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With rent prices and interest rates rising steadily, many landlords are finding that their investment property has become more expensive. As a result, I am hearing more stories than ever about landlords attempting to raise rents not consistent with the guidelines in order to help cover the additional expenses and/or to ensure that their profits remain steady.
Some landlords were quite agreeable to a rent reduction during the first year of the COVID-19 pandemic as they were fearful of losing their tenants. Prices on rentals were going down, and having a good tenant in place who was taking care of the property and paying rent on time was much appreciated. Likewise, tenants did not want to have to move out during that time if it wasn't necessary. Arrangements were often made that met the landlord and tenant's needs at the time.
While government guidelines are in place, it is important to remember that when you are a landlord with good tenants or a tenant with a good landlord, sometimes negotiations need to be made that work for both parties. Every situation is different and I believe that the right starting point is knowing your rights and obligations no matter which hat you are wearing in this scenario.
In the event that a landlord can no longer afford to hold onto a rental property, they may consider the option of selling the property. Another option is for them to move into that property or a third option is to negotiate a rent increase with their tenant that would help them to hold onto the property and their tenant if the tenant is agreeable.
If the landlord chooses to sell, the buyer of the property may:
- Accept the tenant at the same terms or the existing tenancy agreement. One issue with this is that if the tenant is paying well below market rent, the value of the property is reduced in
the eyes of the buyer.
- Request vacant occupancy which would mean that the tenant would be asked to leave. In
this case, the landlord/seller will have to pay the tenant to leave at an amount negotiated
between them. Standard is one month’s rent.
If a landlord decides to move into the unit or have a family member move into the unit, they are
still required to pay the tenant one month's rent and provide adequate notice (minimum two months) to the tenant so that they have time to look for another rental. They must move in and reside at the property for a minimum of 1 year before they can rent the property out to anyone else.
As we have been hearing about in the press, there are landlords who are taking advantage of
tenants and also tenants who are not paying rent and refusing to move. The backlog at the LTB
(Landlord and Tenant Board) for hearings is enormous and having a case heard will take months. This means that whenever possible, it is best to negotiate directly with each other honestly and fairly.
Ideally, both tenants and landlords should be educated about their rights and obligations so
that meaningful discussions can be had between the parties. If both tenant and landlord would
like to continue their arrangement, having an open and honest discussion with one another to
find a solution (either temporary or permanent) that meets both parties’ needs is the best way to
deal with the situation.
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