landlord friends, your rich friends, what they need to build. That's what you want, that's what they want, and you're going to get there eventually.
But I really have hope. I have hope in this province, that the people who will be watching these proceedings, the tenants, will be organizing, and that in that organizing effort it will teach some of you a strong lesson: that they want protections. This economy is not giving them the protections they need, and the changes you are making generally and specifically with this package, which is not a tenant protection package, are going to hurt them more.
As you go and consult them, as I know a number of you already have, you will find that they are not happy. They're not happy with the changes you're making, because the bottom line is that when they get an increase and they have no protection, they're going to be angry at what you're proposing. I suspect all of you will feel this anger, and that will teach us all a good lesson in terms of the kinds of things that we as governments can introduce. So I'm very optimistic in the public and the public's power to be able to teach us lessons not just during an election time but in between, when we introduce measures that are going to further devastate our economies in general and people in specific.
Mr Chair, I'll be looking forward to the hearings, the deputations this afternoon and for the next three weeks. We'll be in constant contact with M. Leach and others around this. So thank you very much for the opportunity.
The Chair: Anyone else? No further comment?
Ms Marilyn Churley (Riverdale): How much time is left, Mr Chair?
The Chair: About five minutes.
Ms Churley: Five minutes. Thank you for the opportunity.
I just want to pick up where my colleague left off. I've said before to you in the House, Mr Leach, and I'll say it again, that these changes, your changes, will create the biggest housing crisis in Ontario that we've ever seen, and that's a fact. The reality is, as pointed out by my colleagues this morning, that this is the worst time to be bringing in these kinds of changes. There are already the beginnings of a housing crisis out there, I know at least in the Metro area, as a result of the welfare cuts and some of the user fees this government has imposed.
We are just starting to see the tip of the iceberg on a major housing crisis. If you will recall, the reason that governments over the years, including Conservative governments, put in some forms of rent controls and started to create more and more co-op housing and other forms of social housing was because -- it didn't just come out of the blue. Somebody just didn't wake up some morning and say, "Gee, wouldn't it be nice to build affordable housing." It was because there was a crisis out there. Governments over the years -- Tory, Liberal and NDP governments -- have responded to a growing crisis.
What's going to happen now as a result of these changes and the fact that poor people, those on welfare but also the working poor and people who are losing their jobs, are not going to be able to afford an apartment and we're going to have more and more people on the street? We noticed last winter that there were more families -- mother, fathers and children -- living temporarily in motels because they had no place to live over the course of the winter. My fear is that this is going to get worse.
Interestingly enough, you keep talking about expense to taxpayers. This actually is bad for families, it hurts the children, but it also costs taxpayers more to house these people in motels over the course of the winter. It costs more for health care for these people.
I hope you're open to changes. If you hear overwhelmingly, which I think you will, from tenants these same concerns that are being expressed here today, if you hear overwhelmingly that people feel this is not going to protect them, I hope you will be willing to withdraw this legislation and instead work on the existing legislation brought in by the NDP government and strengthen it, because that is what tenants want.
When you say the system needs fixing, everybody says that. I know that when we brought in our legislation -- and one thing I agree with in your statement today is that you're not going to find a solution that both landlords and tenants are going to be happy with. The reality is, as my colleague Dave Cooke, who was our housing minister at the time we brought in new legislation -- this is one area where you have to choose sides. There is no compromising in this one. At the end of the day, you have to protect tenants. You have to choose sides.
With what you've done here, the landlords, you're right, aren't going to be totally happy because they would like fewer protections for tenants, but the reality is it's the tenants who are going to hurt the most, and I think you know that. So I hope that you are willing to choose sides in this and to protect the millions of tenants across the province. I doubt very much, Mr Leach, that you're going to want to have the legacy when you're not re-elected, partially because of this new rent control, you personally anyway -- your legacy could very well be that you caused the worst housing crisis ever to be seen in Ontario. You will have an opportunity to withdraw this legislation and start all over again.
I will now give my colleague, Mr Silipo, a few minutes, if we have more time left.
The Chair: Mr Silipo doesn't wish to use any time, so, Mr Minister and staff, thank you very much for being with us this morning. We appreciate your attendance.
Hon Mr Leach: Is there opportunity for comment, Mr Chair?
The Chair: I'm sorry, Mr Minister, you used up your hour. We're going to take a five-minute recess before the first presenters come forward.
The committee recessed from 1052 to 1100.
BUILDING AND CONCRETE RESTORATION ASSOCIATION OF ONTARIO
The Chair: We're ready to return to work. Our first presenters this morning represent the Building and Concrete Restoration Association of Ontario, Murray Gamble, the current president, and Harry Hakomaki, the past president. Welcome, gentlemen. You have 20 minutes. Any time you leave at the end of that 20 minutes will be available for questioning, beginning with the official opposition, the Liberals, and it will be divided evenly. The floor is yours.
Mr Murray Gamble: Mr Chairman, ladies and gentlemen of the committee, good morning. My name is Murray Gamble. I'm president of the Building and Concrete Restoration Association of Ontario. With me is Harry Hakomaki, our past president. Our association is made up of contractors, material suppliers, engineers and engineering consultants specializing in the restoration of building exteriors and parking garages. We welcome the opportunity to present our views on the government's discussion paper this morning.
I'm going to start off by reviewing the present situation and how current rent control legislation affects our industry. I will then turn it over to Mr Hakomaki, who will review our position on the proposed legislation.
The rent control legislation, first Bill 4 and now Bill 121, has had a very severe impact on our industry, mainly because it prohibits owners from recovering costs for major repairs to apartment buildings. The devastating economic impact on our industry showed itself in the loss of approximately 5,000 jobs in 1991. A survey of our industry indicated that this was mostly because of the rent control legislation, Bill 4 and Bill 121.
Work immediately came to a halt in our sector. However, the problems are still there and have worsened. In many cases safety has become a concern as well, as buildings have continued to deteriorate and many problems have gone unresolved.
Studies indicate that up to $10 billion worth of repairs are necessary on existing apartment stock in Ontario. Of this, about $1 billion is accounted for by the need to repair exterior facades, building envelopes, including the roofs, garages, balconies etc, which is our sector. In order to return our sector to health, changes need to be made, not only to allow for recovering costs for major repairs, but to other regulations which prevent the cost of operating buildings being covered. When landlords cannot cover the costs of their operations on buildings, obviously it has the effect of further impeding payments for repairs.
I'd like to turn it over to Mr Hakomaki now to review our position on the discussion paper.
Mr Harry Hakomaki: Ladies and gentlemen, we want to strongly support two components of this discussion paper: the provisions which relate to capital expenditures and the general direction which permits the market to work.
If we look at the capital expenditure side, we feel the change that's proposed in this legislation, the 4% cap with a 2% carryforward, is a necessity. It'll go a long way to bringing back some of the jobs that were lost under the previous legislation. In fact, we feel that probably 30% to 40% of the jobs that were lost under the previous legislation can come back if the landlords are allowed to set aside funds for capital repairs.
I'd like to emphasize that we regard the ability to repair the buildings as being in the interests of both the landlords and the tenants. I think probably the best protection that any government can give its tenants is to provide a safe and well-maintained home. The other area, which is the removal of the regulations which impede the market to operate, we also support.
The discussion paper deals with removing regulations. As businessmen and contractors, we strongly, firmly believe in removal of any regulations that impede progress or make your job more difficult as being in the best interests of everyone involved.
We strongly support the idea of the landlord and tenant being able to negotiate their rents. We do this every day in our business. We feel a negotiated settlement on any issue is far above anything that is imposed or regulated. I think this would be something new that both tenants and landlords would welcome, and we strongly support it.
I can only emphasize that the job market is there. People want to get back to work and we feel this regulation change will help us to get our people back to work.
Mr Gamble: In conclusion, we appreciate the opportunity to present our views today. We urge the committee to move ahead. We think there's a clear signal needed to be sent to the landlords that restoration can be paid for and much-needed work can proceed quickly to address safety concerns and create more jobs in our industry. Thank you.
Mr Mario Sergio (Yorkview): I have a couple of questions. With respect to all repairs and maintenance and stuff like that, I believe there is certain protection within the bylaws and property standards of the local municipalities, that if an inspection is conducted and repairs are to be made, they will be made; the municipalities will go after a particular building. What has been the problem with your profession in conducting those repairs?
Mr Gamble: Essentially the problem has been that the money has not been in the budgets of the buildings to undertake these repairs. In our sector, repairs to building exteriors, parking garages etc, many of these programs can run into the millions in terms of costs which really cannot be recouped under the current legislation. Even if owners are trying to do the best they can, quite often the deterioration can get ahead of them and they do not have the funds to deal with it.
Mr Sergio: The proposed legislation says that an existing building will still be protected under rent control. Am I right?
Mr Gamble: Yes.
Mr Sergio: How is this going to help your profession, if those landlords will still be guided by the same rules and regulations?
Mr Gamble: We see this as an important first step in that there is some extra allowance for recouping capital expenditures in this discussion paper.
Mr Sergio: But those allowances exist now.
Mr Gamble: But the 4% is an increase over what's there now, the way I understand it.
Mr Sergio: I wish to pursue this particular one because at the moment not only are you allowed to get whatever increases the government allows you, but also to conduct those repairs and charge the tenants. What has been the problem with your association?
Mr Gamble: The problem has been that the level allowed to charge back to the tenants has been too low to actually cover the exact costs of the repairs. For our association, ideally, we would be happy if the market would prevail and landlords could recoup whatever costs they could from the tenants. Conversely, tenants would move to the buildings that were best maintained. That would be the ideal for us. We are not saying that this discussion paper is the ideal for our industry. What we're saying is that in the past there has not been enough ceiling for the landlords to recoup costs on major expenditures.
Mr Sergio: If you are a landlord and you've got to put on a new roof, don't you charge the tenants the expenses of putting up a new roof?
Mr Gamble: You should be able to, but what is happening is that in some cases the operating costs of the building are such that the rents just cover those and very little more, and these extreme costs of putting a new roof on, of fixing a parking garage, can't be covered.
Mr Sergio: That is above the rent increases. The landlord gets the normal rent increases plus whatever repairs he makes to the particular building, doesn't he?
Mr Gamble: Not completely; it's capped. There is a cap there and that's the problem; the cap is too low.
Mr Sergio: You don't think that's enough?
Mr Gamble: It's not enough; that's what our position is, sir.
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Mr Marchese: I apologize for not being here. A few of us were out there in a scrum. When you have only one person here, it's difficult to be in two places at once.
On the issue of the kind of capital that you had not being sufficient, was that capital that was allowed under the cap being used to do the repairs, do you think? Do you think it's being used by every landlord?
Mr Gamble: Our response would be that obviously not every landlord would be using it. I would say the majority of them were, and the majority of them were running into problems finding enough money to undertake large restoration projects. On day-to-day maintenance, it may have covered it okay, but these are very large projects that have to be undertaken and there was not enough allowance within the old guidelines to cover that.
Mr Marchese: It was felt that what we allowed was sufficient for capital repairs, and if it was of an extraordinary nature they could appeal that and have yet an additional increase to permit some of the things you're talking about, but you still argue, I presume, that in spite of the additional increase they could have appealed for if there were extraordinary problems with the building, that still wasn't enough?
Mr Gamble: I can certainly say that the best argument we have is that the level of activity in our sector dropped in half as soon as the new legislation came in. We lost a lot of jobs. A lot of our companies were drastically hit. A lot of jobs that were on the go at that time, necessary restoration jobs -- balconies, exterior façades -- things that would make improvements for tenants, stopped dead in their tracks because the funding just couldn't be recouped.
Mr Marchese: The kind of work you used to do has probably dropped across the board. It isn't just in a particular area; it isn't just because of rent control necessarily. The whole construction industry was dead. We were the only ones building. That's why some of you were working. Without us, you wouldn't be working, I suspect.
Mr Gamble: We have made allowances in any of our predictions for economic conditions. We agree that economic conditions have caused some problems in our sector, we understand that, but when you compare the level even in a hard-hit sector like the commercial sector, which was very badly economically hit, it's nothing compared to how business fell off in the apartment sector. That's really what we're doing: looking in relation to that.
Mr Marchese: My concern is that landlords are not spending the money for the capital repairs for which they have money, and in the end they complain that perhaps it's not enough. I'm very concerned about that.
Mr Hakomaki: One point that you might want to realize when they're talking about capital expenditure is that when you're dealing with X dollars and Y dollars, the proper route to go to maintain your building is to spend more and make it last longer and do the repair properly, and the other is that if I've got limited funds, can I get by by doing a temporary repair, the tendency or the mentality seems to go, "Let's do temporary repair to spend only what I've got allowed." It sometimes is the wrong way to go and is money wasted, so what we're trying to do is encourage people to do permanent and proper repairs, which cost more money.
Mr Marchese: I appreciate that. That's why I've also argued that if there were extraordinary capital repairs needed to be done, there was a further allowance within that cap that allowed or permitted them to appeal, and if those costs could be justified, they obviously would have gotten the extra money.
Mr Hakomaki: That became the deregulation that we encourage here. The impediment to going ahead was the bureaucracy you had to deal with to prove something. You can't plan by having to justify something down the road later on. You've got to plan your repairs years ahead.
Mr Marchese: My worry is that if that means the tenants are going to be hit with yet further increases, that's not acceptable, and that's what this proposal does. There has obviously got to be another way to deal with that, and that way is not to leave tenants unprotected in the way this package does.
Mr Wayne Wettlaufer (Kitchener): Mr Gamble and Mr Hakomaki, thank you for appearing today. In my previous life I was an insurance broker and prior to that I was a physical risk inspector for an insurance company for nearly 20 years, so I have some experience in what you're discussing here in your paper. Safety should be a primary concern. We don't hear it emphasized by the members of the opposing parties.
I'm a little flabbergasted by the figure of $10 billion in repairs that you mentioned. I know we have an aging apartment population. Can you give us some idea where you come up with a figure of $10 billion?
Mr Gamble: Actually, that is not just for exterior restoration; that's maintenance dollars that need to be spent on the entire apartment stock. That's heating and electrical etc, all of those things. Those numbers come from compilations of studies conducted by the Ministry of Housing and other agencies. It's an overall number. The time frame on it I believe is within the next five to 10 years. That is what they're looking at as going to be needed to retrofit our existing apartment stock. But it includes everything, not just our sector. It includes all aspects of maintaining apartment buildings.
Mr Bruce Smith (Middlesex): Welcome to the committee this morning and thank you for your presentation. I think it's very interesting that your statistics show approximately 5,000 jobs were lost because of previous legislation. It's my position that in all likelihood there would be a percentage of homeowners and tenants that would have been impacted by that type of job loss in the province.
In your presentation, you've identified two areas of interest or of support that you like about the documents. Are there perhaps two other areas that you haven't identified that you either like, you think are absent or you think should be added to the report, either in support of or in opposition to it?
Mr Gamble: We feel that generally it's a fairly balanced piece of legislation. We understand that rent control is always a very difficult issue. From our perspective, obviously, more money that could be spent on repairing buildings or emphasizing repairs to buildings would be better. However, we also realize that there's a realistic approach out there, that you have to protect tenants; you can't just throw tenants to the wind. It's a balancing act: Landlords should not be subsidizing a tenant's rent and, conversely, you don't want to see landlords making excessive amounts of money at the peril of tenants.
While we can look through it and say that in a perfect world there should be some other changes, we see this as a good first step, we see it as a rather balanced piece of legislation and we see that it can give us some light at the end of the tunnel, so to speak, in our business. We can see some work starting to happen again on this apartment stock.
Mr Tilson: During the Bill 4 and Bill 121 hearings, owners of buildings came and said it was nigh to impossible to plan for making capital expenditures such as you're suggesting for balconies and garages and other types of things like that. I don't know how much time has elapsed since Bill 4; it's got to be almost four or five years. In your view, as far as the area is concerned -- and I suppose that's mainly Toronto, but it presumably goes outside of Toronto -- what is the status of the safety of many buildings, particularly stock that goes back 20 or 30 years, with respect to balconies and garages?
Mr Gamble: We see a wide variety of degrees of integrity in these structures. Some buildings -- newer buildings, buildings which had repairs done just before the change in the rent control legislation in 1991 -- are in pretty good shape. There are, however, a lot of buildings with some serious structural problems in them right now, that being delamination or small concrete falling off of the buildings from the exterior, whether it be from balconies or façades, and as well in garages, not to mention a lot of what I would call living standard problems, in that a lot of leakage problems in the buildings exteriors, while they're not life-threatening, are definitely of major concern for tenants. Certainly the level of repair of the buildings in the last five years generally has deteriorated significantly, and in some cases it has led to safety concerns.
The Chair: Thank you, gentlemen. We appreciate your presentation to us this morning.
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HEATHER ADAMSON
The Chair: The next presenter is Heather Adamson. Good morning, Ms Adamson. Welcome to our committee.
Ms Heather Adamson: Good morning, members of the provincial Parliament. My name is Heather Adamson and I would like to express some of the concerns that I have about the upcoming new proposed legislation, termed the new tenant protection system. We are lower-middle-income apartment tenants and pay $930 per month for a two-bedroom dwelling in Metro Toronto. This is over 45% of our net income. It is our fear that this proposed legislation will cause already high rents to rise dramatically.
Back in 1991 I lived in an apartment building on 30 Godstone Road in which the landlord attempted to raise the rent 61% in one year. We believe a majority of landlords will attempt something similar again should rent control be lifted. We also believe that should the landlords get the increases in rent they claim they need to upgrade and/or maintain present buildings, they will not necessarily use the increased income intelligently in refurbishing projects or at all in the buildings.
An example of this: In our present building at 145 Marlee Avenue, they recently changed the lighting system in the main lobby area. They decided to install high-energy-consuming, high-maintenance, incandescent lightbulbs instead of an energy-efficient, long-lasting, fluorescent lighting system, which no doubt Ontario Hydro would have provided an additional monetary incentive to install.
One of the main ideas of the Common Sense Revolution is to put more money back into the hands of the average consumer, which is why the present government is implementing tax cuts. If the average consumer has more disposable income available, then it is likely that more consumer items will be purchased, thus stimulating the economy and creating jobs. If rental property owners demand and get, for instance, a 20% increase in rent, then I fear that the tax rebates will all end up in the landlords' pockets. The average consumer who is a renter will be likely to have even less money to spend on consumer items than before, thus retarding the economy and causing higher unemployment.
The few landlords receiving a great amount of money from the many tenants are unlikely to develop the same volume of consumer goods purchases as would occur if the money remained with the tenants. Even if more money in the hands of landlords will lead to development of new buildings, which is questionable, this would provide some construction employment but would fail to offset the loss of jobs due to weak consumer spending caused by tenants being squeezed by rent hikes.
Another problem I have regarding the new proposed rent control is that tenants who still reside in their apartments will feel pressured into staying in their current units because every other newly available apartment suddenly will have a very high rent put on by the landlords of the buildings. The main reason tenants like us are trying to move out of our present place is to move to a more affordable apartment that is within our modest budget. This is difficult enough at the present time in the greater Toronto area since the rents are very high here. In comparison, Montreal rents are approximately 40% lower for a similar dwelling, yet property taxes, energy costs and general services provided are pretty much the same as Toronto. So why is it that property owners cannot make a reasonable profit in Toronto?
One of our main worries is that owners will attempt to raise the rent by large amounts in hopes of gaining a significant increase in income, even if the market will not bear it. It may take two years for them to realize that their new, very high rents are not sustainable as they can only rent some of their units. Meanwhile, they will have caused disruption and hardship to certain tenants who for various reasons had no choice but to pay the exorbitant rents before the market stabilized. After all, everyone needs a roof over their head.
I would also like to add that it would be unfortunate if the rent registry were eliminated, because it provides information on what the maximum legal rent on their unit is and what services are included in that rent, along with how much of an increase over the above guideline a landlord has applied for. It is important for tenants to still find out about this information.
Thank you for your attention. I hope you will take our concerns into careful consideration. Thank you very much for listening to my concerns.
The Chair: Thanks, Ms Adamson. We've got about four minutes per caucus left for questions, beginning with Mr Marchese.
Mr Marchese: Ms Adamson, thank you for your presentation. This is the kind of human response we're going to be getting from people who are going to be very worried about this package. But I'd like your reaction to the title of this package. The title of this package is the "tenant protection package." Do you feel somehow that this title is either fair or going to be in your favour?
Ms Adamson: I don't feel it's going to be fair and I don't think it should have the title "new tenant protection system," because there is no tenant protection system. If the landlords get to charge whatever rents they want as soon as an apartment is vacant, and we are looking for a new apartment, we'll have to go by what the owners want.
Mr Marchese: Why do you think this government would want to call something that? Why do you think this government would say this is a tenant protection package when in fact it means, for 70% of the people, a rent increase? Why do you think they would do that?
Ms Adamson: I think the government is trying to protect basically, or help out, the owners. They want to see the owners be able to make new apartment buildings, charge whatever rent they want. They're saying they're going to be reasonable, but I don't believe that. With rent control not being lifted, the owners have to restrict themselves on how much they can charge through the guideline. If there is no guideline, they can charge whatever they want.
Mr Marchese: You mention that one of the reasons people move is to find more affordable housing and not more expensive. Obviously, with this kind of package, if you move, you're going to be hit with an increase. You won't want to move any more. What is your sense of what people are going to do as a result of knowing that if they move they're going to be hit with an increase? Will people stay in their apartments? Will people want to move? Will they simply live with whatever situation they're in, whether it's an abusive relationship or whether they're in an area which they're trying to get out of? What do you think will happen?
Ms Adamson: First of all, people who are already in their units will be afraid to move. They will feel, and this is the only term to say, prisoners in their home. They will say: "I'm paying $930 a month rent. I've checked into other units besides where I'm living and the rents are $1,000 or $975 a month. Well, I'm paying that now. I'm going to get another increase, based on what the guideline is, close to that amount, so I'm not going to move. I'm not happy staying where I am but I don't have a choice. Either I stay where I am and pay close to what the new rent is going to be on another unit or I just pay $1,000, which is a little bit more money." Still, people don't want to move because they're scared of the new rent hikes.
Mr Marchese: I think you make a good argument. In fact, I was making the same argument earlier on about the effect this will have on the economy and on disposable income. If people end up paying more to rent, they will have less to spend on consumer goods, thus further weakening our economy.
Ms Adamson: Absolutely. It is a known fact that most people buy a lot of consumer goods for their apartment. Something I should mention -- Consumers Distributing is a consumers' company and they are closing many of their stores in Toronto. These are people who buy consumers goods. In fact, if you pay a lot of money for a new apartment, what money do you have left to purchase consumer goods? You don't. All your money and your paycheque is going for rent, and as it stands, the wages for your jobs are going down, not up.
Mr Dave Boushy (Sarnia): In my home town, Sarnia, the vacancy rate is very high. I think we are among the highest in Ontario, about 12%, and the rent is pretty low compared to Toronto and other places. The reason for it is because there is an abundance of apartments to rent. Because of that, as you realize, the tenant has a choice to go from one apartment to another.
Because of the low rate of vacancy in Toronto -- as you indicated, rent is high. What is the solution, in your opinion, to have the rate higher? Is it for an abundance of rental apartments to be available and is this what this government is trying to do through this legislation? Is there any other way, in your opinion, to make the rent go lower, and what is it? What is the solution?
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Ms Adamson: My opinion is, right now the rents are too high as it is. I am in the process of looking for another place and I've come across that the rents, phoning up, are too high. It is true that when there is an apartment available that is at a reasonable price and I have phoned up and inquired about it, there many people trying to get into that apartment to put an application in. I would say there are more people looking and there are fewer apartments available. In my opinion, if the owners get more money for their units, in whatever amount they're asking, I do not believe they will maintain and fix the buildings up properly. I have seen some results in these buildings as it is.
Mr Tilson: Just continuing on that point on the issue of repairs and safety, we will be pursuing the issue, or it has been recommended in the paper at least that we will be pursuing the issue of complying with property standards, and buildings, for safety purposes and other purposes, will be obliged to meet the various standards.
