More and more landlords are hiking rents above the yearly limit in Toronto
Despite the fact that there are rules restricting how much the rent for many properties in Ontario can be increased each year, there are still ways that landlords can jack prices up even more under certain circumstances — and in Toronto, they've been doing so more than ever in recent years.
If the Landlord and Tenant Board approves their application for an above guideline rent increase (AGI), a building owner can hike rent more than the amount that the provincial government sets each year based on the provincial Consumer Price Index, which takes into account economic factors like inflation.
It's worth taking a look. I'd also like to see that top ten reasons for jacking up the rent about the guideline? How much of it was just maintaining the blding?— Rrrutgrrs (@Cdianshield) June 23, 2020
For 2018 and 2019, the limit was 1.8 per cent every 12 months, and for 2020, it was 2.2 per cent before a rent freeze was passed due to the pandemic, keeping 2021 prices at 2020 levels.
And while Toronto continues to become less and less affordable to live in, data shows that more and more above guideline rent increases have been applied for.
It found that the phenomenon has been taking place a staggering two and a half times or 250 per cent more between that time period, with 117 AGI applications filed seven years ago, and 294 last year.
The proportion was the same in Ontario as a whole as well, with 296 applications over the 2012-2013 fiscal year, and 758 in 2019-2020, steadily climbing over the years in between.
Our report on above guideline rent increases (AGIs) in Toronto, co-authored by @Martine_August, is now available at https://t.co/RnB1n3EOaS— RenovictionsTO (@renovictions) February 25, 2021
AGIs are increasing. There were 2.5 times the number of applications in Toronto in fiscal year 2019-20 as in 2012-13. pic.twitter.com/SWpFI4XaG4
There are select reasons that the board may green light above guideline increases even with the current rent freeze in place, such as extensive costs for capital repairs or security services on a property that are incurred by the owner.
Jumps in municipal taxes and/or other such charges are also usually considered fair causes for an above guideline increase, except in 2021.
"AGIs continue to exacerbate the affordability crisis," Philip Zigman and Martine August at RenovictionsTO state in their report, which also points out the issues of renovictions — evictions on the basis of renovating a unit — and vacany decontrol, where landlords raise rents dramatically between tenants, as the rent control rule does not apply.
"By allowing landlords to transfer these costs to tenants, we are prioritizing a landlord's ability to maximize their profits over the affordability of housing."
According to lawmakers, AGIs incentivize landlords to maintain their buildings—either because they will not be bothered to or cannot afford to. But these rationales do not justify transferring these costs on to tenants.— RenovictionsTO (@renovictions) February 25, 2021
Find the full report here: https://t.co/RnB1n3EOaS
The document also looked at what types of landlords were behind the AGIs, which can add up to tens of thousands of dollars more than a tenant was expecting to pay over multiple years.
It is financialized and corporate landlords — i.e. professional landlords or companies, not people who are just renting out one unit or a few to cover mortgage fees or make some extra cash on the side — who make up the vast majority of applications (64 per cent from 2012-2019, compared to 36 per cent made by independent landlords).
And when looking at the number of units affected by these applications, the disparity is even more drastic, with nearly 200,000 impacted units over those years belonging to financialized or corporate landlords, a staggering 84 per cent, compared to just 32,900 belonging to independent landlords.
In advocates' opinion, these types of landlords should be able to afford things like capital and tax costs, and not transfer them onto the little guys. Thus, AGIs in the case of big firms could simply be another way to generate more profits.
"Since the late 1990s, there has been a rise in financialized ownership of apartment buildings, in which financial firms acquire and manage apartments as products for investors... [and] these firms appear to be more single-mindedly focused on extracting profits," the report reads.
"Applying for AGIs can serve a dual purpose, not only securing rent increases above the guideline but also displacing tenants unable to afford the increase, thus achieving turnover and enabling even larger rent increases."
Busting the myth that landlords “need” above guideline rent increases (AGIs) to survive https://t.co/Mwrvcynfge— Martine August (@Martine_August) February 25, 2021
Though renters in Toronto were graced with 12 months of falling rent prices thanks to the health crisis last year after prices had hit untenable highs, the market is already on the rebound as Toronto returns to its status as one of the least affordable cities to live in in the world.
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