No rent control on new condos occupied from November 2018

Three years ago Premier Doug Ford introduced an exemption to Ontario’s rent control rules for units first occupied after Nov. 15, 2018.

New buildings, additions to existing buildings and most new basement apartments that are occupied for the first time for residential purposes after November 15, 2018 are exempt from rent control.

This was done to stimulate the development of much-needed rental supply in hopes of lowering the rents. More than 7,500 purpose-built rental units have been built in Toronto since the policy was enacted, says market research firm Urbanation. However, the the number of units actually built since the policy came into force hasn’t been enough to address the rental demand.

The issue of dismissed rent control was not noticeable in the past year due to the provincial pandemic rent freeze mandate. That rent freeze came to an end on January 1, 2022. Landlords have to provide 90 days’ notice to raise the rent for tenants that have occupied their units for 12 months or more.

As a consequence, we expect many tenants will become subject to rent increases this spring. The rent increase will mean tough times for the tenants still recovering form the loss of income due to the pandemic.

Last fall Canada Mortgage and Housing Corp. found that 11 per cent of rental households in the Toronto region were in arrears. Some households that fell behind in rent during the pandemic already have rent repayment schedules this year with no increase in wages. Adding the increase in rent might push their housing budget over the limit and force them to move.

To avoid rent hikes, tenants might prefer renting older units where the rent increase guideline for 2022 is 1.2%.

Rentals.ca says the average rent in the Greater Toronto Area sat at about $2,167 per month in November, and in the city alone is projected to hit $2,495 per month by the end of the year.

If you are a landlord of a newer unit, you might want to keep in mind that although the rent is not controlled by the government now, it’s still controlled by the market. An open conversation followed by a reasonable negotiation is the best approach to keep your tenants and yourself happy.