We've just heard the last deposition. I don't know whether you were in the committee room when the cement and concrete people made their presentation. They talked about the amount of repairs that are needed. They estimated that $10 billion worth of repairs are required for Ontario's aging apartment stock. My question to you is -- and I appreciate your concern. No one wants their rent to get out of control. No one wants that and I appreciate that.
The difficulty is, if we're to live in safety, if we're to have safe buildings, safe balconies, safe if you live in an apartment that has parking, and there are all kinds of other areas that require safety, it's going to take a substantial amount of money to maintain the housing stock, much of which is 20 to 30 years old. Notwithstanding your comments about the fear of rent increases -- we all have that -- where's the money going to come from?
Ms Adamson: I believe right now owners, number one, are making a good enough profit. Also -- I don't know where it's going to come from; I would say more or less from the owners on the profit they are making -- they must be able to maintain the buildings. There are some cases where owners make a good profit in a building and yet they want to jack up the rent more. They say it's to fix up the building and some of them pocket that money. I happen to know one building I lived in that it was happening to.
Mr Tilson: During the hearings for the two bills that were put forward by the NDP government, Bill 4 and Bill 121, it was suggested by owners that if they didn't have these resources they would be obliged to close those buildings down. Those are facts that have come to a committee of this Legislature. You've made comments that owners simply aren't making moneys available. Do you have any information for the committee that would substantiate what you've just said?
Ms Adamson: Basically we're going back and saying that I feel they are making a profit whereby they can fix up the buildings and you're asking me for some facts on that.
Mr Tilson: Yes.
Ms Adamson: All I can say is in the building, for instance, I was living in, which I'm still living in, we had a heating and a hot water system problem. We had previous property management that did not give an adequate heating system. We found out by the new people who took over the building that all they had to do was have another boiler system. There was another boiler system in that building and all they had to do was get somebody in to check it to make sure it was running properly and there'd be proper heating and there'd be proper hot water.
I've been living in the same building for at least four years now and this year, or I believe last year, is when the heating system and the hot water system was starting to work. Because of a boiler system that was not checked into by the previous people, that's where the problem came from. They found this new boiler system. It didn't cost much to get it fixed, to make sure it was running, and now we have proper hot water heating. But in the past years when the previous property management took over that building, we did not have a proper heating system. In fact, the previous owners of that building had to go to court because the tenants were suing them. We didn't have proper heat and we were paying a lot of money in rent.
Mr Kennedy: Thank you very much for your well-thought-out presentation, Ms Adamson. I wonder if you would agree that if the government is going to make these kinds of proposals, they should know and they should be able to explain what the causes are for high rents in Metro Toronto.
Ms Adamson: I would agree with you on that. I think they should sit down with some of the owners -- not all of them but a certain number of owners -- and find out, if they want to charge whatever they want in rent, why? What is the reason? What are they going to do with that excess amount of money? How are they going to fix up the buildings? If they need more of this money, where are they going to use that money? What are they going to do? Are they going to fix the hallways? Are they going to fix the outside of the building? Are they going to fix leaking areas, the roof? The government should sit down with the owners and say: "You're charging more money in rent. What are you going to do with that money and where is the money going on the repairs that you say you need to fix up?"
Mr Kennedy: They're saying to you that they have to take away your protection in the marketplace in order to make this market better. Have you heard any arguments that make you believe that?
Ms Adamson: No, I have not. As I said before, I believe the owners are making a good profit. If they want to really fix up the buildings, there is a concern: What if they want to fix them up so much and make it into a luxurious apartment and maybe we're not going to be happy with that? And of course our rent's going to go up more when they make all these fancy changes in the building.
Mr Kennedy: You're aware that this legislation includes a proposal to get rid of the protection act for rental housing?
Ms Adamson: Yes.
Mr Kennedy: If your building was made into a condominium, could you afford to buy it?
Ms Adamson: Absolutely not. In the new tenant protection they say that the owners can decide on their own; they don't have to get approval from the municipalities, if I'm correct.
Mr Kennedy: Right. That's correct.
Ms Adamson: They can make a condominium, they can do luxurious renovations, and if we don't like it, we're given a certain amount of notice time to leave.
Mr Kennedy: Right. One of the members opposite said that no one wants to see rents go out of control. From what you're saying to us, you're already paying 45% of your income in rent. I think it might be helpful, particularly to the government, to explain to us what that means. When so much of your income is going to rent, what can't you afford? You mentioned how much you're paying. I don't mean for you to get overly personal, but can you elaborate on that a little bit for the committee?
Ms Adamson: I can explain that. First of all, I don't know if this -- my husband has a very good job, and the income that he makes, it's true, a good portion of it goes to rent. Also, I get interest money and interest rates have gone down considerably and part of that money I use goes for my rent too. When we combine that income together and we have to pay $930 a month rent, that's a lot of money from both parties. So yes, it's true; his money and my money go for rent and it's just too much. That's why we're looking for a cheaper, affordable apartment.
In the next few weeks we're going to get our 90-day notice renewal, how much our rental unit is going up to in December, and we know it will probably go up to at least $950 or $975, which is way over what we can afford. We're trying to go within our budget -- how much he makes, what money I have coming in, what we can afford -- and we definitely cannot afford this price.
Mr Sergio: Just one question, Ms Adamson. One of the objectives of the proposed legislation is to focus on the protection of the tenants. Do you believe as a tenant that the proposed legislation is focusing more attention on the tenant or the unit?
Ms Adamson: I believe they're focusing more on the unit. I believe there is no protection for the tenants based on what I hear about how much owners can charge on rent, based on harassment, that if owners want to and somebody's living in a unit right now, they can be harassed or pushed out. It is possible. Once rent control is lifted, there is no protection for the tenants any more.
Mr Sergio: Are you saying the proposed legislation is putting more attention, more protection, on the unit and the landlord than the tenant?
Ms Adamson: Absolutely. It's putting more attention on the unit and the landlord than the tenant. That's absolutely correct.
The Chair: Thank you, Ms Adamson. We appreciate your presentation here this morning and your interest in our process.
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UNITED TENANTS OF ONTARIO
The Chair: Our next presenter is the United Tenants of Ontario, represented by Debbie May and Barbara Hurd. Good morning and welcome to our committee. We appreciate your being here this morning. You have 20 minutes to use as you see fit. Any time you allow for questions would begin with the government. The floor is yours.
Ms Debbie May: Good morning. My name is Debbie May and I'm the former co-chair of United Tenants of Ontario/Locataires uni(e)s de l'Ontario, also known as UTOO/LUDO. Barb Hurd is the former coordinator for United Tenants of Ontario.
By way of background UTOO/LUDO, the provincial tenants' voice, was in existence for seven years. We had a mandate to represent the interests of tenants across Ontario. I say "had" and "was" because this government cut all of our funding in early 1996 and we were forced to close down all operations as of July 31, 1996. They have also subsequently rejected our innovative proposal for a self-funding mechanism. This would have ensured that we continued to promote the interests of Ontario's tenants at no cost to the government. We had proposed that tenants pay $1 a month in addition to their rent, but we needed the required legislative assistance from the government to collect these fees. They rejected our proposal outright. With these actions, they have already dealt the collective voice a deadly blow.
I'd like to give you a brief overview of Ontario's tenants. There are approximately 3.3 million tenants in Ontario. This number represents one third of Ontario's population. We occupy an estimated 1.5 million rental housing units. The average household income for tenants is approximately $34,000 per year. By comparison, the average household income for homeowners is approximately $60,000 per year. Ontario's tenants pay $10 billion a year in rent. Of this, $1.5 billion goes to yearly property taxes. I believe, based on these figures, members of the committee will agree that collectively Ontario's tenants are a major contributor to Ontario's tax base.
Tenants come from all income levels. The majority of low-income people are of course tenants. It is for this group of tenants that I will start to outline areas of strong concern that these proposed legislative changes will have.
First, let's look at what's happened to low-income tenants in the last five years. Approximately four years ago, welfare offices stopped providing last month's rent deposits to people receiving general welfare and family benefits assistance. This alone has made it virtually impossible for people on low fixed incomes to move.
In addition, this government announced during the summer of 1995 that it was cancelling the provincial and non-profit housing program. This program has been the main source of affordable housing over the past 10 years. There are currently an estimated 80,000 people sitting on these waiting lists. The future of the existing 84,000 public housing units remains unclear at best. This government has consistently stated that the plan is to sell these units, but significant questions have not been answered by the Ministry of Housing. To whom will these units be sold? What type of future does this government foresee for these tenants? Tenants need and deserve some element of security.
Finally, the slashing of the welfare rates by 21.6% has caused a surge in what we call economic evictions. At the legal clinic where I work, economic evictions have become one of the main reasons people call for help. Of course, there is no legal help available. There is no legal defence to arrears of rent. At the end of the day, people lose their housing.
Now that I've given you this brief history, I turn your attention to the government's proposed vacancy decontrol. This decontrol, in our opinion, operates to virtually ensure that these tenants will be forced to stay in bad housing situations. Even more troubling is the very real possibility that low-income tenants, many of whom barely make their monthly rent payments now, may be forced out of any housing. By this I mean vacancy decontrol may mean nothing less than homelessness if tenants lose their existing housing and are forced to face an unrestricted market.
Let's also look at the high end of the financial scale. In this regard, I refer you to the Lampert report of November 1995, which was commissioned by this government. On page 20 of the report, Mr Lampert states:
"A significant minority have relatively high incomes. Almost one quarter of tenants had incomes of over $50,000 in 1993. Forty percent pay less than 20% of their incomes in rent. These are the types of tenants that typically are the main target for new privately built rental housing -- $1,000 per month represents only 20% of income for someone with an income of $60,000."
Let's look at these incomes which are being quoted as able to afford higher rents. First, the figure of $50,000 refers to gross income, not net. High tax rates will take one third of this income, meaning a significant reduction in that figure of $50,000. Second, this statement gives us no idea of the family composition of these tenants. It doesn't say what percentage of these people are single, couples, couples with children. All of these are statistics that need to be considered, as they all have an impact on a tenant's financial situation. Third, it doesn't consider the impact of such things as day care, food, the basic necessities of life. I would suggest that had these things been taken into consideration, Mr Lampert might not have been so quick to imply that there's a group of tenants that can afford higher rental payments.
Let's also consider one other factor. Historically, this group of tenants has been the group most likely to buy homes. I would suggest that an unrestricted market, meaning ultimately higher rents, would take owning a home out of the reach of many more people.
Studies show that approximately 70% of tenants will move once during any five-year period, so prior to the next election the majority of units will have become vacant and subject to an unlimited rent increase. People's reasons for moving range from seeking better employment opportunities to a full range of personal and family circumstances. This is true for all people, regardless of income. Moving always entails costs, even when rental rates are controlled. Under this proposal, these costs may skyrocket as rent controls are removed from the tenants' new homes. In essence, a tenant who moves, either by choice or necessity, will suffer financially as a result.
This government continues to say that rents will only increase by what the market will bear. In cities such as Toronto, which has such a low vacancy rate at the best of times, it just won't work. The low vacancy rate operates in favour of landlords with vacancy decontrol. In cities such as Toronto and Windsor, we believe what we will see is landlords charging higher and higher rents because demand far outweighs the supply. UTOO/LUDO believes that it will not be what the market can bear, but rather survival of the richest. We believe strongly that the most significant impact of vacancy decontrol will be the creation of a financial incentive for landlords to push tenants from their homes in order to reach that vacancy decontrol. This government knows this will be the case. You have acknowledged this by creating a new level of bureaucracy called the anti-harassment unit and by doubling existing fines. I would suggest to you that the doubling of the fines for harassment is simply sugar coating. The harassment that tenants already face from some unscrupulous landlords is about to be spread even wider throughout the tenant population.
I am suggesting that it is inconsistent for this government to bring in legislation that creates this type of environment, acknowledge it as they have with the anti-harassment unit, and then attempt to call this a tenant protection package.
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I ask that you turn to the first page of the tenant protection package which sets out its goals. The very first stated goal on page 1 is the following: "The ministry wants to reform the tenant protection system to protect tenants from unfair or double-digit rent increases...." It goes on further, but I'll stop there.
I'd like you to now turn your attention to the government's legislative proposal that affects tenants who are not forced out of their homes. Landlords will now be looking at guideline increases, a 1% increase in capital expenditures applications and extraordinary cost increases. Let's examine the capital expenditures increase. If we go back in history, in fact less than six to 10 years ago, landlords were receiving anywhere up to 50% increases under the old rent review system. Despite these increases, the current rent control legislation is being used as the excuse for why the housing stock is now in such a bad state of repair.
Is it the government and landlords' position that these units fell into their current state of disrepair only during the NDP government? This is not realistically the case. Perhaps instead of increasing the capital expenditure increase, this government should have had the courage to say there's been enough money to do these repairs already. I suggest to you Ontario's tenants have paid for the same repairs again and again.
The government, however, does not stop there. Now we are to face increases for extraordinary expenses. Under this proposal, landlords are to be given the right to increase rents without a cap to cover these extraordinary expenses. So each year that there's a property tax increase or hydro goes up, tenants will now be required to cover these business expenses of the landlord. As a result, we believe tenants of all income levels in this province will see double-digit increases.
The tenant protection package doesn't stop there. It will now be the responsibility of tenants to bargain with their landlords for above-guideline increases for a capital improvement. This begs a whole host of questions: What happens if a landlord and tenant negotiate for renovations and the tenant receives substandard work? If an agreement has been signed, as the government is suggesting, would that unpaid amount become arrears and therefore grounds for eviction? Who defines renovation versus needed repair? Once again, where is the tenant protection? UTOO/LUDO believes that the entire part of this government proposal is about how to increase the rent of sitting tenants.
I'd now like the members of the committee to consider the provisions relating to the protection of rental housing. It has been stated by the government, the Lampert report and innumerable reports and experts that there is insufficient affordable housing to meet the current demand, let alone the demand of an ever-growing population. How does this government respond to this? You respond by putting forward a package that repeals the Rental Housing Protection Act.
Members of the committee, we can't afford to lose any more affordable housing stock. The government agrees. You continue to pay lip-service by saying you are making these proposed changes to stimulate the construction of new units. These new units are no doubt supposed to help meet the demand, but the repealing of the RHPA runs counter to all of this. Under the new proposal, there is no requirement to replace demolished or converted units with new rental stock. Tenants will not be protected by repealing the RHPA.
Despite the fact that you repeatedly claim you will not bend to the will of special-interest groups, we state that you are effectively selling out Ontario's tenants to the relatively small special-interest group -- the landlords.
If you review again the goals on page 1 of this proposal, you'll see that Mr Leach says these proposals will ultimately create jobs and thereby stimulate the economy. What Mr Leach doesn't seem to understand is that as one of this province's largest consumer groups we are already contributing $10 billion to the economy. We contribute through our rent. Making it possible for landlords to charge ever higher rental rates will not stimulate Ontario's economy; it stimulates landlords' bank accounts. It serves to create a tenant population facing more instability and uncertainty at a time when many haven't seen their own incomes raised in more than a few years and many are worried about holding on to the jobs they currently have. The members of this committee cannot possibly believe this will have a positive impact on Ontario's economy. No minuscule tax cut will replace the money that comes out of the pockets of one third of this province's population as we struggle to keep our homes.
It's also with disbelief that we read Mr Leach's goal of creating jobs through this proposal. This is the same government that axed the cooperative and non-profit programs which provided ongoing employment in the areas of renovations, construction, building and maintenance and administration; and the list goes on. Mr Leach has already defunded and therefore destroyed 125 non-profit and cooperative housing communities. This would have provided an estimated 3,330 person-years of employment in Metro alone. Let's be up front about this goal: It's not about the creation of new jobs. It's a faint hope of replacing what you've already taken away.
In closing, I'd like to ask the members to re-read this proposal tonight and go through it with a new question in their minds. Ask yourself, where is the tenant protection part of this package? When you have done so, you will reach the same conclusion that Ontario's tenants have: There is no protection in the tenant protection package. UTOO/LUDO asks that despite your party affiliation you find the strength not to endorse this proposal and in fact call it publicly what it is: the sellout of Ontario's tenants.
Mr Wettlaufer: Thank you, Ms May, for your proposal. I would like to ask you a question. We have some figures from the ministry that 80% of rental buildings in Ontario are made up of four or fewer units. We know that many of these buildings are owned by individuals, owned by pensioners. They are faced with repairs. These are not large land owners. You stated that tenants pay $10 billion in rent a year. We heard a proposal this morning that these buildings are facing $10 billion in repairs and maintenance costs. If tenants are paying $10 billion in rent and the land owners are facing $10 billion in repairs, where is the money going to come from for these landlords to pay for the maintenance and repairs necessary to maintain safety for tenants?
Ms May: Our question back to you is, where did the money go that we've been paying them all these years? Some of it is supposed to be invested in their buildings. If they didn't take the increases that they could have taken over the years, that they maybe forewent, then they've missed the boat. But there has been money given over the years. As was pointed out in the brief, there were huge increases over the past 20 years of rent review.
Mr Curling: This process is so flawed it ain't funny, this process of hearings. You bring to this hearing some very important information and questions, and it doesn't give us the time to ask you those kinds of questions that could help us a group to put them in a better direction than this new direction they have. I don't know if I'm going to have a question, because we don't have the time for a response. Even the concrete people who came also brought to this arena some very important information.
The point you made is well taken: The fact that these repairs that should be done, many of us would like to believe it's an overnight thing that happens. Over the years, many of these buildings were not being maintained properly. The fact is that now the high amount of cost to repair this must be done immediately on the backs of tenants. That is wrong and the government should be in place to make sure this sort of cost is not transferred to tenants. I just wanted to commend your organization and the tremendous work you're doing in regard to tenant organization.
Mr Marchese: Just a few points, because there's not time for a question, to thank you for your brief and to agree with everything you've said. This is not a tenant protection package; this is the sellout of tenants. I agree with that.
One of the major points you made in your earlier remarks was that you have been defunded. You haven't spoken at much length about that, but that's serious. They won't comment on that. But it means tenants are on their own basically. That's what they're doing. How can you have a package protecting tenants and at the same time defund organizations that are there to protect tenants? They're not interested in that. You've been defunded. Legal clinics have received cutbacks, which means that they're not able to do their job to defend tenants. People like yourselves are out of the way. How do they have the nerve to say this is a package that protects tenants? I just don't understand.
Ms May: In fact, their first page says it's for discussion. Effectively, they've killed this discussion. At the end of these hearings, I would like to know who they will be contacting to continue through the next four years to go through tenant protection.
Mr Marchese: The landlords.
Ms May: The landlords. It's the only existing group at that point. You've taken that away from us.
The Chair: Just to set the record straight on the timing of the presentations, the decision about 20 minutes was an all-party agreement decision, contrary to Mr Curling's comments.
Thank you very much for being here this morning. We appreciate it. We stand recessed until 1 o'clock.
The committee recessed from 1201 to 1300.
LEGAL CLINICS' HOUSING ISSUES COMMITTEE
The Chair: Our first group this afternoon is the Legal Clinics' Housing Issues Committee: Wendy Bird, chairperson and northern Ontario representative; Cindy Harper, the southwest Ontario representative; and Mary Garrett, the eastern Ontario representative. Welcome.
Ms Mary Garrett: My name is Mary Garrett. I'm the eastern rep of the Legal Clinics' Housing Issues Committee, lovingly called LCHIC, is a province-wide organization of legal clinics. We represent over 70 legal clinics in the province. Over 50% of the clinics' caseload is landlord-tenant issues where we represent tenants. I say that to you so that you'll know that our presentation is coming from the people who stand in the trenches working in this legislation on a daily basis.
We have done a brief -- I believe you have it -- just in case you want to follow along with it. We're not going to read it word for word. It's an extensive brief and there's no way we can get through it in 20 minutes, so we'll be summarizing for you.
Housing is an issue of fundamental importance. The discussion paper is both vague and sketchy in its proposals. It is also based on inaccuracies and assumptions in many vital respects. We are left in the unfortunate position of having to guess about what the intended reforms are. This makes meaningful commentary difficult at best. This is a paper that we say proposes to make sitting tenants sitting ducks.
I'm going to talk to you about the rent control aspects of the discussion paper. The term "tenant protection" becomes an oxymoron in the light of this discussion paper. It suggests tenants will be protected and then it says rent control will only affect those tenants who are not moving. The result is that it eliminates protection for a whole group of tenants and prospective tenants: those who would be moving from present family structures such as young adults or battered wives.
Most tenants, particularly low-income tenants and those new to the rental world, do not have the skills to negotiate on an even footing with a landlord and are not offered any protection under the new proposals. The remaining tenants -- the sitting tenants or sitting ducks -- will have the same protection as they have now except the cap on capital expenditures. This discussion paper proposes to increase that to 4% at a time that it proposes to cut the costs no longer borne in rent control.
As well, tenants will be expected to pay up to 4% above the guideline if utility costs go up. The landlord would also be relieved of the obligation to show tenants future utility costs so that the tenants will know when they can apply for rent decreases due to lower utility costs. If the taxes increase, the tenants will be required to pay rent increases to cover those of the increase, despite the guideline or the cap. In all of this, the landlord is not required to justify the 2% rent increase allowance they're allowed to receive under the annual guidelines. They've been allowed to get this under the last two pieces of legislation.
This is the part of the paper that I think is my favourite. The discussion paper also proposes to allow a tenant to volunteer to pay a rent increase. Now I ask you, why would a tenant want to volunteer to pay a rent increase? This is to get the landlord to do the major repairs and renovations, which is the purpose of the 2% rent increase on capital expenditures that they've been getting through the guidelines for the last two pieces of legislation.
If a tenant happens to reside in a mobile home park or the land-lease situation, they not only have the same protections that the other tenants aren't getting, but if the government requires the landlord to replace an old system, such as a septic system or an electrical system or have them install a new one, the entire cost is allowed back to the tenant -- 100% -- despite the 4% cap. It makes one wonder just what protection a tenant is being given under this paper.
The discussion paper does say that government will get tougher on landlords with regard to requirements to do maintenance. It proposes to do this by providing the already overworked, underfunded property standards departments to have more powers. Power without financial or moral commitment is not a deterrent to landlords. The discussion paper says it will increase maximum fines for landlords who do not do repairs. In the past four years, there have been 29 prosecutions with respect to the 12 possible offences under the Rent Control Act. Although the maximum fine for landlords is $5,000, the average fine in Toronto is $350. Landlords cannot be forced to comply unless the threat of fines is serious and vigorously pursued, which would include also high minimum fines.
All the while that the discussion paper is discussing punishment to negligent landlords, it's considering discontinuing one of the most persuasive measures in the Rent Control Act: orders prohibiting rent increases until such time as repairs are completed. If the government is serious about encouraging landlords to comply, it would need to set high minimum fines, ensure property standards departments have adequate property standards bylaws and have the money to implement it sufficiently to service all tenants.
Another method of encouraging landlords to comply with maintenance requirements and other legislative requirements would be to licence them in the same manner that we licence real estate people, insurance brokers and street vendors. If they do not comply, they can be charged higher licensing fees and have their licence suspended or revoked.
Ms Cindy Harper: My name is Cindy Harper. I'm a lawyer with Neighbourhood Legal Services in London and I am the southwest rep for LCHIC.
I wish to address three issues. The first is the Landlord and Tenant Act proposals, the second is care homes and the third is the dispute resolution system.
First of all, with respect to the Landlord and Tenant Act proposals, we ask you to keep in mind that any changes made in this area must be done recognizing the fact that part IV of the Landlord and Tenant Act is remedial in nature. The Landlord and Tenant Act amendments of part IV regarding residential tenancies came into force in January 1970. This was a response to the Ontario Law Reform Commission report of 1968, which expressed concerns about the fact that the landlord and tenant law at that time was based on outdated feudal concepts in which landlords had bargaining power and tenants did not.
