Month to month tenancy. Increase rent or end tenancy. (Ontario
Bracebridge, Ontario · Member since 2015 · 22 posts · 5 votes
I just purchased a multi unit property in Ontario and the rents are quite low in comparison to what they should be. So I have a couple questions about going about these increases. I have been making some improvements on the property and I have told tenants verbally that I am looking to increase rents for May 1st. I haven't yet received any resistance and one tenant even acknowledged her low rent when I met her on day one of taking the property over and she offered to write me a check for a higher amount. My improvements have now come to an end and I would like to get something in writing from my tenants.
So none of my tenants have a lease they are all month to month by default. Now I don't know if I will get resistance from them but I would like to a) have them sign a lease for my desired rent which is more than the guideline increase set by landlord tenant board, or if I get resistance b) end tenancy and renovate their apartments altogether and rent them for full market rent.
Can I do this? Should I do this? Has anyone ever done this?
Thanks!
So, you bought a multifamily rental, but you've never read the RTA? The answers to all of your questions are written very plainly in the regulations. They aren't even written in "legalese", just plain as day English.
You'll find a dozen threads on this site by people in Ontario asking how to get started and in I always tell people to start by printing off a copy of the RTA, read it three times, then read it again very slowly trying to figure out how every single paragraph can be used to screw you.
You can't force leases on people who are month to month. You can't just jack up rents, the guideline rent increase is defined by the LTB annually. You CAN roll SOME of your capital expenses into a limited increase above the guideline and all of that is spelled out clearly in the RTA (you won't be happy when you see how little you're allowed). If someone is offering to pay rent above the guideline, then I'd get that offer in writing with a signature before accepting it, or they could just cry to the LTB that you're a big bad meanie landlord jacking up the rents and they WILL bend you over.
Good luck, and (despite perhaps a little bit of sarcastic scathing) we are all here to help and want you to succeed :)
You can ask a tenant to sign a new lease at a new rent however it is entirely at the tenants discursion as to whether they wish to sign or not. If they refuse to sign they remain on the present M2M lease and all you can do is increase the rent by the allowable amount.
If they resist and you wish to get rid of them you must get building permits for the work required, without permits it will be difficult to evict, and you must offer the tenants the right to return after the reno work at their present rental rate.
The up side is most tenants do not know their rights and may leave without issue. If they know their rights they can refuse to leave or insist on returning when the work is completed, which defeats the purpose. If that is the case you can apply for a above guide line increase based on the cap expenses but it will likely not amount to much.
Your best hope is your tenants are ignorant of their rights and agree to a new lease at market rent or leave when asked without informing you they wish to return.
You can not get rid of a tenant in Ontario without cause , cause being defined by the RTA.
Steve is correct you do also have the option of moving in yourself or moving in a family member. This is a valid reason to evict but it is also risky if it is not legitimate and has been regularly challenged by tenants. The board is highly skeptical of this reason to evict because for most landlords it is their only option to get rid of below market tenants and has been extensively attempted and failed.
For it to work it must be your first option, do not try to increase rent or ask them to leave to do reno work otherwise if they refuse and you invoke the owner occupancy you are guaranteed to be challenged and the board will rule against you based on the tenants evidence that you attempted other options to raise rents ahead of owner occupancy. Make a plan and stick to it.
There are many ways to work the system but if you do not know what you are doing in Ontario your tenants will own you.
Even though I know the system it once took me 3 years to get rid of a bad tenant at a cost of nearly 4 grand in rent rebates. Not a big deal as it was well worth the time and cost but for many landlords probably more than they could manage.
Best option in Ontario is to require vacant occupancy at closing. The responsibility then fall on the seller to get them out.
You have got great responses from Ontario, i quite agree that your first and best option is to use owner occupancy informing them that you or a family member need the apartment as primary residence and for this to work smoothly ensure that the tenant is not a senior citizen or physically challenged because both are protected against owners occupancy. If they fall into this category, you may need to look for a similar or equivalent apartment near by at same rent or higher before you can take possession of the apartment.
The other methods such as asking the tenant for a rent increase or asking them leave to let you carry out renovation in the apartment may work but it will be a laborious task especially if they want to exercise their right and if it fails i mean if the tenant didn't agree or consent to your rent increase offer or renovation plan, it will ruin your chances of exercising your right as the owner of the property to use owner occupancy.
So, you bought a multifamily rental, but you've never read the RTA? The answers to all of your questions are written very plainly in the regulations. They aren't even written in "legalese", just plain as day English.
You'll find a dozen threads on this site by people in Ontario asking how to get started and in I always tell people to start by printing off a copy of the RTA, read it three times, then read it again very slowly trying to figure out how every single paragraph can be used to screw you.
You can't force leases on people who are month to month. You can't just jack up rents, the guideline rent increase is defined by the LTB annually. You CAN roll SOME of your capital expenses into a limited increase above the guideline and all of that is spelled out clearly in the RTA (you won't be happy when you see how little you're allowed). If someone is offering to pay rent above the guideline, then I'd get that offer in writing with a signature before accepting it, or they could just cry to the LTB that you're a big bad meanie landlord jacking up the rents and they WILL bend you over.
Good luck, and (despite perhaps a little bit of sarcastic scathing) we are all here to help and want you to succeed :)
Maybe you could pay them to terminate tenancy. Would depend on how much of a rent increase you could get, and amount they'd accept as payment whether it's worth it, but another possible option.
