I had an unusual call this week from a friend who lives in Thunder Bay while attending university. It seems his landlord has raised his rent by an astronomic amount and he is worried as he can't afford to pay. My buddy James is in a heap of trouble as the condo unit he rented last year was built after November 1st 1991 which in turn means it is not subject to the tribunal yearly rent increase. The yearly rental increase set by the tribunal usually averages close to 1.5% per annum.
James rented this unit January 1 2011, you see a landlord must give at least 90 days notice prior to the lease expiry date or it would be null and void. It seems his landlord had made a critical error with timing as he served James too late. In order for a landlord to implement an increase he or she must provide 90 day notice prior to lease expiration to the tenant.
As a Toronto Realtor I have met some really shroud landlords, some I would consider the slum of all slum but this tactic in my opinion is just unethical. Regardless if the law allows this method that a landlord can just increase rents by a huge monthly rate is just plain wrong. How many students out there do you know that can afford an average rental rate of $750.00 per month and then it just jumps to well over a $1000.00 per month? Sorry but that's not right.
The funny thing is that James was one of my tenants when he lived in Toronto and he was a great tenant, he always paid on time and kept the unit very clean. This is what's puzzling about this whole thing, why would a landlord arbitrarily increase the rent like that? I could understand if a landlord has a rogue tenant on his hands as this is a great strategy to evict a tenant with making the unit un affordable.
The Toronto real estate market has well over 7000 condos and I'd say that a high percentage of them have been built after this magical date. If you are buyer looking to invest in the Toronto condo and loft market this might be some good information for you to keep, but please don't abuse the fact that you could increase as much as you care for no reason. Use it with discretion.
This is how I use this method with great tenants; if I rent a Toronto loft to someone for $2000.00 and the next year most compatibles have been leased for $2200.00 per month depending on my relationship with my tenant I may only increase the rent by $50.00 per month. In the event that my tenant has proven that he or she deserves a better rate than I may not increase the rental rate at all.
On the other hand with so many homes in Toronto for sale and most of these homes were not built after November 1, 1991 this might be the reason as to why so many speculators are so eager to buy a Toronto condo.
Regardless of whatever the reason is for investors to jump on the condo bandwagon as a Toronto Realtor and investor nothing is better than buying a home that I can convert into multiple units as I have written an article in my blog giving my reasons.