Any legislation that is now done in the area of landlord and tenant must also recognize the fact that housing is a very serious issue. We are dealing with people's homes. Rental accommodation is rental accommodation, but it's also a home. We must ensure that tenants continue to have security of tenure and that their privacy rights are maintained and as well that their homes are maintained with proper maintenance and repairs.
The discussion paper refers to the fact that it will be clarifying the landlord and tenant legislation. We welcome this. However, it appears that in a number of situations, the proposal is actually extending the rights that landlords have. One of these examples is in the area of assigning and subletting. The discussion paper seems to confuse these two concepts, and it is our proposal that the concepts remain distinct. Tenants will now only be allowed to sublet and to assign after first getting their landlord's consent. We submit that the present legislation should remain, that these two rights should be distinct, and that if there's any modification to these rights, only a true assignment should be limited in any way.
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We agree with the discussion paper where it says that privacy rights are to be maintained. They must be strictly enforced and entry by landlords and their agents must be strictly limited. We agree that the situation with respect to privacy rights should be clarified; however, we disagree with the proposal that there be any extension of the rights to enter by the landlord.
With respect to care homes, we ask you to keep in mind again that these are people's homes. There is a broad range of accommodation that is considered to be care homes. They may be, for example, something similar to a boarding house or they may extend to something similar to a nursing home. We stress to you that it's important that elderly people and the disabled continue to have security of tenure and that their privacy rights be maintained. They should not have rights that are any less than those afforded to other tenants.
We wish to point out to you that we support the proposals that are made in the brief to you by the Advocacy Centre for the Elderly. We support their recommendations with one slight exception. It is our recommendation that there be no special and discriminatory fast-track eviction procedures for care home residents.
The third issue which I wish to address is that of the dispute resolution system. First of all, it is our position that landlord and tenant matters, given their serious nature, should remain with the court system. We recognize that the system may be costly; however, we suggest that there are proposals that could be made to the existing system to reduce costs and to meet the goals that are set out in the proposal. For example, mediation could be introduced, a duty counsel program and even simple procedural modifications such as a form that could be introduced for tenants to actually bring applications to court for repairs or other issues.
However, I wish to address an alternative dispute resolution system, and first of all I wish to say that the delivery system must be independent of government and it must be subject to legislation. The appointment procedure will be critical. It must be an open procedure, it must be an established procedure and it must ensure that the adjudicators who are appointed are impartial and well-qualified. There cannot be political appointments. This will undermine the credibility of any system that is set up. There must be ongoing training for the adjudicators. They must be knowledgeable and they must have expertise. Adjudicators should not be selected simply on the basis of whoever is the lowest bidder.
We also suggest that there be voluntary mediation to cut down on the number of hearings that would actually be held, and if a hearing is held, we suggest that the Statutory Powers Procedure Act should apply to ensure procedural fairness. The tribunal should have clear, simple rules so that the parties are on equal footing and they all know what is expected of them. The tribunal should have charter jurisdiction, and any appeals from that tribunal should be to the Divisional Court on issues other than fact alone.
We also suggest that in order to ensure access to both landlords and tenants, who may both be of low income, costs should be minimal and any filing fees or other fees that are introduced should also be minimal.
Finally, with respect to any system that is set up, we suggest very strongly that it must be properly financed. A system that is underfunded, that has overworked staff, will not meet the requirements that are expected, and both landlords and tenants will not be given access to justice.
Ms Wendy Bird: My name is Wendy Bird. I am a community legal worker and I am the chairperson of the Legal Clinics' Housing Issues Committee. I'll address the Rental Housing Protection Act and mobile home park issues.
The Rental Housing Protection Act came into force in 1986. It was developed to respond to a serious decline in the amount of rental housing stock available to tenants and to protect tenants from unreasonable eviction. This decline in rental units was due to demolition, conversion to other uses and luxury upgrading of rental dwellings. From 1978 to 1985 in Metro Toronto over 11,000 units in buildings with six or more units were lost to these activities.
The Rental Housing Protection Act was enacted with two purposes to fulfil, the first being to protect existing rental housing stock from eroding to unacceptably low levels, the second to protect sitting tenants from being unreasonably evicted from their homes. The minister now proposes to reduce the mandate of the Rental Housing Protection Act to protect only sitting tenants and to remove the requirement for municipal approval. Removing the requirement for municipal approval repeals the Rental Housing Protection Act entirely. It removes the protection for sitting tenants as well. To repeal the Rental Housing Protection Act and call this tenant protection legislation is to make a mockery of the concept of tenant protection.
Without the limitations of the Rental Housing Protection Act landlords will once again be free to convert and renovate units. Conversion to unregulated cooperative and condominium housing gobbled up thousands of units prior to 1986. Existing tenants can seldom afford to buy their units and they end up dispossessed from their homes. There is every reason to believe that this conversion practice will begin again with the repeal of the Rental Housing Protection Act. This will erode the present rental stock, causing fewer units to be available for tenants. In turn, this will drive up the rents because of housing shortages and now the lack of control over rents.
The units that will disappear will be mostly today's low-cost, affordable units. The government believes that removal of rental control and the Rental Housing Protection Act will cause the private sector to build more rental housing to fill the gap. There is absolutely no reason to believe that this is true or will take place. Repeal of the Rental Housing Protection Act and rent control are only minor impediments to the private sector building new rental housing. If all the impediments were removed, the private sector has still made it very clear, it cannot build affordable housing. The rents that will have to be charged for new construction are at the top of the rent scale or beyond.
The Ministry of Municipal Affairs and Housing commissioned a report from Greg Lampert, an economic consultant, to look at the challenge of encouraging investment in new rental housing in Ontario. He informs the government that there is serious doubt whether relaxation of rent controls will itself be sufficient to stimulate private rental investment on the scale required. Mr Lampert goes on to say that there is a significant gap between the market rent for new rental projects and the rent required to make rental housing an attractive investment given the current costs of constructing new rental housing.
What are the real barriers that prevent the private sector from building? Mr Lampert says they are:
(1) Taxation: The federal government has substantially reduced income tax advantages. GST has increased construction costs. Property taxes are double or more for apartments than for owner-occupied homes and the province charges capital taxes.
(2) Development costs: These include municipal development charges; municipal fees, such as building permits, planning application fees, sewer hookup fees; municipal development requirements, such as parkland dedication, site control requirements and, of course, building regulations.
(3) Financing costs: It is quite clear that there is a restrictive lending environment for rental housing, which discourages investment at this time.
Many of these barriers are not within the provincial government's control to change. Mr Lampert claims that Metro Toronto now has one of the lowest vacancy rates in the province and that it is going to tighten considerably, whatever the government does. This situation is caused by the government's termination of the non-profit program, with no commitment by the private sector to build more housing. Repeal of the Rental Housing Protection Act will hasten the decline of the existing housing stock.
The Rental Housing Protection Act was extended to cover mobile home parks and land-lease communities in 1994. One of the major reasons for this coverage was to protect sitting tenants from eviction when landlords closed or converted parks to evade their obligations to make basic repairs to roads, sewers and utility hookups.
This type of housing is unique. It's unique because the tenant owns his or her home and rents only the land or site and the site services. Eviction for these tenants can be financially ruinous. The significant difference between mobile home park and land-lease situations and regular rental housing is the relative captivity of the consumer. Uprooting the home is a truly expensive proposition, not only in dollars but in terms of emotional pressures. In many of the more rural areas of the province you will find that it is not possible to move the home; there is nowhere to move to.
I would remind the government that it is dealing with people's homes. Removal of the Rental Housing Protection Act does not protect sitting tenants at all; it leaves them vulnerable to unreasonable eviction. It will also reduce the number of units available to tenants that they can rent. There is no commitment from the private sector to fill that gap.
The Chair: Thank you very much, ladies. The 20 minutes has been fully used up, so there's no time left for questions. We appreciate your presentation here today and your interest in the process.
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GOLDLIST DEVELOPMENT CORP
The Chair: The next presenter is Mr David Freedman from the Goldlist Development Corp. Good afternoon, gentlemen. Welcome to the committee.
Mr David Freedman: Thank you very much, Mr Chairman. I'm the president of Goldlist Development Corp. I've already submitted to the committee a corporate profile, a very brief profile, so I won't dwell on what Goldlist is or what it's done over the last 40-odd years. As I will be speaking later on in the week on behalf of the industry as a whole, Mr George Goldlist will be speaking. He's the founder and chairman of Goldlist Development Corp and he will be addressing this meeting.
Mr George Goldlist: Mr Chairman, members of the committee, what I'm going to start off with some of you might consider a fairy tale. The fairy tale started in the late 1950s when George Goldlist built the first apartment building with elevators. We started in 1952. The first building we built with elevators was 60 suites. The nightmare we had: Was anybody going to come and rent those apartments? That was the major concern. We built 60 apartments, put all our investments in it and said, "Are they going to come to rent?"
Lo and behold, one Saturday afternoon, we opened up the building. It's snowing; these things happen. A man pulls up in a car. He says: "I've been watching this building going up. I want the top suite, the one-bedroom." I said, "If this fellow showed up in this weather, we're going to do all right." It took us not very long; we rented out the 60 apartments.
We learned one major lesson at that moment, that without tenants we're nothing. An empty building is a disaster, which many commercial developers know. Our philosophy was established at that moment: Our tenants are our customers. We treat them right. If we don't, they'll move out and nothing else will ever fill those buildings. Since that time we've built probably, gross, 20,000 units. A good number of those were rentals. We have followed our philosophy: The tenant is our customer.
Lo and behold, we continued building and the wisdom of the government in 1975 was to put in rent control. Rent control was obviously put in to protect the tenant, and it hasn't worked. What it has done is driven people like me out of the business of providing accommodations, for which there are people out there knocking at our doors.
I graduated as a registered accountant. I got out of the accounting business because I said, "I don't want to be in the paper business." But let me tell you what's happening now: I go down my offices and I see papers, papers. We are building more paper piles to answer different government questionnaires and the different negotiating with the tenants by somebody, not us, setting the pace to treat the customer as -- we love our customers and we treat them fairly. We built some pretty tall buildings. If we stack up the papers my people go through in a year, it's probably taller than any of our buildings, and we built some 40-odd-storey buildings.
It might sound like a fairy tale, but that's actually what happened. You've taken the business incentive out of our hands. We cannot negotiate with tenants. We cannot treat them fairly, because all we have is a directive: Either you do that or you don't do that. That is what happened. Gradually, we went into all kinds of other business producing houses. We produced under the MURB plan, under ARP, various schemes from the government to get rental accommodation built. They only worked so long, because government kept on changing its mind. The last thing that happened is that government got into non-profit housing.
My late father asked me: "George, what is non-profit housing? I don't understand it. Either you make a profit and you're in business, or you lose money." Unfortunately he died, at a nice age, so I can't explain to him that now the taxpayer pays the bill. You're probably now paying close to $1 billion. I said, about seven or eight years ago, that the bill's going to grow. You build non-profit housing and somebody is going to have to pay the bill. The taxpayer, not the government, has been paying. It's probably, if I'm not incorrect, close to probably a $1-billion annual subsidy, and it's going to grow.
We're at the point now where this government, in its wisdom, cut off non-profit housing. Unless private industry is welcomed back -- stop all those barbed wire fences, knock down the barbed wire fences that you've put between me and putting up the new buildings, and get the red carpet out so we can get back in business and provide people with housing, which we know how to do. No government knows how to do it. I've got 45 years of experience, and I can say that.
We treat our tenants fairly, because they're our customers. We will not increase the rents God knows what numbers. At worst it's lying, at best it's insincere that I'm going to increase my tenants' rent 10% or 20%. What am I going to do with the building? That's no way of doing business. We have our record to stand for.
I want to also talk about the other side of the coin. We employ people. We have 200-plus people now on staff; we had more. Bill 4 came in; we reduced our technical service from 60-odd to 40-odd. The government at that time was protecting the tenants, and it's supposed to protect the workers. We had to make a choice to lay off 10 or 20 people. That bothered me just as much as I was worrying about whether the tenants would come.
I'll tell you right now that two weeks ago at my cottage on Saturday a fellow by the name of Santos Travilla dropped over and said: "Mr George," -- that's my name, that's what they call me; he had coffee with me -- "you know, it's 33 years that I've been working for you. I got married at that time." I don't know if he said he got the job first or got married first. It's 33 years he's been working for me, and he still works there. We hope to keep him on.
Also, the other end is this: We have tradesmen now who are sitting at home, people who are collecting unemployment insurance or whatever it is. They have no job. I can give you a few specific trades. I had a talk last week with a fellow by the name of Michael Zentil. He's a plumbing contractor. I asked, "Michael, how many people have you got working for you now?" He said, "I'm one of the lucky ones; I've got 38 still." He's doing a lot of maintenance. "How many did you have when we did some jobs?" He said, "I had 150-plus." I can go through the line: Cabello, a bricklayer. The men are sitting home; there's no work. I can go down the line of people who worked for us for years and years.
My view is this: This legislation coming up is not satisfactory to the industry. We feel let down by the government. Our Premier said, "We're open for business." If you're open for business, you've got to listen to us. We want to get back into the business of providing rental. Now, we have a lot of problems, because all these fences have been built up over the years.
I'll take one specific building: 49 Thorncliffe, which is 400 units. We pay $2,600 a year average realty taxes, one bedroom, two or three. If this was assessed as condo or housing, there would be a minimum saving of $75 a month that we could reduce the rents, and we went on record that we will. But all these politicians with their stories who say, "We're for you, tenants; we're against landlords," they're not for the tenant. If they were, they'd say, "Why are they paying $75 a month more and why don't we address that problem?" We could drop the rents tomorrow if the assessment would be changed to rental accommodation the same way as condos or single-family homes.
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But you know what they tell me privately? The tenants don't vote; we've got to protect the single-family home owner. That's what they told me. Many times they told me that. Another politician comes up, off the record, and he says, "We don't want the seniors to lose their homes because the realty taxes would have to go up on single-family homes." I say: "What about the seniors who are tenants? Why don't we give them the reduction?" They have no answer, but they have one psychological block: "We're against landlords."
This is about this industry now. We could get back to work. We'll need a lot of help. Realty taxes have to be addressed. The GST has to be addressed. Did you know that the GST on rental accommodation is 7%, while if we build a condo it's 4.5%? I can never get the answer, logically, why. Are we discriminating against the tenants or is the government discriminating against the tenants? That's a federal matter, but I think there are ways we could put our people back to work and look after the tenants. Thank you.
The Chair: Thank you very much, sir. We've got about three minutes per caucus left for questions, beginning with the official opposition.
Mr Curling: At the start I would say that George Goldlist is a good landlord and I have proof of that in that sense; I know you treat your tenants very well and have facts to back that.
You have made some points that are quite relevant. We talk of course on this committee that property tax must be looked at and rent control is not the devil that people talk about as causing not to build. If rent control comes off, would you build immediately, and would you build at the lower end of the market? While you're saying the government should get out of the non-profit, or whatever words you want to call it, building for people who can't afford the market rent normally out there, would you build immediately at the lower end of the market or will we have to wait until you've satisfied the top end before you build the lower end?
Mr Goldlist: We have now 250-odd units ready to start. The land price is right, interest rates are right, but we need help. We need help on the GST. There's no reason why the federal government should charge 7% on rental instead of 4.5%. The realty taxes is a must. We must treat the tenants the same way as you treat homeowners.
Also, the sales tax. I spoke to somebody from the government on the sales tax on building materials. The land is sitting there. Why don't you waive the sales tax on rental accommodation to let us build it? You're not getting the income anyway. The land is sitting there. You're not going to get any money. Get us started on rental accommodation.
There's no question the GST has to go down to 4.5%, and I think we should use our influence to get the federal government to waive that GST for rental accommodation for a couple of years. That, with interest rates what they are now, would close the gap and we'd put the shovel in in three months and get our people back to work.
Mr Curling: Could we say then, Mr Goldlist, that if the landlords and tenants get together, which is not impossible -- it has happened -- and say that the real enemy in all of this, as I said, is the government approaching this thing in a different way, more than saying it's the tenants' fault who want everything for nothing and the landlords who want all the amount of money and not giving you services -- I would express now that I'm extremely disappointed that the minister is not here to listen. I think that is an insult to the whole process of consultation. It's the minister who sets this up, and you're coming here with some very pertinent information and so are the United Tenants association and all that. The minister is not here. I would hope the minister himself would have been here to hear some of this.
Mr Marchese: Mr Goldlist, just a few things.
Interjections.
Mr Marchese: Mr Chairman, there's a dialogue here.
I'm a big supporter of government intervention. That's what makes us different from the people on the other side.
Mr Goldlist: I didn't get that, please.
Mr Marchese: I'm a big supporter of government involvement and intervention to be able to regulate the problems that the market causes. Now, those folks over there don't seem to care about what the market does to people. I do. I'm not saying you don't care, because you pointed out that you care about the fact that renters are very important to you in what you do.
Mr Goldlist: That's obvious.
Mr Marchese: I understand. But I have to state from the outset that without government involvement, and often intervention, a whole lot of other people out there would be without basic minimum protections that need to be provided. So we need to protect the public interest in general.
You mentioned quickly that tradespeople are out there having no jobs. I've known this for a long time. I'm in an area where Italian Canadians work in the construction field and Portuguese Canadians have now literally replaced Italian Canadians in that field.
Mr Goldlist: There's still a few Italians in there. I wouldn't discount them.
Mr Marchese: There's still a few that I've known for many years, but they've been unemployed.
Mr Goldlist: That's right.
Mr Marchese: And the only body that has provided work for them has been the government through the building of cooperative --
Mr Goldlist: Because you stopped us from working.
Mr Marchese: Then there's the other point you said about the fact that we are in the way, that we don't know how to do it, thet you guys know how to do it.
Mr Goldlist: You're damned tooting you don't know how.
Mr Marchese: What you want is a red carpet, you said, and part of the red carpet treatment comes with a whole list of things that you want. One of the things you mention is the GST, reducing that by half or eliminating that altogether.
Mr Goldlist: Yes. Why is it discriminating against the tenants? Why are all the politicians saying, "We're for the tenants," but they're ignoring the things that the government is against the tenants when you have to pay 7% on GST as a rental accommodation and when I build a condo I'm only paying 4.5%?
Mr Marchese: Mr Goldlist, what else do you need on that red carpet to get you and others going?
Mr Goldlist: It wouldn't be difficult if we sat down. We know one thing: The municipalities have to help us out, the province has to help us out, and the federal, and we would have a shovel working in three months there building rental accommodation. That's my business and I love the business. And let me also tell you, I'm a tenant of my own in my building. I go up and down in that building daily. The tenants are wonderful people; 98% of Goldlist tenants at least are good people. You get 2%, you never get that.
Your answer is, if I was a tenant, I want it as cheap as possible, but also I'm a person and I know that tenants cannot get the services unless I give my reasonable rent. That's obvious.
Mr Bart Maves (Niagara Falls): Welcome, Mr Goldlist. Mr Marchese is about intervention and messing up the market and he doesn't care about how his regulation messes up the market.
How many units has your company built in the last three or four years?
Mr Goldlist: The last three or four years, we've built a couple of non-profit.
Mr Freedman: Are you talking about strictly rental units?
Mr Maves: Yes, rental units.
Mr Goldlist: Only non-profit. We built post-1975 some rentals, but the last three years with the NDP government, Bill 4, we're out of business. They closed us up.
Mr Maves: Several submissions that people have given before you have said that the vacancy rate is 0.8% in Toronto, that you've been getting gigantic rent increases in the late 1980s, that over the past few years you've been getting rent increases and you haven't justified them. Some people have even said that landlords take the money and then don't invest it in what they say they're investing in. If that's the case, I can't understand why there aren't just multimillionaires all over the place who are landlords investing more and more money into this incredibly lucrative business.
Mr Goldlist: Because it's the big lie. They can get away with it.
Mr Maves: Can you explain that?
Mr Goldlist: The big lie they can get away with is that they are for tenants and against landlords. It's not true. If you're against landlords, you're against tenants because you are not looking after the tenants, because we're the ones who can provide the housing.
I can show you. If this committee really wants to see something, you should take half a day. We'll show you buildings where they're in excellent shape, there's no problem. We have a building now we need to put some $5 million or $6 million in to renovate the building. It was built 25 or 30 years ago. We were going to do it until Bill 4 came in -- our friends to the right here -- and we stopped that. We laid off people. We need redevelopment. It doesn't make any sense. But we've got to have the power. You took away the power from us, the government.
Either the government gets us back into business or you're going to have to come back and build non-profit again. That's the choice, if the taxpayers will put up with it, because they're writing the cheque. Like my father asked, "What's this non-profit?" If you've got the government behind you, they can issue the cheque, the taxpayers' money; you can build an apartment. My father never understood what non-profit meant. He was a small businessman. He came and helped me out in later years. He knew that if you don't make a profit, how do you stay in business? What's non-profit? I could not give him an answer. I give one now. The government -- the taxpayer -- pays the bills, and then you can build.
The Chair: Thank you very much, gentlemen. We appreciate your interest in our process.
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CANADIAN FEDERATION OF STUDENTS-ONTARIO
The Chair: The next presenter is the Canadian Federation of Students, Vicky Smallman, the chair.
Ms Vicky Smallman: I brought with me Ashkan Hashemi, our CFS researcher.
The Chair: Okay, great. We appreciate you being here.
Ms Smallman: We only plan to speak for about 10 minutes and then are happy to entertain questions. We brought along a more extensive brief that outlines our concerns in detail, and so I would ask the committee to refer to that specifically because 10 minutes isn't a lot of time to get really into the meat of our concerns with the proposals.
The Canadian Federation of Students-Ontario, an organization of which I am chair, represents about 125,000 students in colleges and universities across Ontario, from Thunder Bay to Windsor to Ottawa. We are very concerned about the proposals contained within the tenant protection legislation basically because students comprise a very large portion of the rental population, particularly in some communities, and as renters we really do need access to affordable, safe housing.
There is a direct correlation, we believe, between the availability of affordable, secure housing and accessibility to post-secondary education as well as the ability of a student to really perform well in his or her program. You need to be able to feel like you have a stable home and you can't be too worried about money because that can be quite overwhelming and can really compromise your ability to succeed.
We have experienced a number of attacks, I believe, this year, and from this government in particular. It's not just this government, actually; it's been building over the last decade. Our tuition has more than doubled and this year we have experienced the largest tuition increase in the history of post-secondary education in Ontario, 20% for university students and 15% for college students. This means we have a lot less disposable income to put towards things like rent, and the situation as it exists right now is not great for student renters. Especially in a city like Toronto, it is very difficult to get access to accommodation that is safe, secure and stable and also affordable, something that fits in with our budgets, which are quite minimal. We are really concerned that the proposals within New Directions are going to make things a lot worse.
Our primary concern is with vacancy decontrol. We don't really believe it will ensure a stable pool of affordable housing. Students are a very transitory population. We move at least once a year and sometimes more often than that depending on the situation. Therefore, vacancy decontrol is not really going to protect us from what we consider to be unfair rent increases, because as soon as you leave a particular apartment, the landlord has the ability to raise the rent as much as they would like. So we do feel that vacancy decontrol will have a direct correlation on the availability of a stable pool of affordable housing.
We are also concerned with the proposed provisions on subletting. Currently students have the flexibility to be able to sublet their apartments when they choose. Students often have a need to sublet on a regular basis either to go home to their primary residences to work for the summer in order to earn money to come back to school or, in the case of graduate students, they may need to sublet their apartment for short periods of time in order to go away and do research.
The proposed provisions require that a renter have the permission of his or her landlord to sublet their apartment, and we believe that this eventually, maybe not in all cases but certainly it does open up the possibility for a landlord to be able to refuse a sublet and therefore move towards vacating the apartment in order to jack up the rent. We think this is just going to work with vacancy decontrol in terms of shrinking the pool of affordable housing.