Thank you for all of the input. Very helpful. @Matt Geerts I was somewhat familiar with the RTA before my purchase. I read the RTA in my brokers office pre purchase. I mostly wanted to know if I should at least try to get rents up and if anyone has ever done so against rules written in RTA. It seems there is a lack of education around the RTA, and I have heard several stories of other landlords doing things against RTA.
I bought the property with awareness to RTA but with intention to at least try to increase profits.
A typical single family 1200 Sq ft home in the same neighbourhood would sell for 220k
This property is 2300 Sq ft and is fully tenanted. Purchased for 250k. The sellers suffered on sale price because they never raised rents!
My approach would be to try. Nothing ventured nothing gained. As the owner of a business you must put your concerns first and do what is best for your business. In your case I would defiantly ignore the RTA and give notice to raise the rents. I take this business approach all the time and am usually successful. If they do push back to the degree of filing with the LTB you simply apologise and rescind the notice. With luck they will not or they will simply leave, either is a win in Ontario.
The reality is that in a rent control environment system there is zero value to having long term tenants, they are actually a death knell to your business. There is no possible way to keep up with increasing costs year over year. If a tenant stays longer than 3 years you are behind the market. That is likely the reason the previous owners investment was devalued.
Word of advice. When tenants leave set your rent well above market and offer a rent discount. This way when you give your mandatory annual rent increases you also reduce the discount appropriately so that you get a greater increase annually than the RTA allows. This is totally legal. Instead of being restricted to the measly COLA increase you can actually keep your place at market. Very few landlords are aware of or take advantage of this RTA go around simply because they do not know of it..
@Thomas S.This is the exact reason I posted here. Hoping to hear from someone like yourself. That is a great strategy you just presented. I agree I think it is worth going after and it's good to hear that you have had success yourself. What form do you use when you give notice of a rent increase. my tenants are month to month. Do I still need to give 90 days?
Thank you
The LTB website has a rent increase form which they require you use. I have never used it and simply make up my own.
Include tenant name, address of property, present rent, new rent and date effective (90 days).
If you anticipate push back you may be safer using the board form as the board has a practice of using any excuse possible to support tenants. Funny thing if a landlord fills out a application wrong the adjudicator will dismiss the application, when a tenant fills out a application it makes no difference if it is proper or written with a crayon. They will help them fill it out properly and proceed with the hearing.
Remember you can ask for anything and the tenant has the option to refuse or accept, if they accept a above guideline rent increase it is legal, but down the road, legal or not the board can reverse it. Catch 22....they almost always support the tenant except when a landlord files a L9.
The unique thing about out board adjudicators is that they are not required to follow any laws or guidelines including the RTA regulations. I had two identical cases, I argued a opposite position on each, and they denied both. How can that be, easy, they were eviction applications (case law based Frustrated contract) and they supported the tenant in both cases. They ignored case law in both situations.
@Thomas S. I don't really expect any push back and I feel as though I will hear about concern prior to them going to the board if they even decide to resist. I have already presented my intentions to them the day I took the property over. So I'll make my own form I guess
@Thomas S. for telling me to go for it. It helped me a lot to hear that you have successfully taken this route in the past and succeeded.
Very interesting. As long as everyone is amicable, why not.
Congratulations Mark. It is always refreshing to hear about good tenant situations in Ontario.
The reality is that only about 10% of tenants are bad. It is actually the LTB that is the problem. You need to be creative and resolve issues without having to use the LTB.
If rent collection is a issue do not go the route of a N4, total waste of money. The board will deny all N4s costing you the application fee ($170). Best option is to immediately file L9. There is no grace period and you do not need to notify the tenant in advance. The board will uphold this application every time and the tenant pays the $170. I use this application as a $170 late fee to punish any tenant that pays late. Tenants rarely repeat.
I always inform all applicants of my L9 late rent policy during screening but some are still surprised when it happens.
Steve is correct you do also have the option of moving in yourself or moving in a family member. This is a valid reason to evict but it is also risky if it is not legitimate and has been regularly challenged by tenants. The board is highly skeptical of this reason to evict because for most landlords it is their only option to get rid of below market tenants and has been extensively attempted and failed.
For it to work it must be your first option, do not try to increase rent or ask them to leave to do reno work otherwise if they refuse and you invoke the owner occupancy you are guaranteed to be challenged and the board will rule against you based on the tenants evidence that you attempted other options to raise rents ahead of owner occupancy. Make a plan and stick to it.
There are many ways to work the system but if you do not know what you are doing in Ontario your tenants will own you.
Even though I know the system it once took me 3 years to get rid of a bad tenant at a cost of nearly 4 grand in rent rebates. Not a big deal as it was well worth the time and cost but for many landlords probably more than they could manage.
Best option in Ontario is to require vacant occupancy at closing. The responsibility then fall on the seller to get them out.
Really? This guy is just trying to figure out how to pay his expenses and feed his family. He could be living in his car for all you know, while providing residence to others. Take your hate to the gym and hit a punching bag. It's all everyone elses fault isn't it? Where would you be without a landlord? Don't like yours? There's millions, move on and quit complaining. Or, learn to save and buy your own place. When you voted for that tax increase, it was a rent increase. Think.
I'm so sick of the greed & inconsiderate landlords today. They are fast becoming a huge drain on society. As long as government does nothing they'll **** all over tenants. It's horrific!
The post you replied to is 7 years old. Ontario, like some other provinces in Canada, has a rent cap. So as long as you stay in the same place, your rent doesn't go up a lot each year. Problem is expenses for landlords do. There are good and bad landlords and tenants.