These together, we feel, and a number of proposals contained within New Directions, will actually provide incentives for landlords to harass tenants. Students as a group are not very well-informed about their rights as tenants. Often they're just coming straight from home or they have a lot on their minds; they don't actually realize they have rights under the Landlord and Tenant Act and there is not a lot of public education out there about tenants' rights. Therefore, they will often put up with a very bad situation and a lot of harassment and perhaps a lot of negligence in maintenance and things like that just in order to stay in an affordable home.
With vacancy decontrol and some of the other provisions, we feel students are put more at risk of being harassed and intimidated by landlords, who may be anxious to get rid of low-income tenants or who they may perceive as undesirable tenants in order to free up the apartment, raise the rent or perhaps demolish it in order to put up a condo or some kind of higher-income accommodation. We believe students in particular are at risk for this type of treatment.
While we are very happy that the government is proposing to enhance the anti-harassment legislation and the amount of settlements that are available, we don't think this is ultimately going to help students who do not have the time or energy to be able to go through a dispute resolution procedure or bring legal action against a landlord who's treating them unfairly. Often students will not know they have those mechanisms available to them.
We're also concerned about the potential elimination of the Rental Housing Protection Act. We believe that while this may provide incentives for the creation of new rental accommodation, it's not going to be the type of rental accommodation students will be able to access. We would like to see other ways of looking at this. We want to see the amount of affordable rental housing protected rather than things opened up because we think ultimately this is just going to benefit landlords more than it will low-income tenants.
Finally -- and I know I'm going over things quite quickly, but you do have the brief in front of you -- we have identified a number of areas which the New Directions documents does not address and we would like to see the government address. One is, first of all, the creation of affordable rental housing. Second is the lack of regulation on quasi-legal and illegal basement suites. Students in particular often find themselves looking for the most affordable accommodation possible and will take a basement suite which is not regulated and therefore they have no protection. We'd like to see the government take a look at these types of apartments and look at perhaps bringing in some regulations so that there are minimum standards that need to be met by these types of suites.
We also feel that the document does not address shared rental accommodation, which is a very popular form of accommodation for students. They often, to keep their rents down, pool together and share apartments or houses. There isn't really a lot of talk in the document about how shared rental accommodation works with vacancy decontrol and we'd like to see some more details about that.
Finally, we really feel very strongly that the government needs to take a look at dissemination of information about landlord-tenant legislation and tenants' rights. We would like to see the government bring in some provisions that would require a tenant to receive a copy of landlord-tenant legislation with every lease that is signed, something like that, so that students and other tenants will know their rights right away and therefore will be able to take advantage of dispute resolution mechanisms and be able to resolve any problems with harassment that might come up.
I think I'll leave it at that and open the floor up to questions.
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Mr Marchese: Thank you, Ms Smallman, for your presentation. I just want to make a few comments on what you said because I think they're important. First of all, in terms of vacancy decontrol, 99.9999% of the population doesn't have a clue what that means, so we need to tell them. What it means is that when you leave your apartment, the landlord can raise the rents again. That's really what it means; nice and simple so that we don't confuse the public about these words that don't mean much to them -- except in reality, what it means is they're going to get an increase.
Secondly, you brought up an important point about students which needs to be reiterated often, and that is that they move often, possibly every year. If that's the case, they will be hit particularly with an increase in their rents. We know about tuition fees. We've done it and they've added yet another 20% or so. It compounds the problem even more.
This is something students need to become aware of because it will hit them in their pocket. My daughter is going to first-year university and she'll be paying $4,000 in tuition fees. It's really hard, and this compounds their economic problems even more. I'm not sure whether some of those fine members there realize that, but they should.
One of the points you mention is that students may not be aware of their rights. That's not unusual, because a lot of people aren't.
Ms Smallman: That's right.
Mr Marchese: In that boat we have a lot of immigrants as well. As you were talking about students, I was thinking about immigrants coming into the country, and generally they don't buy houses because they don't have the money. Where do they go? Into rental accommodations. If there's a problem, who protects them?
The legal clinics have been almost defunded. United Tenants of Ontario doesn't get any more money to help tenants, so who supports them? But you shouldn't worry, because Monsieur Leach and the other fine members on the other side say this is a package to protect tenants, so everything will be okay. Even though you have problems, don't worry; they say everything will be all right. Do you feel all right?
Ms Smallman: No, we don't, actually. We're quite worried. I know that I'm worried about my own rent and as a graduate student with a fairly substantial debt load, I don't feel that I have a lot of protection. I think your points are very well taken, that students are being hit from all sides with a number of problems, and I don't see a lot of protection for tenants of any kind in here. I particularly don't see protection for students, the type of transitory tenants, and "inexperienced tenants" is probably the best way of putting it.
I would like to see the ministry actually look at the word "protection" and look at whom this document actually protects. I think it protects the landlords and it provides incentives to landlords to further harass low-income tenants, and in particular students.
Mr Tilson: I think the difficulties of getting accommodation in university towns have gone on for eons and students have complained about it. At the same time, landlords have complained about the difficulties that students cause in certain accommodation. Mr Marchese and I do have one thing in common, and that's a child who's going to university.
Ms Churley: And that's it.
Mr Tilson: That's probably about it, yes. I think it ends there.
The question I have is really twofold. What can be done to encourage rental accommodation in university towns around this province? What could this government do to encourage rental accommodation? Finally, you've expressed some of the concerns of students, but what assistance could be given to landlords? Because landlords are discouraged from forming rental accommodation because of the improper actions of many students.
Mr Ashkan Hashemi: As far as incentives for building housing are concerned, we don't have any grand schemes of how to build housing for students. What we do know is that some of the stuff that's gone on before this has actually killed most of the affordable housing that was being built in this province. I'm talking about getting rid of co-op housing and things like that. Bringing that back would certainly be a good start.
Business itself has suggested some means, outside of vacancy decontrol, for doing that. Vacancy decontrol is actually a very small part of building new affordable rental housing; it's got very little to do with it. There are a whole bunch of other provisions that I think the Lampert report addresses in some cases that need to be looked at, separate from the proposals in this one. Those were ignored. Things that would not affect tenants seem to have been ignored, whereas things that directly impinge on tenants' ability to pay for their suites seem to have been put forward in this brief. So those are some of our concerns around creating new affordable rental housing.
As far as addressing the question of landlords and student tenants is concerned, I think a lot of the misconceptions around student tenants are precisely that, they're misconceptions, they're stereotypes. A few problem tenants do not make an entire population. Student renters are a huge population and there's no problem for most of them. There already are procedures in place to deal with problem tenants, and that seems to have worked so far. Because of a few bad apples, you can't --
The Chair: Thank you very much, Mr Tilson. Mr Curling.
Mr Curling: Thank you for your excellent presentation. It's an area that has not been addressed properly. I was trying to look through the submission made by the legal clinic. They had made a comment, it was an excellent comment, that when we try to deal with rent control as an isolated economic issue causing entirely all the problems happening in the rental market, then we get rather concerned.
I don't know if you have done any studies or if you have any figures to see what the costs have been to students in the last, let's say, two years that make it more inaccessible to be a viable student; in other words, tuition fees, user fees, now you're going to have increased rent. Is there any figure that you have that you could share with us?
Ms Smallman: Certainly. We don't have our fact sheets with us today, but I'd be happy to forward any documentation to the committee. In terms of just the tuition increases, this coming year it's 20% for university students and 15% for college students. Before that, over the last 10 years tuition has doubled. So it's doubled and then add another 20% on top of that. That's tuition alone.
Mr Curling: That's right, plus you haven't touched on the increased rents.
Ms Smallman: That's right. I don't think we have any documentation in terms of the amount of rent that students are paying. You can't come up with it; there are so many different communities in so many different types of towns.
Mr Curling: My colleagues on the Conservative side get very uneasy when I speak, because they feel I'm coming from an empty point of view. I spent four years at Seneca College doing housing, and I know the concerns of students and the cost to parents and to students, and the fact of an inadequate era for getting summer jobs has also added to that.
Ms Smallman: You can look at the youth employment figures for this summer and you can pretty much assume that students have not been able to make the kind of money they're going to need to make to cover their costs for the upcoming year, which means an increasing reliance on the Ontario student assistance program and probably eventually some forcing of students to drop out.
Mr Curling: I just wish the minister was here to hear this.
Mr Sergio: I have one question, a quick one, Ms Smallman. It was suggested that perhaps universities should provide more housing for their students. With all the cuts that universities have received, and probably they'll get some more, do you think they are in a situation where they can afford to build more student residences?
Ms Smallman: Certainly not. In fact, they can't afford to maintain the residences they have, much less build new housing. Many universities in the past have taken on working with the government to build subsidized housing, but this is no longer on the agenda for the government, so this is not an option for universities any more. In terms of building a new building, that requires massive funds. Universities are just trying to keep their heads above water right now. They can't afford it.
The Chair: Thank you, folks. We appreciate your being here this afternoon and your presentation.
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ONTARIO COALITION OF SENIOR CITIZENS' ORGANIZATIONS
The Chair: The next presenter is Martha Dallaire, a member of the Ontario Coalition of Senior Citizens' Organizations. Good afternoon. Welcome to our committee.
Ms Martha Dallaire: My name is Martha Dallaire, and with me is Morris Jesion, the executive director of the Ontario Coalition of Senior Citizens' Organizations.
The Ontario Coalition of Senior Citizens' Organizations, or OCSCO, is a coalition of over 80 seniors' groups from across Ontario representing the concerns of over 500,000 senior citizens. OCSCO unites both large and small groups from community, union, women's, ethnic, native and veterans' organizations on matters affecting the quality of life for the senior citizens' community.
I am a senior and a tenant, and I will be directly affected by the changes the Harris government is proposing. I am very much afraid of how these changes will affect me, my friends and other seniors. On behalf of OCSCO, I am here to present our response to New Directions and our concerns about the negative impact of these changes to seniors and Ontario's housing options as a whole.
When the province killed co-operative and non-profit housing programs in Ontario, it also removed a housing option that thousands of seniors relied upon each year to supply new affordable housing. This and the proposals in New Directions are of grave concern to the seniors' community in Ontario. Except for developing high-end, single-family dwellings and condos throughout Ontario, our government has been slowly eating away at housing policies to the point where there is no housing policy in the province of Ontario. OCSCO believes that housing policy must have a larger vision and social purpose than is currently the trend among governments. Our government has a responsibility to maintain and develop a comprehensive housing strategy which fulfils the needs of all Ontario's citizens.
The majority of seniors believe that aging in place is the preferred way to live their life. The Ontario government is, however, taking that goal away from them by looking at ways to change the protections given to tenants through the Landlord and Tenant Act, the Rent Control Act, the Residents' Rights Act and the Rental Housing Protection Act. Seniors are very much afraid that without these protections there will be huge rent increases that seniors simply can't afford. We are afraid that landlords will now do everything within their power to kick us out of our buildings so that they can charge more rent to new tenants. If the rental housing stock that so many of us depend on is depleted, where will seniors who rent go to live? How will vulnerable care home residents protect themselves?
New Directions proposes strong tenant protection by giving a landlord the ability to increase an incoming tenant's rent without regulatory restriction. Instead, vacancy decontrol will eliminate tenant protection from arbitrarily high rent increases for all tenants who move. Our discussion must focus on the impact of these changes to low-income tenants. Low-income seniors are at risk of losing affordable housing here in the province of Ontario.
The original intent of the Rent Control Act was to protect vulnerable tenants at the low end of the rental market; that is, it protects people who cannot afford high rents and who cannot afford to buy property. As an independent body, the rent registry has helped tenants determine if their rent was legal and to challenge unscrupulous landlords by legal action. Many seniors live alone and in poverty. Hence, these protections are especially important for seniors because we live on a fixed income, we cannot afford huge increases in living expenses and we are unable to compete for rental units when vacancy rates are low.
Under the proposed changes, as soon as a tenant needs or chooses to move, we will experience a rental market fraught with arbitrary rents regardless of the quality of housing. Among seniors who move we can expect more poverty, ill health and social isolation. Many seniors have reported to us that they are now afraid to move, because if they do they will be forced to choose paying higher rents over food, medication and transportation. Therefore, OCSCO is against any form of vacancy decontrol and recommends that the government maintain tenant protections under the current rent control system.
These concerns bring me to my second point: Does the government actually believe that the proposed negotiation procedures between landlords and new tenants will take place in a fair manner between two equal parties? Landlords and tenants do not have equal power. People need housing and landlords have more than their fair share of tenants who need to rent. During the proposed negotiation process, low-income seniors will be easily outbid by other tenants who can afford a higher rent for a unit. Even being outbid by $30 a month may be the difference, for a senior, between eating and paying for necessary medications and having a home to live in.
Also, the reality is that most tenants do not know their landlords personally and only have a relationship with a superintendent. This means that landlords and seniors meeting to discuss new rent increases or volunteer renovations, which most seniors cannot afford, is highly unrealistic.
With respect to capping capital expenditure increases, I would like to stress that such caps are also essential to protect tenants from arbitrary rent increases during their tenancy. We are worried that allowing landlords to increase rent limits on capital repairs will be too much for low-income seniors to bear. Also, if the costs no longer borne provision is removed from the Rent Control Act, seniors will be forced to pay for the repairs forever, even when the landlord no longer has to pay this cost. Finally, you must preserve tenants' rights to make a rent reduction application at any time. We should have the right to a rent reduction application for inadequate maintenance, reduced or withdrawn services and operating cost decreases for municipal taxes and for reduction in the landlord's cost of heat, hydro and water.
Seniors do not believe that the government's proposals will necessarily induce landlords to put money into building maintenance. There is no requirement in the proposal that the higher rents negotiated will be attached to improve building maintenance. Even if landlords and tenants settle on a higher rent based on repairs and improved maintenance, this system may result in new investment in the building. However, it will also result in the economic eviction of seniors as low-income tenants who cannot afford higher rents are forced out of their homes. This will force many seniors into low-cost, inaccessible housing with the worst health and safety conditions.
OCSCO supports increased fines and possible imprisonment for property standard violations. However, it is our belief that many seniors do not report property standard violations. Seniors are afraid of landlord harassment and many do not know their rights as tenants. These fears will become much worse if rent deregulation happens.
Harassment reports will depend on tenants taking action against a landlord. We know that vulnerable seniors will still not challenge their landlords for fear of losing their housing. Hence, for the municipal property standard offices and the proposed anti-harassment system to work effectively, the government must commit a great deal of financial and structural resources to the new systems. Most importantly, OCSCO recommends more money and support for tenant rights education, without which vulnerable tenants cannot effectively protect themselves from unscrupulous landlords.
OCSCO is satisfied that fundamental tenant protections under the Landlord and Tenant Act will remain unchanged. However, the government is proposing to take Landlord and Tenant Act disputes out of the courts and have the issues settled by a quasi-judicial tribunal. Under any new system it is essential that the decision-makers are knowledgable and neutral in landlord and tenant issues. You must also ensure the decision-makers are not political appointments made by the government of the day.
The government is also considering charging application fees for addressing landlord and tenant disputes. A user fee system to protect your rights is unjust for all tenants, and such fees, no matter how small, will prevent low-income seniors from bringing legitimate concerns to court. Therefore, OCSCO is against any form of user fees for the resolution of landlord and tenant disputes.
OCSCO does not agree that changing the conditions for conversion, demolition and renovations of rental housing will protect tenants. The Rental Housing Protection Act already protects the tenant by preserving the province's rental housing stock. This ensures that developers cannot arbitrarily convert apartments to condos, which low- and moderate-income tenants cannot afford to buy. Does the government not realize that if tenants could afford to buy houses or condos, many would already have done so? After all, the current supply of high-end condos is very high and readily available for purchase. However, seniors who live on a month-by-month pension cannot afford to buy property.
Changes to the Rental Housing Protection Act will mean that current rental housing will be lost through demolitions to other uses or conversions to condos. Rather than help tenants, these changes will result in an increase in unaffordable housing units and fewer housing options for seniors and all tenants.
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To avoid tenant hardship, the government proposes giving sitting tenants the right of first refusal to purchase their units in the case of conversion and extended tenure for existing tenants. As I've already stated, these proposals will not protect those seniors who cannot afford to buy property. Seniors will be forced out of their homes as the province's rental housing stock is depleted through demolition and conversion. Hence OCSCO strongly urges that the Rental Housing Protection Act remain in effect as written. Your government has a responsibility to protect low-income seniors and tenants who depend heavily on the province's rental stock for their housing.
Tenants of care homes have security of tenure under the Landlord and Tenant Act, the Rent Control Act and the Rental Housing Protection Act, just as any other tenant in Ontario. OCSCO is very concerned that vacancy decontrol will result in arbitrary and unaffordable rent increases for new tenants in care homes. Conversions or demolitions of care homes will result in the loss of affordable housing for special-needs tenants as a whole. Seniors and other adults with special care needs will be devastated by the impact of these changes.
New Directions will also allow care home operators to transfer tenants to alternative facilities when the level of care needs change, subject to certain protections. It is not clear to us, however, what these protections are. We believe the only acceptable tenant protection from arbitrarily being transferred to an alternative facility is the consent of the tenant. The Health Care Consent Act currently requires a person to consent to admission to a care facility. OCSCO recommends that the protections of the Health Care Consent Act remain in place for care home residents.
With respect to fast-track evictions for care home residents, OCSCO believes that care home tenants should not be subject to eviction procedures different from any other tenant in the province, especially since there is no evidence that tenants living in care homes are any more likely to threaten other tenants. A fast-track eviction will create a loophole for landlords who wish to arbitrarily evict seniors and other vulnerable adults living in care homes. All tenants deserve security of tenure. Thus, OCSCO is against a fast-track eviction clause for care home tenants who pose a threat to other tenants.
In New Directions, this government admits that tenants in some of our larger cities have little choice in where they live. Your consultation paper should have stated that low-income tenants and seniors have little choice in where they live. This government must acknowledge that income, housing availability and housing affordability are major determinants of people's health and choice of housing. Where there is a lack of affordable housing, low-income people are forced to live in substandard housing.
The Landlord and Tenant Act, the Rent Control Act and the Rental Housing Protection Act exist to protect tenants and to provide diverse housing options for Ontario's citizens. Seniors are especially dependent on these protections. We have spoken to many seniors who now live in fear that this government is turning its back on the people of this province. Therefore, OCSCO urges the government of Ontario to seriously consider the social impact on Ontario's citizens before any amendments are made to the original statutes protecting tenants' rights.
Thank you very much for the opportunity to present our concerns and our recommendations to you today.
Mrs Lillian Ross (Hamilton West): Good afternoon. Thank you very much for your presentation. Do you have any statistics on seniors and how often they move out of their accommodation?
Mr Morris Jesion: No, we don't.
Mrs Ross: It's been my experience from talking to seniors who have called me when they heard about this legislation coming out that most of them move into an apartment and they don't want to move out. They prefer to stay where they are. Do you not feel this protection act protects them because they will not have to face high rents?
Ms Dallaire: I think there is an element there of seniors feeling they will be trapped in that kind of accommodation and they won't be able to move because if they do, they'll have to move into an accommodation which they won't be able to afford. Also, I don't know if it's a function of our age or what, but I guess it's a matter of one likes to have a modicum of comfort in one's old age, and comfort is often what one is familiar with.
Mrs Ross: Right, exactly. Under the current rent control as it is now, seniors have faced rent increases over the last number of years, have they not?
Ms Dallaire: Yes.
Mrs Ross: How do you feel it protected them when they still had rent increases? Even when inflation was very low, they faced rent increases. Can you explain that to me, how rent control protected them against rent increases?
Ms Dallaire: I think because the rent control was established to be a certain amount and was, as I recall, a very reasonable amount every year that was possible. I think their fear is that with the changes it could be anything. If the landlord decides to do major changes, they could be faced with 10%, 20% or 30% increases.
Mr Sergio: Ms Dallaire, thank you very much for your presentation. It shows you are well familiar with the intended legislation. I'm looking at the summary of your presentation here and I have to say that none of what you're recommending is being incorporated in the proposed legislation, unfortunately.
There is a three- or four-year waiting period for housing accommodation within Ontario Housing or the affordable housing of the province. Knowing how sensitive the issue is with seniors' accommodation and since there is no such thing any more as accommodation based on needs, other than, "Come in and make your application today and we'll take it from here," how does this affect the mentality of the seniors out there, the peace and quiet, the enjoyment of their own place and future consideration if they should, because of a number of reasons, move? How does this affect seniors?
Ms Dallaire: They're terrified. It's as simple as that. They call us, they speak to us, and they say they are terrified. They want to know what it means to them. They are totally confused about what it actually means because they don't feel they have had sufficient information. They're scared. What can I say?
Mr Sergio: Just quickly, Ms Dallaire, a large number of them, a large percentage, are on government assistance. They have already received a 21.6% decrease in their payments. How would they cope if they had to move and face a possible rent increase on another place?
Ms Dallaire: I don't know.
Mr Sergio: They don't have an answer.
Ms Churley: Thank you for your presentation. It summed up very well many of the same problems that our party sees with this new legislation. You state on your first page something that I would totally agree with and would hope that this government comes to see after a few weeks of these hearings: that you believe the housing policy must have a larger vision and social purpose than what is currently the trend among governments.
Our party sees housing as a right. It's something that's absolutely essential to our wellbeing, and therefore not something you can just throw open to the whims of the marketplace. Unfortunately, that's what this legislation is doing, and your document points out the pitfalls with that.
I would suggest that you go to see Mr Cam Jackson soon. He is the government's new minister without portfolio for seniors. I would point out to him that one of the very first gestures he could make as this new minister responsible for seniors -- the spin doctors want him out there to say, "We care, we care," because they sense a vulnerability there -- is to say, "If you really care, go back to Mr Harris and say, `This new tenant act is going to hurt vulnerable seniors.'" That, on top of the new user fees on drugs and a host of other user fees that we see coming with privatization, is really going to hurt seniors. We don't want just window-dressing, Mr Jackson, we want action, and symbolize it here. This is your chance.
The Chair: Thank you very much, Ms Churley.
Ms Churley: Sorry I didn't get to my question.
The Chair: Thank you very much for your presentation. We appreciate your interest in the process.
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TORONTO CHRISTIAN RESOURCE CENTRE
The Chair: The next presenters are from the Toronto Christian Resource Centre, Carmel Hili and Julie Haubrich. Welcome to our committee hearings.
Mr Carmel Hili: Dear committee members, my name is Carmel Hili and this is my colleague Julie Haubrich. We come from the Toronto Christian Resource Centre. Our submission falls into two parts. First we will address a matter that arises directly out of our work of providing housing for low-income individuals in shared accommodation. Secondly, we will deal with several other parts of the proposed legislation.
We have a message to give to you, and this message is based on 20 years of providing shared accommodation to low-income singles in Toronto. Our organization operates 35 houses. About five men and/or women live in each one of them. They have their own personal rooms; however, they share bathrooms, living room, kitchen and basement.
You may all have experienced living temporarily in a rooming house during your student years. Many single people have to live in these housing types for most of their lives because they cannot afford anything better. The wellbeing of the tenants in these communities depends on each individual living in it. If one of these tenants decides to deal or use drugs, invite a gang to move in to use drugs, party in the late hours of the night, turn the TV up loud at night, play metal music for the next-door neighbour to hear, clutter the basement with junk, or turn his or her room into a flophouse, then everyone is affected and the house will become very unsafe.
We believe the Landlord and Tenant Act in its present form works well in self-contained units. In the matter of shared accommodation in situations where one tenant is substantially interfering with the enjoyment of premises of the other tenants, clause 107(1)(c), it needs some fine-tuning. At the present time, the Landlord and Tenant Act does not protect tenants in shared accommodation adequately. Please note that we are referring only to tenants living in shared accommodation and in situations where one tenant's behaviour is posing a danger to the safety and enjoyment of the other four or five who live with him or her.
This concern comes out of our experience; it's based on it. We are down in the trenches, providing housing daily to low-income singles, managing 35 houses with more than 180 tenants living in them. Under the present legislation it takes generally more than two months to terminate the tenancy of someone living in shared accommodation who may be terrorizing the other tenants. We feel this is no protection to the other five or six who are residing in the same house. In the two months it takes to get the culprit tenant out, violence, danger from fire, use of firearms, assault on one's person or heavy beatings can erupt at any time. These victim tenants are left to their own resources and many prefer to leave their home. Some go back to the streets rather than suffer physically and mentally through such circumstances.
We recommend that the eviction legal process in shared accommodation when the basis for eviction is for serious misbehaviour be speeded up. We want due process. Tenant advocates state that it takes about a month and a half to evict someone. Our experience tells us it is more like two and a half months and upward. In one case it took us a year, during which time one person died and the others left and the tenant in breach was left alone in the house. For tenants sharing intimately a home with a renegade tenant, two months or more are like an eternity.
The speeded-up process is warranted because of the type of housing, shared as against self-contained apartments, and not because of the social or economic background of the tenants in shared accommodation. The government's proposal has already recognized the principle of speeded-up process in care homes, which are also shared accommodation.
We recommend that shared accommodation receive a new paragraph by itself in the legislation where tenants' rights in rooming houses, care homes and boarding homes are affirmed; that is, where these tenants' rights in these places are affirmed and where the legal process of eviction due to misbehaviour only, according to the LTA, is laid out on a speeded-up basis.
Rather than suspend a tenant's right to his tenancy or devise ways of sidestepping due process, as is recommended in some quarters, we recommend that in the matter of clauses 107(1)(b), (c) and (d), where one tenant is substantially interfering with the enjoyment of the premises by the other tenants or doing unlawful acts or endangering other tenants' wellbeing, the legal process could be hastened in this manner:
Step 1: That subsection 107(1) be changed to read that, "The landlord may serve on the tenants a notice of termination of tenancy agreement to be effective not earlier than the fifth day" -- instead of the 20th day -- "after notice is given, specifying the act or acts complained of and requiring within one day" -- instead of seven days, as it is currently -- "to cease and desist from activities in clauses (b), (c) and (d)."
Step 2: That in subsection 107(4) the last four lines be amended to read that "the landlord may serve on the tenant notice of termination agreement to be effective not earlier than the seventh day" -- and not the 14th day -- "after the notice is given."
Step 3: That cases dealing with behavioural problems in shared accommodation, such as those referred to in clauses 107(1)(b), (c) and (d), be heard immediately by a judge, bypassing the deputy registrar of the court or any tribunal.
Step 4: That in the matter of evictions for breaches under clauses 107(1)(b), (c) and (d) from shared accommodation, due to the nature of the housing and because of the immediate danger many tenants are exposed to, the obtaining of the writ of possession and the executing of the writ by the sheriff be given priority and carried out within five working days.
These changes might bring a cluster of cases on the court's doorstep at the beginning. Once these initial cases have been dealt with, however, there will be a quick adjustment. There would be no extra time, no extra work, but more prompt court decisions and executions. If you implement these changes, you will be affirming the rights of tenants in boarding homes and care homes and rooming houses, you will retain due legal process, and finally, residents in rooming houses and boarding homes and care homes will feel safer and grateful to you.
We want now to address the changes contemplated regarding rent control, the Rental Housing Protection Act and the Landlord and Tenant Act.
Rent control: The new Rent Control Act will have an annual guideline and limits set by the government only for sitting tenants. There are no rent controls for new tenants. When a unit becomes vacant, the landlord can raise the rent as much as he or she wants.
The main reason for changing the law is because in its present form it discourages capital investment. It has been shown in other jurisdictions that the removal of rent controls does not make developers invest. In British Columbia, rent controls were removed in 1983 when the minister responsible for housing stated, "These deregulatory measures will ultimately result in new real estate development, more jobs and a continuing healthy availability of rental accommodation." However, today British Columbia has the lowest vacancy rate and the highest rents in Canada. There has been no boom of new housing. Rents went up and the down-filtering forecasted did not happen. Why do we insist on making others' mistakes?
In the government's proposed legislation there is a real heart-bleeding plea for balancing the law so that landlords can make more money and will be more motivated to keep the buildings in good repair. Yet interestingly enough, the Russell Canadian Property Index, a highly respected gauge of investment activity, states that Ontario's apartment sector has delivered a 10% annual return on investment over the past 10 years, outpacing all other sectors, including retail, industrial, office and mixed use.
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For tenants, the proposed legislation is devastating. Clearly the government is siding with landlords. As a result, there will be high rents charged new tenants, harassment of tenants and pressure put on them to move, tenants not being able to move at great inconvenience to themselves because of high new rents and a pressure cooker rental market with a zero vacancy rate.
We consider that the proposed law will be unfair and unjust and will punish tenants financially and socially.
The Rental Housing Protection Act: The power that municipalities have pursuant to the Rental Housing Protection Act to prevent demolition or conversions of affordable housing will disappear. The reason given by the government for doing away with this act is that building owners cannot improve the quality of their buildings or make better use of the land under them.
Owners will now be able to sell buildings arbitrarily to the highest bidder or convert them to condominiums. This is a great piece of legislation for them. What do tenants get from the phasing out of the act? According to the government, tenants can buy the apartments. Yet the government knows that home ownership for most tenants is not an option. What tenants get is housing being sold from under them and a shrinking base of housing units as owners convert affordable housing to condos or other use, or demolish functional low-cost housing. How more one-sided can a law be? This is a formula for a housing disaster in the province.
I have managed a rooming house on Bleecker Street since 1982. The landlord wanted to tear it down to make room for a parking lot. The city prohibited him from doing this. As a result, 20 low-income tenants have had long-term housing in it. Most of them came from the streets and the hostels. If the RHPA were not in place, all of them would have ended back there. Piles of money for a parking lot owner on the one hand and 20 low-income tenants decently housed on the other; what is the government choosing with this law?
Ms Julie Haubrich: I'd like to pick up on the point my colleague Carmel Hili has made about tenants being left wide open to potential harassment by landlords who wish to make more money. This threat of harassment is real, especially if it means increased revenues for landlords. I have talked with numerous tenants who have been and are being harassed by landlords. The subtle and the simple things are often the most harassing: the slowdown on the repairs to units, in the hallways and in the elevators; no hot water at irregular intervals; slow, inadequate or no response to their complaints.
In the new legislation there is an obvious recognition that harassment may be a problem, as an enforcement unit will be established to investigate tenant complaints and fines for landlord harassment have been increased. These appear to be very positive measures, but I have great fears about their effectiveness unless they have teeth, and that means they will need to be well funded. With a government that has cut its budget so drastically, I fear for the tenants in the private market. They're like sitting ducks.
I also fear that I soon will be living in a society where poorer folks and people on fixed incomes either will be living in horrible and harassing conditions or may end up moving out and finding it impossible to find suitable and affordable accommodation.
When I was a student I moved often. In 13 years I moved 27 times. I took any job that I could to help me pay for my schooling and took accommodation that was close to those places of work, so I had to move often to take those jobs. If we lose rent controls, students and yes, let's face it, all of us will have to think twice before we give notice to a unit that we're living in to take a job that may offer only a couple of hundred dollars more a month.
We talk about developing a mobile and flexible workforce, but if people have to calculate huge differences in their rent, many jobs will have to be turned down or else commuting time may end up being two to four hours a day. As a person who's concerned about their environment, as someone who cycles, I can't handle any more cars on the road polluting the air, so this just seems crazy.
This is particularly crazy-making for individuals on social assistance. On one hand, they're deprived of adequate funds to look for work -- there's not enough money to get proper clothes, TTC, or even pay for résumés, but they do that and they don't eat -- but if they happen to find a job and they have to relocate to get that job, they may be unable to find affordable housing, especially if it's only a minimum wage job they have an option of taking. This government wants people off assistance yet it blocks every door. It seems like we're clipping every wing.
We know now that there's not enough affordable housing. With these changes to rent control, in four to five years we'll lose most of all the units affordable to low- and fixed-income people who are in the private market. I say this because, on average, about 25% of the population moves every year. This will put more pressure on governments of the future to build more affordable and subsidized housing for low- and fixed-income people. As a taxpayer, I don't see this as good planning for the future.
I see that in this new legislation there's also talk of a "faster, more accessible system to resolve disputes between landlords and tenants" and an "improved enforcement of property maintenance standards." Both these measures have potential to be beneficial for the community I work with, the low-income community, but only if they're adequately funded.
If these tribunals are not properly staffed, made accessible to people with diverse and other special needs, and given legal counsel, they will be nothing more than a place for landlords to get eviction papers stamped. If all the issues that arise between landlords and tenants are dealt with in one place and that place is not adequately staffed to meet the workload, I fear that no one's needs will be met. The end result will be longer waits for both landlord and tenant.
We thank you for the opportunity to address you about these concerns of great importance; however, we regret that many other people and groups could not have had the same opportunity. In spite of indicating early on that they wanted to address the committee, they were not assigned a time to do this because of lack of time. This proposed legislation touches the lives of many people and we ask you to give them a chance to express their feelings and anxieties. Extending the hearings would be a reasonable option.
We now are available for any questions you may have.
Mr Kennedy: Thank you for your presentation. There are a number of really strong points that were made that we haven't heard before. I wonder if I could ask you, though, just to elaborate a little bit because of your specialized and long-term involvement with vulnerable people and what you think the prospects are going to be for them to access new harassment mechanisms, for their ability to find other places in the marketplace and what their current situation is. I don't think people recognize how much some people are already devoting to the cost of shelter.
Mr Hili: Single, displaced people are already encountering barriers as it is, and that was before the cuts. With the cuts, it's going to be even more difficult for them. They cannot compete any more to get rooms because there are people who are being bounced from further up coming down, and they are competing with them for rooms. Getting a room in a rooming house is indeed going to be a very difficult thing for people living on the streets.
Mr Marchese: One quick comment and then a quick question: First, I want to admit that in the area of shared accommodation there are problems, there were problems and there will be problems. That's one area I think could use some attention in terms of how we fix that. I wanted to agree with that.
This government doesn't believe in the role of government as it relates to housing. They say they should be out of the housing business. They argue, "Let the marketplace take care of these things." What do you think the role of government should be in this area?
Mr Hili: Housing is not a business. Social housing is a sacred trust that the government undertakes. The government doesn't go into housing to make money like a business does, so it's important that government be involved in housing because the market is not delivering. The market will not deliver in a situation like Metropolitan Toronto, where the average household is making only about $33,000. From studies and research done, the market would not be building apartments for people making as little money as that.
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Mr Maves: Thank you very much for your presentation. I was interested in your first section when you talked about, in your scenario, rooming houses, how you want the power to evict more quickly to stop one person harassing the other people, scaring them and so on. Yet then you quickly turned and, in other non-rooming-house units, you just characterized landlords asking tenants to leave as harassment. You seemed to accept that there were bad tenants in one case and not in the other. Could you just explain? It was an apparent contradiction. You were anxious to get stepped-up eviction for bad tenants in one case, but not in others.
Mr Hili: There is a due process that the landlord can use. If the landlord feels a tenant is not carrying out his or her duties, paying rent, then there is due process in apartment buildings as you share accommodation.
In shared accommodation the thing that stands out is that people are very intimately close to each other. They share rooms, not apartments. They share the same bathroom and living room and they bump into each other every day.
Mr Maves: I have an apartment in Parkdale and I hear everybody all the time.
The Chair: Thank you very much, folks. We appreciate your attendance here this afternoon. Just to let you know, anybody who did not have an opportunity to come and present live to the committee, we would be more than happy to accept a written submission from them. As the Chairperson, I will make sure everyone has an opportunity to read that.
METROPOLITAN TORONTO APARTMENT BUILDERS' ASSOCIATION
The Chair: The next group is the Metropolitan Toronto Apartment Builders' Association, represented by Richard Lyall, the general manager, and John Bassel. Good afternoon, gentlemen.
Mr John Bassel: I'm going to try to be as brief as I can. You have a written presentation in front of you. I don't intend to read the whole thing, but I want to just tell you that I've been in the housing industry for 42 years. I think I'm reasonably well known and I think I know a lot about the housing industry. With me is Richard Lyall, the executive director of the MTABA.
The next two paragraphs describe the activities of the MTABA and I do not intend to review that. You can read it at your leisure. Needless to say, it's a very important organization which really represents all of the people who build high-rise, multi-family accommodation. It's a deceptively complex industry, with probably a higher degree of government involvement than any other industry sector, partly because of social policy, which borders on the industry.
We've received international recognition for our forward thinking in the building of multi-family housing; in fact, the systems that were developed in Toronto are now used worldwide. However, locally we've been blunted. Our activities have been blunted, partly because of political objectives and partly because of social policy.
This is one of the reasons why we see changes to the rent control system as one of the steps necessary to restore a balanced housing market and ensure adequate housing supply and maintenance. If this process that's ongoing now results in meaningful change, then it will be a good thing for the province.
Given the complexity of the industry and market, we believe the rent regulation issue cannot and should not be examined in isolation any more. In the course of these hearings, you're going to hear from some other industry associations that will elaborate on what I'm saying here. All I can say is that we're facing a housing crisis, particularly in the Metropolitan Toronto area and other parts of Ontario, and if we don't deal with it we're going to be in really bad trouble.
As you know, private sector rental apartments are not part of what's going on today and they're not part of what's been going on for a long time. In fact, the building of private sector rental housing may be an anachronism and I may be an anachronism, although I hope not, because I'm one of the few people still active in the industry who built private sector rental housing unsubsidized and went out in the market and made it happen. We'd like the opportunity to let that happen again.
Now with the passing of the era of massive government intervention in housing development, the association's greatest challenge is directed at efforts to restore the apartment industry. When I say "apartment industry" I'm talking about private sector rental housing. First, it must be done to restore a balanced market, which is necessary given that everything else has been tried; second, because we have no other choice. Finally, controls have been falling all over North America, with New York City and Ontario being the only significant housing markets which effectively exclude private sector rental investment. In my opinion, this is not a sterling example to be followed and we shouldn't be following it any more.
It should be noted that in its heyday, the apartment building industry around these parts produced as many as 30,000 and 40,000 units annually. All of these units are presently occupied.
The effect of long-term intervention has not only been crippling private sector investment and distorting the market, especially in GTA, it has left us with deteriorating rental housing stock and many overcrowded buildings. Also, it is the primary reason why various governments of the day were forced into building so much non-profit housing, at a cost of between $1,000 and $1,500 a month per unit for the foreseeable future, 30 or 40 years, for each and every unit so built.
I'd also like to say that the so-called market segment of these buildings was not really market rent segment; it was the suppressed rent level of the private sector market, so even those units which were purportedly market rents were really not. They were subsidized probably to the extent of $600 to $800 a month each as well.
Successive governments have failed in meeting the social policy objective of ensuring a balanced and adequate supply of housing. While tenants are seemingly well represented, no one group outside of the industry represents prospective tenants, people who have no place to live and really need a place to live.
Last summer when the new government announced its intention to change the system, including the withdrawal from social housing, we advised that it do so gradually and make sufficient and timely changes to get the private rental market industry working. I just want to elaborate on that a little bit. It takes 15 to 25 months at least, from a standing start, to build an apartment building, and that's if everything goes well for you. So the minute the program was ended, all of a sudden a vacuum was created, and as we sit here today, the solution to the vacuum has not yet come. We must find that solution, because we're now a year down the road with a need for 15,000 to 20,000 units, and each year that need will be at least the same amount, regardless of what anybody says.
We've also provided our comments to Greg Lampert, who wrote the paper for the provincial government on the barriers to investment in private rental housing. That document is probably well known to you, and if it's not, it will be by the end of these hearings.
In the report the rent control system was identified as one of the major barriers, not the only one. The report was also careful to note that many other major changes would be necessary. The economic bottom line is that right now we can't build a rental housing unit to rent at market rents because market rents are a couple of hundred dollars or more a month less today, because of certain things that need to be changed, than they might otherwise be.
We demonstrated the potential enormous economic benefits and tax revenues that would be derived from building apartments. Let's remember that every apartment unit that's built provides about two to two and a half person-years of employment. If you're going to built 15,000 units a year, you're going to provide about 40,000 permanent jobs annually.
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There are many entrenched obstacles and myths that have been created concerning rental development. One of the biggest is the assertion that the market cannot work. They are correct only inasmuch as the current regulatory and tax environment cannot sustain the private rental industry. But let me assure you, the changes that are needed are not that many and I think they are doable. Given the fact that there's no other rental stock being built, we'd better find a way to do them.
Our industry benefited from the production of social housing because every unit of social housing that was built was primarily built by the multifamily housing industry. So the people who were doing that are now ready, willing and able to fill another role, which role must be filled for other reasons.
My greatest criticism about finding solutions to the housing problem is that there has been a dearth of ideas and solutions from any other concerned groups. Clearly, leaving the system the way it is, with minor modifications, is not the answer. Successive governments have proven themselves incapable, even through massive intervention, of replacing the market. Sadly, government has proven it can kill it; for example, the fact that no group has seriously challenged the Lampert report. It is only the Rental Housing Supply Alliance that has proposed solutions which do not involve massive government spending and direct intervention.
The whole situation reminds me of Gorbachev visiting the Ukrainian farmers in western Canada years ago as the Soviet agriculture minister. He picked up a handful of dirt and said: "Same soil, same people, same climate, same crop. It must be the system."
Therefore, I respectfully request that you ask other groups presenting how they would effectively meet the challenge of creating new housing supply. Challenge them to look beyond their narrow scope of interest.
We see the proposed rental changes as an indication that the government -- and I hope I can use that term broadly -- is seriously recognizing the need to address this difficult and not well-understood problem. To tackle a politically sensitive issue like this requires courage. The Rental Housing Supply Alliance will address this in its presentation.
I remind you that rental changes alone will not result in new construction. I hope I have made that abundantly clear.
With regard to the specific provisions of the proposed changes, we have reviewed the Fair Rental Policy Organization of Ontario position and support it in principle. We are puzzled somewhat by the fact that following decontrol, a guideline will be reapplied to the unit in question. This seems to defeat the purpose of restoring the market. After all, the market for those units will have been restored in any event. As such, we recommend full vacancy decontrol. The recontrol of a unit implies that the current system, as modified, will remain in place, which will have a negative impact on new investment.
We have to remember that we have had not had significant investment in rental housing for a long time. Investors have choices, and the more secure the investment, the better. Rental housing as an investment will have to prove itself to be a stable environment for investment. As such, the psychological barriers to investment cannot be underestimated.
For the same reasons, the negative impact of what appear to be the draconian maintenance proposals should be carefully considered. Why should I buy into a system like that with a new apartment building? Why should I jump into that particular pond? I don't really believe that kind of measure is necessary for most of the existing landlords. I believe it's an over-reaction and something that should be reconsidered.
It will be necessary, by the way, for government to sign individual contracts with potential new private rental investors which would provide for long-term investment security. In other words, I don't want to be trapped into building a building with a promise that it will not be rent controlled and then find out some time in the future that a government of the future will say, "It's time we rent-controlled these units." It happened to us in 1975. We were told that anything we built after 1975 would not be rent controlled. Lo and behold, Bill 51 came along, and you know what happened.
There's not too much time left and I just want to give you some personal comments. One is, I see Alvin Curling here. He was the minister responsible for Bill 51. Just as a sidelight, Bill 51 was not a perfect piece of legislation. In fact, it was an agreement between a group of landlords and tenants who worked -- we worked; I was one of them -- for about 15 months to come to that. But even if it was imperfect, it did result in a spurt of private sector rental accommodation building: in 1986, 8,500 units; in 1987, 12,500 units; in 1988, 10,000 units.
If we look at the piece of legislation that's being proposed now and try to be careful that we are going to make a bit of a non-hostile environment for investment, I think there is an opportunity to build units. As a matter of fact -- Alvin is here -- last Monday I was in Vancouver. I was the chairman of a conference there and our guest speaker on the opening day was Bob Rae. It was my duty to introduce Bob Rae, so I gave the thumbnail sketch that they provided me with, and then I reminded him about Bill 51. I reminded him of the fact that it was the minority government of the day. We needed three-party support to make it happen and I went to his office at Queen's Park, hand-in-hand with a tenant representative, to seek his support for that bill. In fact, the support was given and the bill happened.
So this decontrol/recontrol is not something that's going to excite me very much. There are certain parts of Ontario where that whole concept will result in major losses in value to buildings because of very depressed markets, and we have to look at it very carefully before we do that.
I've already talked about the maintenance thing, which I consider very bad. I am encouraged by the fact that the legislation will provide the opportunity to do capital improvements. As the previous speaker spoke about no hot water and so on and so forth, if money is going to be made available to do these things, responsible landlords will do them. The existing legislation almost precludes anything like that happening.
I could go on for another 20 minutes, but there may be one or two questions.
The Chair: Actually, Mr Bassel, you've not allowed any time for any questions.
Mr Bassel: I didn't start on time. I was four minutes late in starting, so someone else took part of my time.
The Chair: We appreciate your attendance here and your comments and your involvement in our process.
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FEDERATION OF METRO TENANTS' ASSOCIATIONS
The Chair: The next presenter is the Federation of Metro Tenants' Associations, represented by Henk Mulder, the chair, Janet Morrison, the vice-chair, and Kenn Hale, the chair of the law reform committee. Welcome to our committee. We appreciate your being here.
Mr Henk Mulder: My name is Henk Mulder. I am the chairperson of Federation of the Metro Tenants' Associations. We thank you for giving us the opportunity to provide the committee, the government and the public with the views of the federation's members on the discussion paper, Tenant Protection Legislation -- New Directions for Discussion.
Like many of our members, Janet and I have had to overcome serious difficulties with our landlords in order to keep our homes. I have had to fight for years for decent maintenance in my building. We suffered from filthy common areas and mice and cockroaches in our apartments. The parking garages were falling apart and damaging our cars. We organized and the rent control office made the landlord return over $300,000 to the tenants. Now we are facing a plan by the landlord to demolish the 400 units in our building to make way for luxury condominiums. Remember the address is 325 Bogart Avenue. We have been in the news several times.
Janet has suffered from repair and security problems that would not go away. She was forced to give up her home and move to another building. We know that the legal rights of tenants are not always adequate to do the job, but the discussion paper will take these rights away from us and give landlords even more freedom to exploit people.
I now ask Janet to present the federation's position on the issues raised in this paper.
Ms Janet Morrison: The federation and the goals of tenant protection: As you may know, the Federation of Metro Tenants' Associations is the largest and the oldest tenant organization in Ontario. Through our affiliated associations and individual memberships we have represented tens of thousands of tenants over the 22 years of our existence. We have participated in the development of every piece of provincial legislation since the days of Bill Davis.
We do not represent a narrow interest group; we represent the tenants of the greater Metro Toronto area. We speak for the people who live in the majority of housing units in Metropolitan Toronto. We speak for over one third of the tenants in Ontario. They want us to tell you that the proposals in the discussion paper are not acceptable to them. They want us to demand that you tell Mr Leach and his bureaucrats to go back to the drawing board and present something that meets their need for a decent, affordable place to live.
The paper begins with the government's goals: to reform the tenant protection system; to protect tenants from unfair or double-digit rent increases, evictions and harassment; to provide strong security of tenure; and to improve enforcement of property maintenance standards.
The federation completely agrees with these goals and applauds the government for recognition of them. Unfortunately, the changes that the government is putting forward will do nothing to achieve these goals. In fact, the proposals would strengthen the power of landlords at the expense of tenants. They would result in higher rents, more unfair evictions and harassment and a weakening of security of tenure. In addition, they would likely lead to fewer rental units being available, poorer maintenance of the present rental stock, a deterioration of landlord-tenant relations and less access to justice for tenants.
The government appears to want to carry out legal experiments on Ontario tenants and move away from the legislative approach that has protected us for the last 25 years.
Vacancy decontrol -- bleeding rent control to death: The proposal to allow landlords to set new rents once sitting tenants have moved out has nothing to do with protecting tenants. It is a plan to kill off rent control one unit at a time.
Support for rent control among Ontario tenants was evident to most candidates in the last election, and several Metro members now holding cabinet positions campaigned on promises to save rent control.
In the fall 1995 the government commissioned Greg Lampert, a development consultant, to produce a report which he called The Challenge of Encouraging Investment in New Rental Housing in Ontario. He told them that the elimination of rent controls must be done in a manner that would not result in negative media coverage. He recognized that there would be a political price to pay for massive economic evictions and he was concerned that landlords would lose out when future governments reintroduced controls.
In the proposal for vacancy decontrol, the government believes that it has found the perfect method of deregulating rents and avoiding a political backlash. Government members can claim that tenants will continue to be protected as long as they remain in their present apartments. Meanwhile they can tell landlords that there is a free market as long as the tenant living in the unit can be persuaded to move. Our members have told us at meeting after meeting that tenants do not believe the government's claim that they will be protected. They have told Al Leach, Isabel Bassett, John Parker, Derwyn Shea and Dave Johnson at public meetings that they do not want to be prisoners in their own apartments. They do not want to be sitting ducks caught between their landlord and their landlord's dream of charging a market rent for their unit.
It is clear that vacancy decontrol will result in the end of any effective control of rent levels; it is just being done the coward's way. Given that 20% of all tenants move each year, it is estimated that 70% of Ontario's units will have had decontrolled rents at the end of five years. Certain sectors of the rental market, those serving students and other parts of the tenant population that move more often, will be decontrolled at a much quicker rate.
These people are often severely disadvantaged in that they have limited incomes and a limited amount of time to negotiate with their landlords. Seniors and young couples will also be hurt badly since their situations often call for changing the size of their living space. Even seeking a transfer within the same building will result in an increase of rent up to what the market will bear. This puts the lie to the Premier's June 25 statement that tenants will not see their rents rise.
We also ask you to consider the implications for the proposed tribunal trying to cope with the huge number of evictions that take place in Metro Toronto. The vast majority of evictions are due to arrears. The system only functions now because a good percentage of these cases are settled without going before a judge because both parties agree to payment terms. Under the new proposals this will not happen, since the landlord will only get to set a market rate if the eviction is carried out. On the other side, the tenant will only have the benefit of a controlled rent if they stay where they are. Apart from its effect on the system, this will have a disastrous effect on lower-income tenants who occasionally fall into arrears but are able to make it up if they are given time to do so.
The government acknowledges that vacancy decontrol will result in an increase in landlord harassment of tenants in order to obtain vacant possession and decontrol the rent. That is why the discussion paper proposes the creation of an anti-harassment unit. At present, both the Landlord and Tenant Act and the Rent Control Act contain an anti-harassment provision. There is nothing to suggest that the maximum fines provided for in these laws are not sufficient to properly punish lawbreakers. But how often are landlords prosecuted for such behaviour? Where are the crown attorneys to prosecute them?
A government struggling with ways to keep its costs under control is not going to commit sufficient resources to scratch the surface of this problem. Increasing maximum fines and turning some bureaucrat into an anti-harassment officer will not stop harassment. This committee should stop harassment before it starts. You can do so by refusing to endorse vacancy decontrol and the immediate financial incentive it provides to many landlords to force tenants out of their homes.
Rent control -- making a mess of what's left: Even if tenants have the stamina and courage to resist landlords' efforts to get them to move, the proposals to protect sitting tenants from unfair rent increases are inadequate and counterproductive. The limit on rent increases for capital expenditures will be relaxed, and tenants will keep on paying for repairs long after the repairs and the interest payments are paid off. There will be no limit on rent hikes to pass tax and utility increases on to tenants, but tenants will no longer be able to share in the benefits of a decreased utility cost. Tenants will not even get the information on these costs that they are entitled to now, and rent officers will not have to give reasons for their decisions unless tenants think to ask them.
The present system of negotiating rent increases would be turned into an opportunity for landlord pressure and threats, as the requirement for rent officer approval of these agreements would be repealed. Tenants would find their complaints about illegal rent impossible to prove, as the rent registry would be scrapped. The door would be open for the charging of key money and other corrupt practices which led to demands for tighter rent control in the first place.
None of these things can be called "tenant protection." None of these things help builders and investors put up new housing. All they do is further upset the balance in landlord-tenant relations in the landlord's favour. Along with vacancy decontrol they will cause rents to skyrocket, until the next government comes along to undo the damage. The bottom line is that the proposals will take money from the pockets of Ontario's poor to put it into the pockets of the rich. We are here to tell you that the poor pay too much already and can't pay any more.
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Maintenance -- throwing out what works: Considering that landlords and tenants should have a common interest in the preservation and maintenance of rental housing, there are a vast number of repair problems out there. These range from the minor annoyances of cracked walls and ceilings to the major hazards of dangerous wiring and vermin infestation. For over 25 years the law has placed the responsibility for repair and maintenance where it clearly belongs: on the landlord. Nothing better illustrates the weakness of individual an tenant's bargaining power than the fact that this legal obligation is so often avoided.
The discussion paper again hits the nail on the head in recognizing what the problems are. Tenants expect landlords to obey the law and keep rented homes safe and well-maintained. The current system doesn't do enough when landlords fail. So far we agree, but what are the solutions?
Here's what the discussion paper proposes:
Get tenants with repair problems to move out and make way for people who can pay higher rents. Find new ways to force tenants to pay rent even if the landlord refuses to provide a fit place to live. Allow the landlord to raise the rent while defying municipal work orders. Give more power to municipalities which are not interested in using the powers they already have.
We would expect such proposals from landlords who want to find ways to get away with even fewer expenditures on maintenance, but it is difficult to believe that such suggestions are coming from public officials who are developing a legal framework to protect the health and safety of tenants. Of course we support the proposals to increase the powers of municipal inspectors, but this will not result in any improvement in maintenance of rented homes unless municipal councils are willing to devote more resources to inspection and enforcement. In the face of provincial cutbacks to municipal funding, we do not believe they will do so, and the rest of the proposals will only result in the weakening of tenants' abilities to get their landlords to comply with the law. The committee must tell the minister and his bureaucrats that the proposals are dead wrong.
How will tenants get justice from the new system? Seeing how tenants' concerns have been repeatedly dismissed by this government since June 1995, we have grave concerns about putting our faith in any new system they might set up to resolve our disputes with our landlords. We are even more concerned when they refuse to put their proposals up for discussion during a province-wide consultation process and merely say, "Input is welcomed." We think the committee should demand that the ministry provide details as to how any proposed system could provide a high standard of fairness while meeting the cabinet's demand to cut costs to the bone. We suspect that the only priority would be to carry out the minister's promise of faster evictions, and justice be damned.
Having said that, we must be frank and say that the existing court system and the overlap between what judges can decide and what rent officers can decide create serious problems for tenants. These problems have been made worse by cuts to funding of court staff, legal aid and tenant advice services. The imbalance between the unrepresented tenant and the landlord who is represented by a professional agent or lawyer can be made worse when they appear before a judge who expects strict adherence to rules of procedure and evidence.
There is also a real problem with the documentation required by courts. The paperwork needed to bring landlords to court to account for failures in complying with their obligations deters many tenants from seeking justice. But the court system delivers its decisions in an amazingly short time when compared with the Ministry of Municipal Affairs and Housing's rent officers. In fact, the only real example of delay the discussion paper can point to is delay by the rent officers.
What is of most concern to our members and what we think the committee should be most concerned about are the qualifications and independence of decision-makers. Whatever else can be said of judges of the General Division, they have the education and the ability to understand what the Landlord and Tenant Act is trying to accomplish and they have the independence, guaranteed in the Constitution, to be able to make a decision based on the evidence before them.
How can the committee be confident that the same can be said of those who would make the decisions under whatever proposal the ministry finally comes up with? You must insist on legal safeguards for the qualifications and independence of these decision-makers before any discussion begins on the details of a new tribunal. This will certainly not occur if this function is auctioned off to the highest bidder.
You must insist on one further legal safeguard concerning appeals. The right to appeal an eviction order is worthless unless the law provides that the eviction cannot be carried out until the appeal is over. We know that landlords have convinced the minister that this should not be done, but this has been the law for over 20 years. Furthermore, the courts know how to deal with people who abuse appeal rights. Don't let the government fool you into thinking that tenants can prepare for their appeals while they're out on the street.
Protect tenants by protecting their homes: The discussion paper attempts to hide the fact that the government wants to give a green light to evictions for demolition, renovation and conversion of rental units. One of the ways it is trying to do so is by hiding behind a slogan: "Focus protection on tenants instead of units." The Rental Housing Protection Act was passed for two reasons: one, to protect security of tenure, directly by protecting tenants in buildings that were threatened with demolition or conversion and indirectly by protecting those who could not afford to pay for major conversions, major renovations or could not afford a down payment on their apartment. Secondly, the government needed to assure that its efforts to get more affordable built were not being undermined by the loss of older units. Both of these objectives are more relevant today than ever.
The minister's message says that tenants must be protected from evictions without just cause. In our opinion, an eviction to allow a landlord to tear down a building is not an eviction for just cause. An eviction to allow a conversion from affordable rental housing to trendy boutiques is not an eviction for just cause. An eviction because a tenant is unable to afford the down payment to buy his or her apartment is not an eviction for just cause. But these are the kinds of evictions that you would be allowing if you eliminate the requirement that there be municipal approval for demolitions, major renovations or conversions. Clearly the effect of this proposal is to weaken security of tenure, not to make it strong. In order to protect the tenants in the units, it is necessary to protect the tenants.
You may agree with the discussion paper when it says that existing affordable housing is a barrier to owners who want to make better use of their land, but it is not just the tenants of the building who feel revulsion when they watch the 6 o'clock news and see perfectly good housing being smashed by a wrecking ball. The general public reacts to this kind of waste, and when they look for who is responsible, they will look to their Conservative MPPs. So we hope that you will agree with us that affordable rental housing is a good enough use for urban land and you will reject the minister's call for an open season on older buildings.
Condominium conversion is not tenant protection: Conversion to condominium or co-ownership is another way the discussion paper seeks to bring about the end of rent control. When a unit is for sale and not for rent, its price is governed only by what the market will bear. Not only is it lost to the rental market, but the requirement for a down payment and mortgage approval means it is out of reach for most tenants. Furthermore, proposals to convert rental housing to condominium or co-ownership create problems for communities beyond the loss of housing.
There is no dramatic event like there is in demolition, and people outside the building hardly know that it is happening. But inside the building, things are different. Inside the building, neighbour is turning against neighbour. The young are turning against the old and the more well-off are turning against the less well-off. The promoter is offering deals and making threats. Politicians are lining up on side or the other.
In the end, some of the tenants think they have won and some of the tenants think they have lost. If the building is converted, some tenants get to keep their homes because they could afford the down payment and the higher monthly charges. Some tenants flip their units and walk off with a nice profit. Some tenants have their homes sold out from underneath them, and sooner or later the purchaser gets possession. If the conversion fails, the hostility lingers on, and the those who supported the promoter no longer feel welcome in their own building.
Why would tenant protection legislation permit such an ugly scenario to be played out? We believe the government wants to bring these nightmares back because there are promoters waiting in the wings to organize these schemes and that they will make a lot of money. Perhaps the minister believes they will use some of this money to build affordable housing somewhere, but what makes him think it will be somewhere in Ontario? There is nothing in this plan for tenants or the public at large, and the economic evictions that would occur in the aftermath will shake the housing market to its foundations. Along with vacancy decontrol, this is a plan to create friction and contention between tenants and should be soundly rejected by the committee.
The politics of dividing tenants: The federation was created in 1974 as an umbrella organization for tenants' associations. A major part of our work involves helping tenants to organize themselves into associations and thereby look after their own interests without having to rely on government or the legal system. We see cooperation and united action by tenants as one of the only ways the legal and financial might of landlords can be challenged. When tenants work together, the playing field is not levelled out, but it gives tenants a fighting chance.
The government's proposals are based entirely on tenants acting on their own in a marketplace where the players are assumed to have equal strength and ability. In such a world there is no need for consumer protection because the consumers are perfectly able to compete with each other and with the landlord. This world may well exist somewhere in the universe, but it is not in the world of Metro tenants.
The government is encouraging division between tenants. It is telling them not to think of themselves as neighbours facing similar conditions, but as individuals asking the landlord to cut a deal with them, and them alone. Tenant associations have not only been good for tenants, but they have kept disputes out of the expensive public arenas and smoothed out some of the bumps in the relations between landlords and tenants. Tenant organizing will not die if the proposals are adopted, but it will be done for much higher stakes and with no incentive to find a compromise.
Tenants have not bought the minister's rhetoric that taking away their rights is good for them. They do not believe that a democratically elected government has to be held up for ransom by a small group of property owners. They believe that government has an obligation to look out for the best interests of all members of society and that there must be a place where their legitimate grievances can be addressed. The ministry's proposals threaten all these things and it is your committee that can prevent them from being carried out. The Federation of Metro Tenants' Associations asks you to do that.
The Chair: Thank you very much for your presentation. You've used up your allotted 20 minutes. We appreciate your attendance here this afternoon and your interest in our process.
Mr Kenn Hale: If you have any questions, our address is on the front of the brief. We'd be glad to address them.
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P. K. DAVE
The Chair: The next presenter is Mr Dave. Good afternoon, sir, and welcome to our committee.
Mr P. K. Dave: My name is P. K. Dave. I am a tenant at 15 Cougar Court, and this is my friend, Sheba.
With existing regulations under the Rent Control Act, 1992, the costs incurred for tenants for application SB-00096-TT were as follows: First, documents, photocopies, typing etc cost $400. To obtain various documents, to travel to the ministry rent control offices in Scarborough, to the city of Scarborough and sometimes, for the elevator devices, to the Ministry of Consumer and Commercial Relations at Islington and Bloor, total travel for this particular case was 2,000 kilometres. The price, at 50 cents per kilometre, is $1,000. Total hours spent in bringing this case to an end was 500. At the minimum wage, $6.85 -- you have the figure before you. These 500 hours also include 52 hours of actual hearing.
For a majority of the tenants this expense is out of bounds, for the very reasons that you know. Most of their monthly income is spent on rent and food and there is nothing very much left over to pay for these extra expenses.
The stress and the running around with all these expenses for a period of 16 months and then when the landlord appealed to the court, it took a further six months before the entire case came to a stop, and still the maintenance or the mandatory heat, hot water, is not guaranteed -- absolutely not guaranteed.
Removal of the rent registry and without guideline increase -- it's time there should be a decrease of rent when an apartment falls vacant. This is going to create lots of problems and miseries for tenants, as it has been indicated above. A rental unit, or whatever the Ontario government bureaucracy wants to call it, is for we tenants our family's home and you are attacking our home to make an already happy landlord more happy. In short, this proposal wants to hurt a tenant like me.
If the real intention of this government is to protect tenants like myself, then tenants must be given legal rights to deduct from next month's rent cheque any services that have not been provided by the landlord. By "services," I mean the maintenance, the heat, the hot water and things like that. It should be automatic. It can be prorated, you know. If the heat is not provided for five days, the tenants should have a right to deduct automatically from their next month's rent cheque, instead of going to a rent officer, filling our numerous forms, going umpteen times to the rent control offices, going to the Scarborough offices to get the documents and all these things.
This is not protection for the tenants. Very often the rent officers will not personally come out to see actual conditions within the building, apartment or the specific unit because he or she might get prejudiced against the landlord. This being not the case, it is not protection. Call it by any name. Any questions?
Mr Marchese: We welcome you here and we thank you for the presentation. I think these are the stories that we need to hear from people who are affected and will be more affected by this type of proposal that we fear may become legislation down the line.
You're not the first to talk about the rent registry. Almost every deputant has spoken about the problems with its removal. Mr Leach and the civil servants talked about why there's no more need for it, but the rent registry has helped tenants determine if their rents were legal and to challenge unscrupulous landlords by legal action. That is what the Ontario Coalition of Senior Citizens' Organizations said, and obviously you support that. It's something that I raise because I know every deputant is likely to raise it. So you're not the only one.
One of the points the Ontario coalition of senior citizens raised was that they believe "housing policy must have a larger vision and social purpose than what is currently the trend among governments. Our government has a responsibility to maintain and develop comprehensive housing strategy."
Then we listened to a Mr Bassel, who came earlier on. He said that "for many years rental apartment development has been stymied by well-intentioned but ultimately misguided government intervention directed towards social policy." He seems to have something against government intervention and something against government setting that kind of social policy. Now, as I see it, if governments don't set social policy to protect large numbers of people, who's going to do that? It seems to me they're arguing that the private sector will do that and the market will take care of that. Which opinion do you support?
Mr Dave: I support that the government should not get out of any housing business. Food, shelter and clothing are the three basic necessities of mankind. Whenever you talk of shelter, you are talking of housing. Housing is a right. Already speakers before me have mentioned that rental apartments have generated a 10% return on the investment. That is a percentage and a half more than industry and 3% or 4% more than retail or mixed office use, whatever you want to call it.
With this highest return on rental apartment buildings, why is the industry not capable of building its own rental units? Which industries go out and get the money to finance their things? The banks are more than willing, very often, to give money for a rental apartment.
Mr Marchese: Mr Dave, I want to continue to ask you a question, and I'm always cautious about asking those kinds of questions because if you tend to agree with me that the government should set social policy, you could be accused of being a socialist and, God knows, you need courage for that.
But I want to make another point. If this happens and becomes legislated down the line, what do you think about how immigrants will be affected? We don't talk about that, they never touch that, but a large number of people who come into this country won't be able to afford a home; they'll be immigrants. Is it your sense that immigrants immediately grasp the intricacies of what their rights are and do you think they'll be able to handle this kind of problem down the line?
Mr Dave: No. Whenever they come into this country, immigrants' first priority is to look for shelter and a job. They are not very familiar with the law. It has happened to me; my landlord has taken me for a ride. That's how I got into it. I wanted to learn it and by putting in this application SB-00096-TT, I have learned a lot. I also learned lots of, if I am permitted to use the word, bullshit. I also learned lots of bullshit from the rent control officers, you know. I'm sorry about the word, but I have asked for your permission to use that.
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Very often some immigrants have their immigration status in very doubtful situations and they're afraid to speak. These are the very people landlords try to intimidate. Even those who are legitimate immigrants are also getting intimidated, either by key money deposits or illegal parking charges. When they don't even have an Ontario driver's licence, they still have to pay for two parking spots. It goes on and on, and whenever you bring it to the ministry, the ministry takes absolutely no action. I would say, to put it in Rudyard Kipling's words, that the ministry has been immensely successful in doing absolutely nothing with an immense success.
Mr Ernie Hardeman (Oxford): Good afternoon, Mr Dave, and thank you for your presentation. First of all, I sympathize with you that you would have to spend $4,825 to address a concern you had with your landlord. That's one good example that the present system isn't working properly. That type of thing should be settled with less time and money expended.
I have a couple of questions on your presentation. First of all, separate from removing the guidelines on rent increases, you also expressed concern about the actual removal of the registry. Could you elaborate on that, as to why you have concerns as it relates to tenants? The landlords tell us they have some concerns with removing the registry because it will not allow them to make up the difference between the allowable rent and the present rent. Why do you feel tenants have a concern with that?
Mr Dave: Tenants are concerned, because very often the landlord is charging much above the rent registry guideline. Without knowing how much a landlord can actually charge, the tenant is always paying $20, $40, $50 extra. With these things, if the rent registry is removed, there is no way the tenant can ever find out what actual rent he has to pay. Does that answer your question?
Mr Hardeman: Yes. The other one: You suggested that for lack of service such as heat and water and so forth, the tenants should be allowed to deduct that immediately from the cheque. Do you not see that there is a bit of a problem with that? There may be some tenants who would deduct things off the cheques that weren't lacking? If we give that right to tenants, do we then also add that same right to the landlords, who could charge for things that were, in their opinion, damaged or not looked after properly, they could just immediately add that on? Do you not see a fairness, that we have to be fair for both the tenant and the landlord?
Mr Dave: The present legislation under the rent control is not fair for tenants. If a tenant doesn't get heat or hot water, he has to call in the property standards inspector to get a letter which certifies that there is no hot water, there is no heat. This takes a tenant 30 days under access to freedom of information, and very often the tenant has to pay to get this document. Then it goes to the rent control officer, and as I explained it to you earlier -- if you were here; I do not know -- it took 16 months before the rent officer could give the judgement.
To cut all this bureaucracy, if the landlord knows that he is going to get prorated, maybe 5%, maybe 10%, whatever the government is going to decide, what will happen is that he is going to fix it because he will know immediately that if hot water is denied for two days, then he will have 5% less rent collection the following month. Everything will work out fine.
I would like to remind you of one thing: The Russian Revolution was not started by Lenin; it was started by ordinary housewives no better than this audience here because they were denied heating oil by czars. These women were standing, on an early morning in October, outside the store to get heating oil. They wanted -- no, let me finish. They wanted heating oil to warm their homes and to cook meals for their families. When they were denied, they rioted, and from that the revolution started. This is the same situation that we had in West Lodge last year in January.
Mr Sergio: Mr Dave, sorry I missed your presentation, but I have a couple of questions and I would appreciate if you could expand a little bit so it gives me a bit more from your side. We had the minister here this morning. He said to us that he wants to fix the system; he wants to make sure that it's a much fairer and more balanced system. I'm sure you're well familiar with the proposed tenant reform package. Do you think the proposed reform, as it is, will accomplish that?
Mr Dave: No.
Mr Sergio: Why not?
Mr Dave: No, because the protection, you can call it anything, but it is going to be --
Mr Sergio: I have another question for you if you're not going to be that long.
Mr Dave: Ask the question.
Mr Sergio: No, answer the first question. Go ahead.
Mr Dave: They are calling it protection, but calling it protection is to fool the tenants. You can fool some of the people some of the time, not all the people all the time.
Mr Sergio: There seem to be a lot of disputes between landlords and tenants, and one way is to get to those problems and solve them as quickly as possible in a very efficient manner. We also had the minister this morning saying that he wants to create a system that is much more easily accessible and create a much faster system to deal with those problems. Again, there are a number of steps proposed in here to deal with those problems. Do you see those steps being more of a higher hindrance to solve those problems or will this assist in those problems between landlords and tenants?
Mr Dave: The way I see it is that any new system is going to be like an old wine in a new bottle; basically, it will be the same. It will still be time-consuming, it will still be having the same problems, maybe more than what we are already accustomed to.
Mr Sergio: What would you recommend to us?
Mr Dave: I would recommend, as I have stated, that if the landlord does not provide the service, in this era of "pay as you go" deduct it immediately. That will be the simple solution.
Mr Sergio: The minister did say: "I have an open mind. I want to hear from the people and then recommendations from this committee." What would you recommend that we suggest to the minister that he change in his report?
Mr Dave: This is what I recommend: If the landlord does not provide you the service, you immediately deduct the money from the rent cheque. If the landlord wants to get it redressed, he can go to the rent control office and fill out -- you know, you can have catch-22 -- form 22. Let him hear after 16 months.
The Chair: Thank you, Mr Dave.
PETER TABUNS
The Chair: The next presenter is Peter Tabuns, councillor, ward 8. Good afternoon, sir. Welcome to our committee.
Mr Peter Tabuns: Thank you for allowing me to speak to you today. I think most people who come to these hearings will want to be constructive and conciliatory in trying to come to grips with the proposals before them, but my fear is that most of us who read these changes will find that there isn't a way to be anything but very sharp, and that's to say that you should not proceed with what's suggested by the government.
I feel, and the tenants in my ward feel, that if these changes were to go through then effectively the situation for renters in Ontario would become dramatically worse. It would essentially set a time bomb underneath the tenants in this province whose homes would be at risk in the years to come as landlords wanting to increase the revenue on units would be taking steps to push them out of those units.
Under the name of tenant protection, this government is suggesting many changes that would be truly detrimental to tenants and the communities they live in. There's no question that the statutory guideline increase has been capped at 2.8%. I think the government feels it's kept its promises, that it's working in the best interest of the tenants. But in addition, they've increased the above-guideline increase for capital expenditures to 4% and made provisions to allow for unlimited increases in rents based on increases in property taxes or utility costs. All these changes mean less predictability for tenants and the potential for much higher rent increases than under the current system.
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The province also wants to get rid of the "costs no longer borne" provision that is in the current legislation. The elimination of this provision would effectively allow landlords to continue to charge tenants for capital repairs even after the full cost of the item has been recovered through the rents.
When we look at the actions that the government is taking or ask about the impact that the provisions for unlimited rent increases based on higher property taxes will have on tenants in view of the pending property tax reforms, we're told that in all likelihood tenants will see a benefit. We're told that it's very possible that property taxes for rental buildings could go to down. If this is the case, there should be a mechanism in place whereby there's an automatic reduction in rents for tenants. As I read the information before us, tenants will have to apply for a rent reduction, and I'm not sure that the way things are structured or will be structured will ensure that reduction is passed through to them. Asking the tenants to trust that they will be better off is not a prudent course.
I'm also concerned about the provision for unlimited increases based on above-average utility costs. Under the government's proposal, landlords could be granted an above-guideline increase in rents because it was an unusually cold winter and heating costs had increased. Tenants, however, will no longer be able to apply for a rent reduction the following year when the landlord's heating costs go back down.
Because of the proposed vacancy decontrol, the government feels that it is no longer necessary to keep the provincial rent registry in place. What this means is that tenants will have no way to access essential information regarding rent increases, nor will they be able to monitor the fairness of their landlord.
Even in the area of maintenance and enforcement of property standards, where the province has tried to extend an olive branch to the municipalities, it has stacked the deck very heavily against the tenants. In their proposal, it's suggested that as an aid to municipalities in enforcing property standards the province will introduce provisions which will allow municipalities to do the necessary remedial repairs and to recover their costs by adding them to the municipal taxes.
How does this fit with the earlier provision that any significant increases in property taxes can be passed on to tenants through the rents? Some will argue that effectively the work that is being done constitutes capital repairs and therefore it's a legitimate cost which should be borne by the tenants. But those, like myself, who are municipal politicians and who work with tenants on a daily basis know that the municipality would only become involved in making repairs if there's been an ongoing, recurring, significant problem and the landlord has repeatedly refused to cooperate or work with the city to find a solution. None the less, the way the current proposal reads, it would be the tenant who pays.
The province is also proposing the elimination of the orders for preventing rent increases or what we call OPRIs. Not to mention that this has been the single most effective tool for the city of Toronto in gaining timely compliance on property standards violations, I want to look at what this means for tenants. Effectively, it means that they could continue to see rent increases even when there are outstanding work orders on their property. I don't think this is fair and I don't think it'll be seen as fair by the people of this province.
Where are the protections for tenants? Are the protections in the anti-harassment unit that the government is proposing? First, we should look at why it's so important to introduce stronger anti-harassment measures. I think the government is fully aware that one of the very real outcomes of the changes they're proposing is increased tenant harassment as landlords try to get tenants to move so that they can increase the rents. I think we'll find that this harassment won't always be something that is immediately easy to prove.
I remember reading a case in New York City where a landlord would shove hundreds of cockroaches under the door of a unit to try and get a tenant to move so the landlord could increase the rent on the apartment. This would happen on repeated occasions, but it was almost impossible to prove that the landlord was doing this. I remember stories in the city of Toronto where very unsavory characters were hired as superintendents of buildings to make those buildings inhospitable to the tenants who were there.
As you probably heard before, most of the tenants who have been harassed into moving will be more concerned with finding another place to live and will not have the time to spend with investigators or court proceedings. It's also important to recognize that only the most capable and determined tenants would likely be successful in realizing justice. This is especially true given the cuts to funding for the different tenant advocacy and resource groups. And given concern about provincial finances, what sort of resources are going to be allocated to this anti-harassment group? Are we going to have five people covering the province? Are we going to have one inspector for every 300 units? You could set up such an anti-harassment system and undersource it so that effectively it was a dead letter.
Another way of getting tenants to move so that rents can be increased is to offer reduced service or maintenance. Is this something which can be dealt with effectively through the anti-harassment unit? In my opinion, no. Is this something which will be addressed adequately through the proposed dispute resolution system? It's hard to say because the government has not really provided any details as to what this system will look like. However, given the bias the government has shown to date in the development of this legislation, it's likely safe to say that tenants' rights and concerns will not really be respected.
I think the government has to really think about the cumulative impact their proposed changes will have on the quality of life for renters in the province of Ontario. Not only have the proposed changes dramatically weakened the current protections for tenants, but these changes also mean that tenants will be trapped in their units, unable to find suitable alternative accommodation.
When I was coming down today with tenants from my ward to these hearings, a number who are seniors said, yes, with the system that you're proposing, they will never feel secure enough to move out. They will be stuck in their unit because the moment they leave, their protection disappears. And you have a very large population, not just in the city of Toronto but I would guess across the province, of seniors who will be hanging on to those units for dear life.
This, combined with tight rental market conditions, the elimination of the non-profit housing program, the removal of the Rental Housing Protection Act and significant cuts to social assistance, means that renters will have fewer and fewer options available to them. I have serious concerns about what this means for the tenants and the communities where they live. There is no doubt that there will be more and more families and households who will not be able to find suitable housing. It could also mean there are more and more families who are actually homeless. We already know that there is an emerging evictions crisis in the city of Toronto. If allowed to go through, these changes will only compound the problem.
I believe it's imperative that this government reconsider the changes they are proposing before it's too late.
Mr Maves: We had a landlord in earlier and he mentioned the high proportion of costs that he incurs because of municipal property tax. I understand that up to 40% of a landlord's operating costs in the city of Toronto are because of municipal property taxes. Are you aware of that? Is that accurate?
Mr Tabuns: I can't comment on its accuracy. I haven't seen his books. I don't know if that's true or false.
Mr Maves: Have you had representations at city council from tenant advocacy groups about the high impact of municipal property taxes on rents?
Mr Tabuns: We've had concern on the part of tenant advocacy groups about the fact that tenants are charged on a commercial basis as opposed to residential homeowners, who are charged on a different rate. There is concern that there is a higher taxation level for tenants than there is for homeowners.
Mr Maves: Because 40% is a pretty high proportion of rent, so I imagine you'd be supportive of lowering that burden if that was a possibility.
Mr Tabuns: I think that if you were to reform property taxes and move a big chunk of the education tax on to the income tax system, that would be progressive.
Mr Maves: You're in favour of reforming the property tax. Thank you.
Mr Tilson: Mr Tabuns, you are a councillor with the city of Toronto.
Mr Tabuns: Yes, I am.
Mr Tilson: I notice the city of Toronto has been quite active with respect to opposing any changes to rent control legislation --
Mr Tabuns: That's correct.
Mr Tilson: -- really since last year. There have been quite active programs. There's been a "Save rent control" campaign: bus shelter posters, buttons. In fact, I think this afternoon the mayor is coming with Councillor Gardner. The city of Toronto taxpayer is funding that program. Can you tell us what that total program costs the taxpayer of the city of Toronto?
Mr Tabuns: Approximately $250,000.
Mr Tilson: Wow. Thank you.
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Mr Boushy: I'm kind of surprised that you, as one of the leaders in the community, had no recommendation whatsoever, only criticism of our program. Do you have any recommendation?
Mr Tabuns: Yes. Stay with the existing system.
Mr Boushy: Are you satisfied with the present status quo?
Mr Tabuns: As opposed to the alternatives, yes.
Mr Boushy: How come, then, in Toronto you have so much trouble with the present system?
Mr Tabuns: Could you explain what you mean by "so much trouble," sir?
Mr Boushy: You have high rents in Toronto. You have hardly any rental accommodation for the people to rent. You have problems. If you are in favour of the system as it exists, then why are you having so many problems?
Mr Tabuns: I would say that most of our problems relate to the operations of the market. We have a situation in Toronto where the cost of land and the cost of construction is such that new buildings cost a lot more than buildings that have been around for one, two or three decades. As long as the cost of land is very high, as long as there's speculation, we are going to have a very difficult time getting new rental construction built in this city. I was a very strong supporter of social and non-profit housing. I think in western Europe, in some very dynamic economies, it was a very successful way of dealing with a housing crisis.
Mr Sergio: Peter, thank you very much for coming. I think it's good of you to come and speak in support of the tenants in Toronto, especially those in your area.
Just a couple of questions, if you can expand a little bit. We had the minister himself this morning here saying to the committee that the recommendation that he has in his reform package will not provide enough incentive to developers to come out and build more rental accommodation. Knowing how tight is the situation in Metropolitan Toronto, not only in the city of Toronto, what do you think the province, the minister, should be doing as further incentives to developers to come up with some plan and build more affordable units?
Mr Tabuns: I think the solution we have to have in the city of Toronto is a large program of non-profit housing development. I think the development industry is quite happy to build under their own ownership or under the ownership of the community, and non-profit housing provided tens of thousands of units that provided secure, affordable housing for the population.
Mr Sergio: Also, the minister this morning said that no change means no choice.
Mr Tabuns: Yes, I've heard that argument. I saw that argument.
Mr Sergio: Is there any choice in this proposed reform? Is there any choice for tenants in this proposed reform?
Mr Tabuns: No. What this means is that tenants with tight incomes are now going to be chained to their units. If you have any concern whatsoever about being able to afford your unit and you're in a unit that for the moment fits your financial needs, even if it doesn't fit your needs in terms of size or location, you're stuck, because once you leave that unit, you're thrown on the mercy of the market, and if the market is moving up and your income isn't, you are essentially imprisoned in your unit.
Mr Sergio: Again, because of the number of complaints between landlords and tenants, because of tightness in the court system and the cuts which the courts are receiving from the present government, stuff like that, do you think that many tenants would feel perhaps not so free to complain or go to court and they are forced to stay where they are even though they would like to move to another area or a different building or a bigger unit, stuff like that?
Mr Tabuns: I'm sorry, sir. I don't quite understand how that ties in with the courts.
Mr Sergio: If they have complaints with the building, let's say, harassment or whatever, they feel compelled to stay where they are now because --
Mr Tabuns: I see what you're saying. I would say that for most tenants, dealing with the legal system requires a pretty high level of sophistication and only a small minority will actually ever take advantage of the judicial system. I think your criticism is correct. The system is clogged, very slow-moving. I would suspect most people will not take advantage of their admittedly limited rights in using the court system. They will stay where they are.
Mr Marchese: Mr Tabuns, thank you for your presentation. It was, I thought, a very gentle criticism of the government, so I was a bit surprised. I was hoping for a little more kind of acerbic attack on this bad proposal, but we appreciate the comments.
By the way, you're not alone in your criticisms. The Ontario Coalition of Senior Citizens' Organizations has raised similar concerns as you have in terms of the rent registry, in terms of costs no longer borne. Almost everything else that you raised, I think they raised as well.
The other matter you've raised that I'm interested in as well is the proposed strengthening of the anti-harassment measures, that somehow that's going to be good protection for tenants. You raised questions about whether or not that's going to be effective. In fact, the seniors raised the same issues.
Seniors are very frightened generally. As you get to that age you are very intimidated, frightened, about who your caregivers are and who you have to negotiate with. In fact, there's a great deal of trust and reliance on people to be kind to you. I'm not quite sure how seniors, immigrants, students, just the general public will be able to have access to what their rights are, because generally they don't know what their rights are. So I'm not quite sure how you access the system if you feel somehow you've been treated unfairly. I'm not sure that by simply proposing higher fines, somehow that will dismiss the problems or it will somehow intimidate the landlord to the extent that they won't harass people. I raise the same questions you do about all of this.
I wanted to ask you a point that I've asked a previous speaker, because a Mr Bassel has come and said that in his view, "For many years, rental apartment development has been stymied by well-intentioned but ultimately misguided government intervention directed towards social policy and political objectives at the expense of sustaining a balanced housing market." Obviously they don't think governments should play the role that we have had as NDPers, and they in fact think that setting the kind of social policy that we did around housing is bad. Do you have a view on the role of governments in relation to housing?
Mr Tabuns: That's a very broad question, Mr Marchese. Where do I start writing? I would say, very broadly, that I think governments need to take an activist and interventionist approach, given that the market, for a variety of reasons, is not able to provide large volumes of good quality housing at an affordable cost. I think government simply does in this area have to step in.
I would say that outside of direct government intervention in terms of actually building and financing housing, government should take action to ensure there isn't a monopoly in land ownership or collusion in pricing of land or of new housing so that there is actual competition in the market. I'm not accusing anyone of anything illegal, but I think that if you look at the history of housing prices in Montreal and Toronto for the last 40 years, you'll see that in Montreal, where there was much more diffuse land ownership, housing costs were much lower than in the GTA, where there is much more concentrated ownership of land. I think government would have difficulty stepping in there but I think it should look for and find a way to do that so that prices are in a range the population can live with.
The Chair: Thank you, Mr Tabuns. We appreciate your presence here this afternoon and your interest in our process.
JOINT CONSTRUCTION COUNCIL
The Chair: Our next presenter is Michael Steele, the chair of the Joint Construction Council. Good afternoon Mr Steele. You have a half-hour of our time to use as you see fit. Excuse me: 20 minutes.
Mr Michael Steele: I was going to thank you for the extension already.
The Chair: That's kind of déjà vu, that half-hour was. Any time you allow for questions will begin with the Liberals. The floor is yours, sir.
Mr Steele: First of all, thank you very much for the opportunity, ladies and gentlemen. There is a handout which I will basically go through. The handout is there for your records.
As the Chairman has mentioned, my name is Michael Steele. Currently I'm the general manager of building technology for an engineering group called Construction Control Inc; a member of various committees including Canadian Commission on Building and Fire Codes, standing committee part 3, fire protection; a member of the Ontario Building Code Commission; past member of the Ontario Building Materials Evaluation Commission, and the list goes on and on, including that currently I am president of a non-profit housing provider within the community, so I've sort of seen and am involved with various aspects of the building industry, including the provision of rental accommodation to tenants.
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The Joint Construction Council is composed of building industry standards experts and sponsored by the Metropolitan Toronto Apartment Builders' Association and the Urban Development Institute. Its members are the principal providers of multifamily housing stock in the province. For 20 years the council has been recognized as the principal industry group which reviews and recommends changes to Ontario and the national building and fire codes and other related technical standards issues relative to multifamily housing construction.
The council is pleased that the government is taking action on the issue of rental housing supply and rent controls. We know that the current system does not work effectively, as is evident in the fact that no new units have been built for many years and few are being rehabilitated. The system in place now does nothing to encourage investment in existing buildings or, for that matter, new construction.
Presently the economic costs of building new rental units are out of line with what the market will permit, certainly in the greater GTA. The only solution, given that vacancies are not likely going to increase in any meaningful way and new residential construction is stagnant, is to bring costs down in a number of areas, including the regulatory and approvals process.
While these proposals address part of that issue, we need to go further. I'd like to discuss what some of those changes should be and respond to relevant questions concerning the changes proposed in the New Directions package.
The rent control system cannot be neatly separated from building standards issues, whether on existing or new construction. By the same token, standards issues cannot be separated from rent control issues. The housing industry has serious concerns with respect to existing building regulations and the construction process. Many of the regulatory barriers which have been identified by the Joint Construction Council were covered in the Lampert report concerning barriers to investment in new rental housing, the report that was published earlier this year.
The industry believes that the current regulatory environment creates confusion, delay, the stifling of innovation and higher-than-necessary costs. The government has indicated it wants to eliminate unnecessary regulations and bureaucracy. As such, we're somewhat surprised by the draconian enforcement and maintenance measures outlined in the proposals.
What we propose to accomplish today is to review a number of issues related to technical barriers to investment in rental housing and address some of the issues concerning the maintenance provisions of the government proposals.
Technical barriers to new investment -- consolidation: Acts and regulations governing the design, construction and safe use of buildings are administered by several ministries. This creates overlap and inefficiency. It also makes it more difficult for industry to address the concerns of government. Other jurisdictions -- examples are BC, Manitoba, Indiana, New Jersey -- have consolidated building and safety regulations under a single authority.
The industry recommends that the government place major acts and regulations governing building design and new and retrofit construction under one ministry or administrative authority. This would include building code, fire code, technical standards legislation and occupational health and safety. This matter is being pursued further with the Red Tape Review Commission.
Enforcement: Overlapping of the roles of building, fire and property standards officials in enforcing building regulations is wasteful and unnecessary. For example, Ontario building code concepts referenced in the Ontario fire code retrofit regulations are sometimes interpreted differently by fire officials rather than building officials. The industry recommends that the government place responsibility for enforcement in the hands of one municipal inspectorate and encourage construction and/or building design experience in addition to codes knowledge as a qualification for inspectors. Consideration should also be given to allowing accredited professionals to assist in the enforcement process and, in doing so, providing for greater efficiencies as is currently the practice in parts of BC and Alberta.
Municipal regulation: Municipal requirements under mechanisms such as site plan control should not exceed the requirements of provincial construction codes which are intended to create uniform, province-wide standards. The industry recommends that the government legislatively remove existing municipal requirements which are inconsistent with the intent of the Ontario building code.
Discretion, and this is one which we think is a great inhibitor to getting on with the job: The inability or refusal of building and fire officials to exercise reasonable discretion in the enforcement of the OBC and OFC creates unnecessary delay and expense in getting projects approved and buildings retrofitted. Liability fright is a factor, and I could repeat that statement all day. Other jurisdictions have more flexible rules for acceptance of alternative designs and solutions than does Ontario.
The industry recommends that the government enable building officials to exercise discretion in accepting innovative approaches to building designs and provide a legal safety net for the exercise of discretion in good faith.
Code requirements: The industry believes that many code requirements are unnecessary or unduly restrictive. A list of potential measures which the industry recommends that the government examine could include:
Major proposed restrictions on building design should be subject to, among other things, a thorough cost-benefit analysis. Proposals which are not cost-effective should be reconsidered, subject of course to the conformance with life safety requirements and regulations.
Whole-building sprinklering for apartment buildings and other structures has not been demonstrated to be a cost-effective way of ensuring the life safety of occupants and therefore should not be mandated into the Ontario building code.
The energy conservation measure ASHRAE 90.1 should be removed from the building code.
Under Ontario building code part 11 renovation is difficult to understand and apply. The extent of upgrading required of existing buildings needs better expression to lessen the unreasonable imposition of costly upgrades. The retroactive application of building regulations should, and I might emphasize must, be avoided.
Building regulations should be reviewed to identify restrictions which may be removed or modified. Codes of other jurisdictions should be reviewed to identify administrative procedures and technical allowances which are facilitative of design freedom and economies.
Approval of innovative solutions with regard to the use of material and non-standard design approaches should be facilitated.
Lastly, code content not related to health and safety should be considered for deletion. As examples, why do we specify dimensions for rooms, full-height basement insulation, energy efficiency etc which are not necessarily found in other jurisdictions and don't necessarily meet the lifestyles of our multicultural environment?
Certified professionals: The industry believes that the government should establish a certified professionals program to expedite an independent authoritative review and approval process. The industry notes that such an approach has been operating successfully in Vancouver and Alberta for several years.
The Ontario building code review process: Ontario's code development process has not been consistent in terms of timing, evaluation criteria, appropriate industry input and recording of rationale. The balance of interests in advisory committees and familiarity of members with safety issues and design and construction processes, both past and present, affects the quality of the decision-making process. This particular issue is currently under review through discussions with other committees in government.
The industry recommends that the government review and redefine, with industry input, the participation of interest groups on Ontario building code advisory committees and the qualifications of members of these committees; review the extent of committee influence and the documentation of decisions; and establish a means for continuous, efficient industry liaison on developing issues.
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Culture of building regulation, development, administration and enforcement: Over time the development, administration and enforcement of building and fire regulations have become an identifiable subculture. The bureaucracy has become larger and more complex and its ability to understand industry and owner concerns has been questioned. Some regulations appear to convenience enforcers or enhance their scope of operations without providing significant benefit to tenants or owners. Regulations have become a growth industry for officials, lawyers and consultants. I can attest to that, being in the consultant field. To some observers there has been a gradual shift in the outlook or attitude of the administrators of building design regulations to a more enforcement-oriented, liability-concerned, litigious approach.
The industry recommends that government inspire an attitude which is proactive in trying to enhance freedom of design and use for owners, occupants and builders while maintaining appropriate levels of health and safety. We recommend that consideration be given to developing legislative limitations on liability for those responsible for the enforcement of building regulations.
Occupational health and safety: Regulations affecting construction projects under the act will be reviewed this fall by the Ministry of Labour. The health and safety of construction workers is of paramount importance to employers. However, certain regulations have been unnecessarily difficult to abide by. The industry submission will go forward to the Ministry of Labour shortly.
Supply of trades: The low volume of construction activity has resulted in the departure of many workers from the industry. An increase in activity could well result in shortages of trades. The construction industry recommends that the government, in partnership with industry, strengthen the construction apprenticeship training system and allow for multiskilling abilities of trades.
The industry believes substantial efficiencies are achievable in the reform of development and building procedures. Clearly the housing industry has a number of concerns with respect to the impact of government charges and regulations on the costs of rehabilitation of both existing, and the development of new, rental housing in Ontario. In addition, fees and charges which are direct government-mandated costs for rehabilitation, the planning and approvals process and environmental and building regulations impose delays and undue costs on the industry. Streamlining these processes and regulations will have an important flow-through benefit on the costs of both the renovation of existing stock and the creation of new housing development, including the building of new rental housing.
Maintenance proposals: Communication is paramount in establishing good maintenance standards between all three responsible groups: tenants, landlords and property standard officers. Anything in the proposals that reduces communication is regressive. As a result of past and existing regulations, a culture has developed whereby adversarial positions are immediately developed, preventing effective and efficient communication among the parties.
In the interest of promoting good maintenance, property owners must be given proper notice, in writing, of maintenance requirements and deficiencies. Tenants should be educated to provide property owners with this notice in writing in order to allow for an adequate period within which the situation can be rectified.
We would recommend that if there is a need to expedite the property standards enforcement process, the notice-of-violation stage be bypassed. If a notice of violation is to become an optional stage in the property standards enforcement process, there must be clear criteria under which this option may be exercised. For example, proof from a tenant that a landlord has received written notice and has had sufficient time to remedy a problem may be an acceptable substitute for the notice step. However, if there is an indication of tampering or malicious damage, a notice with a reasonable time frame should still be issued.
Property standards officers will be given more powers, including the authority to have a property inspected by a qualified expert when an owner does not provide sufficient information. Prudent landlords regularly make use of engineers and other consultants to keep them informed of and help plan maintenance expenditures on their buildings. Larger landlords often have consultants on staff. Therefore, a stamped engineer's report on the part of a landlord is not an onerous requirement and should be sufficient for normal purposes.
If the landlord does not agree with the property standards officer's engineer's report, there should be recourse to an appeal level. Criteria for a property standards officer to commission an expert report should be clarified. A report may be commissioned after conviction for an offence or if a work order is outstanding for a specific period of time.
Two important cornerstones of a fair and balanced maintenance process are notice provisions and the opportunity to rectify. We cannot emphasize enough that landlords must be informed in writing of requests to maintain and proof must be shown of delivery before any order is issued.
The proposals greatly increase fines for landlords who fail to comply. Fines are a preferred route to rent reductions, which reduce the income stream. Less income normally makes it impossible for the present or any future landlord to do the work required.
Municipal property standards enforcement could assist landlords in enforcing standards of in-suite cleanliness by requiring the tenant to cooperate with landlords in complying with the requirements of bylaws. While we don't foresee officers issuing orders against tenants, such bylaws and assistance on the part of the officers would help to enforce in-suite standards to the benefit of all tenants.
In conclusion, and thanking you for your time, I might note that what's presented here is, in our view, only part of a discussion which we're pleased to see going on with the government and players in the industry, both tenants and providers, because the system is broken and does require fixing.
Mr Sergio: Thank you, Mr Steele, for your in-depth technical presentation. I enjoyed it very much. Quickly, tell me what this proposed tenant reform package here does to tenants in Ontario, in your view.
Mr Steele: The package, as it stands right now, doesn't create the kind of balance that the industry expected to see brought in by this government. Though the weighting has shifted, I don't believe the balance isn't there to allow and encourage the kind of open dialogue and trust that is required to have the system work. Any system has to rely on communication, and if it's going to require and rely on another set of bureaucratic procedures, we're not going to get the trust back into the system that was required for it to work efficiently.
Mr Marchese: Mr Steele, you raised some interesting questions with respect to technical barriers to new investment, and some of them I could agree with and some of those things I think we should be exploring. There are some questions I have on pages 3 and 4 and there are some I think should be dealt with. I disagree with your statement, however, where you say, "We know the current system does not work as is evident in the fact that effectively no new units have been built...." The government has been the only one building, and if the government were not building, you'd have a whole slew of people unemployed out there. It's not because we've been involved as a government that no one has been building.
As you are fully aware, the private sector isn't building because it wants a red carpet. It isn't just technical changes but it's a whole list of things you haven't mentioned that Mr Lampert raises. That red carpet kind of treatment is, for me, the kinds of subsidies and support the private sector is looking for to build. If that's the case, I'd rather build it myself in terms of what government should be doing.
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Mr Tilson: Your comments with respect to bureaucracies and overlaps and that sort of thing in the enforcement of building codes and property standards bylaws, all of that: Are you hinting that this type of thing -- the inspections in particular -- that goes on by the province, by the municipalities, is ripe for some form of self-management?
Mr Steele: Certainly self-management could play a role with it. Currently on any given site in the city we can have four or five layers of inspection of various types of authorities, be they from the professional -- there's a tremendous amount of overlap which is not necessary with regard to putting up a safe product.
Mr Tilson: I'm sure the ministry will look at your comments very carefully.
The Chair: Thank you, Mr Steele. We appreciate you being involved in our process.
CITY OF TORONTO
The Chair: Our next presenters, from the city of Toronto, are Councillor Kay Gardner and Her Worship Mayor Barbara Hall.
Ms Kay Gardner: Thank you, Mr Chair. I would like the mayor to share half of my time, so I will allow her worship to speak in the beginning.
Ms Barbara Hall: Thank you, Mr Chair, members of the committee. I appear before you today to outline serious concerns that the city of Toronto has with respect to the proposed tenant protection legislation that eliminates rent control. The city of Toronto council has unanimously endorsed a position that the Rent Control Act, the Rental Housing Protection Act and the Landlord and Tenant Act be maintained.
The city of Toronto has a long history of working with provincial governments of all parties to establish progressive legislation that protects tenants and preserves rental housing. In the early 1970s, the city worked with the then Conservative government to develop and bring forward rent review legislation.
Toronto today is in the midst of a housing crisis. Sixty-three per cent of our residents are tenants and 34% of those tenants are already paying more than 30% of their income on rent. We are experiencing unprecedented numbers of homeless people in our streets and there's a disturbing rise in the number of families with young children that are unable to find affordable housing.
Vacancy rates in Toronto are 0.8%; they're expected to drop to 0.5% by the end of this year. A vacancy rate of 2.5% is considered a healthy rental market. There's a dramatic rise in economic evictions. In January 1996, court applications for evictions rose by 33% over January 1995. In the same period forced evictions by the sheriff rose by 25%.
I believe that in response to the situation in Toronto the policy outlined in New Directions is the wrong direction. It will not solve the problems that are contributing to our housing crisis; indeed, it will make them worse.
The minister claims that these changes will stimulate the market to create the conditions to build badly needed rental housing units. The minister also claims that this is a better package for tenants. I disagree with both these claims. The fact that the government is prepared to establish an anti-harassment unit shows that even the government believes these changes will create situations where landlords, in an effort to increase rents, will create intolerable conditions where tenants will be forced to leave.
Government cuts have already reduced services that have traditionally supported and represented the interests of tenants. These proposed changes, combined with the lack of access to services for those most vulnerable in our city, will result in a situation where tenants will not have a voice.
Toronto has many communities that will be severely affected by these changes: seniors, low- and moderate-income families, low-income singles, the hard-to-house, those who are psychiatric consumer-survivors, new immigrants, refugees and single-parent families. These groups are fearful of the proposed changes and I believe their fears are justified.
The elimination of rent control on units once they are vacated will create a situation where people are virtually prisoners in their homes. Often people have to move. In fact, mobility creates a healthy housing market. However, if the proposed reforms are adopted, the government will be creating a situation where low-income people will not be able to move because they won't be able to afford a market-priced unit. The result will be that people will be either overhoused or underhoused. Ultimately, this will result in an inefficient use of our existing housing stock. If we look at the statistics on how frequently people move, by the end of five years we will have totally decontrolled units, the loss of all our affordable units in the city of Toronto.
The issue of the stimulation of new rental units is not supported by the facts here either. There are many issues that affect whether or not units are built. I believe there are a number that are much more important than rent control, and those are issues that should be worked on.
The greatest method of creating new, affordable rental housing would be for the government to get back into the housing business. I believe that to have a range of affordable housing available, there is an important, ongoing role for the public sector in meeting the housing needs of Ontarians and Canadians.
I urge the committee to abandon the proposals outlined in the tenant protection legislation and New Directions, but not to stop there. There are issues that need change and we need a comprehensive housing strategy, but I believe that requires that tenants, the development industry, landlords and municipalities be brought to the table to work together with you as partners.
It's in the interests of all of us -- those of us who are tenants, those of us who own our own property -- to have people properly housed in the city of Toronto and throughout the province. People being homeless or people spending too much of their income on housing creates social instability, and that has a negative impact on all of us.
The lives of tenants and the livelihood of the province's largest city depend on a comprehensive, realistic housing strategy from this government, not on a gamble that the market alone will solve the problem.
The city of Toronto has developed a list of principles of a fair system. I submit them to you as the basis for real tenant protection and I say to you that we at the city of Toronto would like to work with you to have the comprehensive housing strategy that we as a community and we as a province require.
Ms Gardner: Mr Chairman and members of the committee, the government has named its proposed new landlord and tenant legislation the Tenant Protection Act. Never before, to my knowledge, has any piece of legislation been given so misleading a name. The truth is that it should properly be called the Landlord Enrichment Act. It'll make tenants poorer and landlords much richer, and that is for sure.
Far from giving tenants greater protection, it'll do precisely the opposite. It'll strip tenants of many of the vitally important rights that they now enjoy. The ultimate goal is to sentence rent control itself to a slow death by strangulation.
New buildings now are covered by rent control only after five years. Under the new act, they would remain exempt forever. A more immediate and crucial blow is the provision that vacant apartments will become exempt from rent control and a landlord will be able to charge whatever the traffic will bear. Controls will go back after the apartment is rented, only to be lifted once more if the apartment becomes empty again. Seventy per cent of all tenants move every five years, so you can see that it won't be long before most of our housing is out of rent control.
Will this encourage landlords to harass tenants into moving? That is the $64,000 question, isn't it? Probably, even though an anti-harassment provision has been included in the new legislation. Of course, such provisions are usually beyond the tenant's ability to enforce them. For instance, I recently had to resort to the human rights act to obtain $7,500 for a group of women who had been charged key money. It took me two years to win that case.
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The government also intends to get rid of the rent registry which provides the tenant with the only means to find out if the rent is the legal rent. This will make life easier and much more profitable for the unscrupulous landlords.
The plan also is to raise the limit on how high the rents can be increased. I can tell you, the sky's the limit.
At present, no legal rent can be increased by more than 3% a year above the rent control guideline, which is 2.8% for this year. The government intends to allow up to 4% above the guideline for repairs and maintenance. Above and beyond that, rent controls will also be increased to allow for increases in the property tax and in the utility costs.
Does any of this strike you as a tenant protection package? The Orwellian audacity of it all boggles the mind.
Rent control, as you know, was introduced in 1975 because of a critical shortage of rental housing. This act will profoundly deepen the housing shortage.
The Rental Housing Protection Act is also to be scrapped, and this will bleed the existing affordable housing stock. This will make it easier for landlords to demolish buildings, to convert them to condominiums and equity co-ops, or to evict all tenants on the pretext that the building needs to be emptied for major repairs. Just like the good old days. To make any of these changes at the present time, a building owner must obtain permission from the municipality, and this is very hard to obtain. The removal of the Rental Housing Protection Act would result in substantial loss of rental housing units in the city of Toronto. From 1968 to 1985, 1,929 rental units were lost in the city through conversion to condos. Since the Rental Housing Protection Act was enacted in 1986, only 20 units have been lost.
I know the value of this act because it was legislated as a result of my work in trying to save apartment homes from conversions or demolition. David Peterson saw the vital importance of it and assured me he would pass such an act if he ever became the Premier, and of course he did.
Last April, Housing Minister Al Leach promised "to make it easier for landlords to evict tenants." This new legislation will help him to keep that promise. For one thing, rising rents will force economic evictions. How can the minister offer a Tenant Protection Act when he has already proclaimed that his goal is to make it easier for landlords to evict tenants? And you'll see that in the clippings I've given you that I've Xeroxed from the Globe and Mail.
In a Toronto Sun interview, Mr Leach said landlords require "financial incentives" to encourage them to build new housing. That's nonsense. They already make huge profits. During the last 10 years the apartment sector of the economy has delivered a 10% return on investment. That is higher than all other sectors of our economy. I quote from the Globe and Mail, July 2, 1996:
"According to the Russell Canadian Property Index, a highly respected gauge of investment activity, Ontario's apartment sector has delivered a 10% annual return on investment over the past 10 years, outpacing all other sectors, including retail at 9%; industrial, 8.4%; office, 5.2%; and mixed-use projects, such as Toronto's Eaton Centre, 3.4%."
It is unseemly for the minister to plead poverty on behalf of the landlords. But even were we to lavish more profits on them, would they spend more on housing? No, of course not, because the rents they would have to charge on new apartments would be so high that tenants could not afford to pay them. The Canada Mortgage and Housing Corp has estimated that a Toronto developer would have to charge a monthly rent of $1,100 for a new two-bedroom apartment just to break even.
Tenants are victims of a cruel hoax. Landlords will do nothing to solve the housing problems because the cost of land, financing and construction makes it uneconomical to build. Landlords spread the lie that rent control stopped the building of apartments. The truth is that the building stopped as early as 1972, three years before rent controls became effective.
In closing, I want to say that I have publicly said the government is about to throw tenants to the wolves, and that is the truth. Higher rents, less security of tenure and the loss of vital rights will lead to dire social consequences in the city of Toronto. There are 166,290 tenant households in the city, or 62% of all households in the city which are tenant households. Tenants are not a special-interest group. They are a majority interest group and will not be denied. Governments may come and go, but the people, tenants and homeowners, go on forever.
You might ask, what do tenants want? The answer is, they are satisfied with the present rent control legislation. I have yet to meet one tenant who wants to surrender that protection. The rent control system is not broken, so don't fix it.
The Chair: Mr Marchese, we're faced with the one-minute challenge again.
Mr Marchese: Well, then, I'll just have to make a statement and congratulate city council for doing what it's doing. I'm almost afraid to congratulate you, because when you do that in the opposition you worry about what the government members may want to do about punishing the city of Toronto.
I think you have taken an important step as a council in terms of committing money which Mr Tabuns has already mentioned was in the order of $250,000, to a question put by Mr Tilson. But I think you as a council have a social responsibility to do what you've done, and you're unanimous in this. Everybody knows that it's not just one political party at the council of the city of Toronto. You are all of different political parties, and it is telling that you should be unanimous in your support for tenants' rights and that this proposal, called the tenant protection proposal, doesn't do it; in fact, it hurts tenants. I for one want to thank you for the position you've taken.
Mrs Ross: My question is to Mayor Hall. In reading your comments here, you stated that "people have to move; in fact mobility creates a healthy housing market," and then you state that "70% of tenants move once every five years." I'm just curious to know how you can say that it creates a healthy housing market and we have such problems with housing if tenants are moving so often. Doesn't that sort of contradict what you're saying?
Ms Hall: No. I think people move because their family size changes, so they move to smaller units or they move to larger ones because their family has expanded. They move because they've secured a job in another community or --
Mrs Ross: I understand that, but --
The Chair: Thank you, Mrs Ross. Mr Curling.
Mr Curling: I sometimes have mixed feelings about this consultation process because some of the things that the mayor and Ms Gardner have said, and the council, that you advocate, are so important. My wish, Mayor, was that the minister would find it within his realm to be here to listen to this. As I said, he made his presentation and scooted out of here so fast and called it consultation.
I want to commend you too, and to carry on the fight for rent control. I think, as the question was asked of my colleague just a minute ago, maybe a minute or two to explain to her how it can help, and that has been denied because the process restricts us all to express that. I hope some day we have a proper consultation and a proper discussion about housing policy and strategy. Thank you very much.
The Chair: Thank you, Mr Curling, and thank you, Mayor Hall and Councillor Gardner. We appreciate your presentation and your interest.
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TENANT ADVOCACY GROUP
The Chair: Our last presenter for the afternoon is the Tenant Advocacy Group. Good afternoon, gentlemen. Welcome to our committee.
Mr Jack de Klerk: Thank you, Mr Chairman. My name is Jack de Klerk, and with me is Joe Myers. We're presenting a submission on behalf of the Tenant Advocacy Group. Our submission has been filed with the clerk, and it goes on for some 30 pages. We hope that most of the committee and certainly the ministry staff will find the time to read it, because it's very detailed and covers a lot of important areas.
The Tenant Advocacy Group is made up of lawyers and community legal workers who work in legal clinics mostly -- some members of the private bar, myself included -- and we represent tenants in their disputes with landlords. We've been active in this work for going on 20 years, since rent regulation was first introduced in this province, and we have a history of consulting with various governments and committees on various aspects of rent regulation. So we bring to our presentation a depth of experience that I hope you will recognize and consider as you go through our brief.
We're very disappointed in the paper. Obviously the proposals don't address the concerns we have, and we don't think they really protect tenants as New Directions indicates. What's at least as important, however, is that the paper doesn't reflect much careful thought about issues that are extremely important to tenants. There hasn't been a lot of discussion on these major issues, and we would hope some public discussion would follow.
The issues are difficult, no doubt. However, everyone would be better served if we had the discussion first and then developed the legislative proposals later. Instead, we get doublespeak and obfuscation.
New directions for tenant protection are needed, it is alleged, because the shortage of affordable housing is the byproduct of the imbalance of power in favour of tenants. If evictions were easier and rent controls were removed, the argument goes, investors would build the housing that is needed.
The real truth that the government's New Directions refuses to address is that in many cases rents are already too high. Tenants are paying too large a portion of their income on rent, rents are substantially discounted or units sit vacant. So taking off controls will not produce the great amounts of capital for new housing, and there is no reason to believe that any additional capital would in fact go into new rental housing construction rather than other forms of investment literally anywhere in the world.
The objectives of rent regulation are that new housing would result from decontrol and presumably from the elements of removing the Rental Housing Protection Act, that there would be cost savings and, as the ministry staff has indicated, that the concept or issue of rent be separated from maintenance.
Unless there is real evidence that higher rents will lead to more housing being built, a rent control strategy to allow rents to increase substantially will be disastrous. Rent control will become an income transfer program from tenants or, if the government gives in to the demands for a generalized shelter allowance program, from the government to landlords. Tenants will have to pay even larger proportions of declining incomes to their landlords, for no obvious benefit in return either to themselves or to society as a whole. Society will be pressured to cover the costs through shelter allowance payments and to create the programs to address increased homelessness, overcrowding, higher food bank usages, more domestic abuse and a whole raft of other consequences of inordinately high rent and poverty.
If costs are going to be reduced, rent control needs to be simplified. Complex legislation with seemingly endless exceptions and provisos is a breeding ground for confusion, bureaucracy, legal wrangling and unfairness. One increase per year based on inflation, no exceptions, will work if we're prepared to commit, in a separate arena, to a repair and replacement program.
Like most anything else that consumers buy, the quality of housing tenants pay for must be related to the price. Rent and maintenance cannot be separated. Landlords are entitled to their rent in exchange for good maintenance and full services. Tenants need to be able to get fair compensation from landlords who do not properly maintain their buildings or reduce services.
It is commonplace that a very big issue facing tenants today is poor maintenance. In order to address that problem, we have to have the right incentives. In the past, programs have attempted to use cash handouts to landlords. The current system, which is a 2% increase in rent that's built into the annual guideline, is there also to encourage more maintenance. Neither of those systems really seems to work.
Properly directed incentives are the most effective way of ensuring that buildings are maintained. Maintenance and rent are two sides of one coin. Allowing tenants to get rent freezes, substantial rebates or compensation if and when maintenance falls below acceptable standards or services in facilities are reduced or discontinued is the only inducement, other than cash handouts, that will encourage landlords to maintain their buildings properly. Any other approach results in reverse incentives and is next to impossible either to monitor or to supervise.
I suggested that we have to go to another arena to address maintenance and repair problems. There has been on the table -- more or less on the table; somewhat off the table -- a suggestion for some time that we look at a province-wide building maintenance and replacement reserve. That discussion has never really taken place. The province should undertake a significant study of the repair problems in multi-unit residential rental properties and it should thoroughly consider whether a province-wide reserve fund is workable. The estimates that have been thrown about are that we need in the neighbourhood of $10 billion to do all the repair work in the province.
If higher rents are going to address that problem, then you have to look at very significant rent increases. There are approximately three million tenants, more or less one million rental households, rental units, in the province. If they were to each pay $7,000 a year in rent, that would give you $7 billion annual rent paid by tenants to landlords. The repair costs are $10 billion. How much do you have to increase the rent to address that problem? It's boggling, and it's much more than the double-digit rent increases that the minister said he wouldn't find acceptable. Some other way of addressing that problem has to be found.
Mr Joe Myers: I would like to address my comments to the committee basically dealing with four matters that are raised in the discussion paper New Directions: (1) part IV of the Landlord and Tenant Act; (2) dispute resolution mechanisms; (3) security of tenure as it relates to the Rental Housing Protection Act; and (4) care homes.
With respect to the Landlord and Tenant Act, the Tenant Advocacy Group acknowledges that the act at present is not perfect, although we would submit that the act is successful largely because it recognizes the historical inequality that exists in the relationship between landlord and tenant.
To the landlord, the relationship is merely a commercial relationship and it functions, to a landlord, pursuant to the rules of commerce; to a tenant it's a totally different matter. A tenant is paying for a home and a roof over his or her head. The marketplace alone cannot provide protection for tenants. It needs to be codified under statute, and our submission today is that the Landlord and Tenant Act as it presently exists does an adequate job, not perfect, of doing that.
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Any change to tenant legislation, we would submit, would have to incorporate the following provisions. Security of tenancy would have to be included in any new legislation. What I'm talking about is that there have to be limited, statutorily enumerated grounds for eviction. They have to be specified grounds that tenants know about. Tenants should only be involuntarily dispossessed or evicted from their homes for specific breaches that are outlined in the legislation. Any change to landlord and tenant legislation that does not provide for security of tenure is not protection for tenants. There must also be included a remedy for abatement of rents to tenants to compensate them when landlords are inadequately maintaining and failing to repair their units.
Presently section 94 of the Landlord and Tenant Act recognizes this right and allows tenants a remedy to pursue in Ontario Court (General Division) to obtain abatements. They can also obtain under this section judgements from a court compelling a landlord to fix and do maintenance repairs. Any new legislation should also include a summary procedure. The Landlord and Tenant Act is adequately effective in that it provided summary procedure, a quick process by which tenants know what they're getting into when they go to court.
New Directions addresses certain issues that we take issue with and have very serious concerns about.
Specifically, we are concerned about the proposal of a system that would permit a landlord to prevent a sublet by a tenant in order to have the unit decontrolled, in other words, so a landlord can charge a rent to an incoming tenant at any rate he or she wants. We think that any changes to legislation should include protection for sublets and assignments of leases and should specify the difference between the two.
We agree with the submissions in New Directions that there are very serious concerns regarding privacy. Privacy is a very serious issue for tenants and one that often comes up. We ask that any legislative changes in this area would specify what reasons are permitted in which a landlord could enter a tenant's unit.
As stated by Mr de Klerk, the move towards vacancy decontrol is one we take issue with largely because we think it could lead to tenants being harassed. Tenants will be harassed by landlords into leaving their units simply so landlords can rent the unit out to new tenants at any rate they want. This is simply unacceptable.
With respect to dispute resolution systems, the present system, although not perfect, is satisfactory. We disagree with the assumption in New Directions that the present dual system, with rent control applications to the Ministry of Housing in the landlord and tenant court under the Ontario Court (General Division), is too confusing and too complex. We acknowledge that there are delays in the system, but in our submission these delays are largely due to understaffing, both with judges and administrative staff. Simply setting up a new tribunal to address these inadequacies will not guarantee a more efficient, faster and easier system that tenants can deal with. If systems are underfunded to begin with, as in the present case, whatever system that's put in its place, given the same level of funding, is doomed from the start.
New Directions makes it clear that this government wishes to take the dispute resolution system out of the courts. If that's done and a tribunal is established, we would submit that certain provisions need to be addressed. First, decision-makers must be competent; they must be trained; they must be independent from government appointment. Moreover, they must be representative of their community.
Mediation should be made available to tenants under this new system, but the mediators should be trained, they should be sensitive to tenant issues and they should be well versed in tenant matters and recognize the historical inequality in the landlord and tenant relationship. Most important, mediation has to be voluntary.
Any dispute resolution system that is brought into force has to be accessible in terms of the hours it's open, where it's located and what forms and procedures it adopts. As you've heard from many tenant groups speaking to you today, the overwhelming majority of tenants in landlord-tenant court are unrepresented; the overwhelming majority of landlords in landlord-tenant court are represented. The new system that is adopted should recognize this and make the court or whatever is in its place easier for tenants to deal with.
With respect to security of tenure and the conversion of rental property, we would submit that the Rental Housing Protection Act in its present form is satisfactory. It does not need to be repealed. It is essential to any tenant protection package that there be limits on conversions, demolitions and extensive renovations. Without such limits it's our fear that uncontrolled conversions, demolitions and renovations will occur to reduce the amount of housing stock. A reduction in the amount of housing stock in simple supply and demand economics will mean that more tenants will be competing for fewer units, which will result in higher rents, a situation that's simply unacceptable.
The Rental Housing Protection Act in its present state is key in providing tenants with this security of tenure. In the event that municipal approval is granted for a conversion, tenants are entitled to notice so that they know what they're getting into. This security of tenure is the essence of any tenant protection package.
New Directions states that a major objective is to build new rental housing stock and suggests that it will be built if municipal approval is not required. We would submit, as many groups have before you today, that's not the case. There are many factors that go into the construction of new buildings and there are many factors that prevent the construction of new buildings or certainly make it more difficult, not the least of which are taxes, GST, development costs, Planning Act applications and the expenses associated with them. All of these create a very difficult environment for investment. Simply repealing the Rental Housing Protection Act will not present a more receptive environment.
Finally, with respect to care homes, we would submit that the Residents' Rights Act, which was proclaimed nearly two years ago, in its present form is satisfactory. The Residents' Rights Act is vital in that it protects the most vulnerable in our society. To eliminate any provisions in that act which might lead to fast-track evictions of our most vulnerable would simply be unacceptable. The act is in place, and we would submit it's doing the job as it presently stands. To make any changes to that is unnecessary.
Those are our submissions, subject to any questions the committee may have.
The Chair: Unfortunately you've used up your full allotment of 20 minutes, and there's no time for questions. We appreciated your presentation this afternoon and your involvement in our process.
The committee stands recessed until 1 o'clock tomorrow.
The committee adjourned at 1700.