Ontario’s plan to freeze rents in 2021 has created another wave of commotion throughout the province. In an unprecedented move by the PC government, the forthcoming bill has “blindsided” landlords and upset tenant groups who fear a rent freeze may trigger a surge in homelessness if not backed with a moratorium on evictions.

Though the statement issued by the Ministry of Housing was sparse on details, the message itself was loud and clear: “This year is not like every other year,” wrote Minister of Municipal Affairs and Housing Steve Clark. “Which is why, at the direction of (Premier Doug Ford), I will bring forward legislation this fall to freeze rents.”

According to Paul Cappa, a paralegal at Cohen Highley LLP, the move to freeze rents may lead to a variety of challenges for landlords in the days and months ahead, many of whom had already deferred issuing rent increases since COVID measures were introduced in March.

“They now have a very limited window of opportunity in which to salvage an increase by issuing Notices of Rent Increase for December 1st, 2020,” he said. “The deadline to serve a rent increase (N1/N2 Notice) is September 2nd, 2020, to meet the prescribed 90 day notice period. Landlords who choose to exercise their right to serve an increase should ensure they meet the delivery requirements under the rules, but it is too late to serve the notice of rent increase by regular mail.”

Typically, the government is required to publicize rent control guidelines for the coming year in the spring; however, this year due to the economic uncertainty posed by COVID-19, the announcement was delayed. But Cappa says he has very little sympathy for the government body he believes has mishandled matters since the beginning. “This delay and ultimate decision follows a number of ill-conceived, knee-jerk reactions to the COVID pandemic that have become the hallmark of this government.”

Meanwhile, tenant groups like ACORN are asking the government to put additional supports in place for struggling renters impacted by the virus. In a virtual protest by 50 Toronto-based ACORN members on August 27th, protesters “blitzed the phone lines” of Premier Doug Ford, Housing Minister Steve Clark, Sean Weir at Tribunals Ontario, and the Deputy Housing Minister to demand rent relief.

“Doug Ford has failed tenants, and is now speeding up evictions,” the group said. “The premier is putting landlords’ [right to] profits before the right to housing.”

Consultations to come

With legislature set to resume on September 14th,  Minister Clark’s statement does indicate that there will be an opportunity for landlord and tenant groups to consult on the new bill—and when that happens, the Federation of Rental-Housing Providers (FRPO) promises to do whatever it can to advocate for landlord interests.

“FRPO has been urging the government to create a form of direct support for residents who can’t pay their rent,” said Tony Irwin, FRPO president and CEO. “There are some people who can’t afford rent at all and many whose situations have not changed. A 1.5 per cent break across the board does little for residents who can’t pay rent, while serving to weaken the industry’s ability to target support where it is needed.  We look forward to addressing our concerns with the Ontario government in the coming days.

Last year, rent increase guidelines for Ontario were set at 2.2 per cent—a number relatively consistent with previous years, but the highest it had been since 2013. Typically, this increase applies to most private residential rental units, excluding social housing and nursing homes, and in 2020, it also applied to new buildings and additions constructed after Nov. 15, 2018.

The subject of rent control has always been a contentious topic and a hotbed for political debate. The annual increase—which, in simple terms, indicates the maximum percentage a landlord is allowed to increase rent over the course of one year without approval from the Landlord and Tenant Board—can impact everything from a building owner’s ability to make ongoing repairs, to a developer’s decision to invest in future rental housing.

According to Irwin, news of the new bill came as a surprise. “Although we were anticipating something slightly lower than last year’s 2.2 per cent increase allowance, we were not prepared for an across-the-board rent freeze,” he said. “FRPO has always had an open, constructive relationship with this government and our hope is that we can discuss the issue in the days ahead and address our members’ concerns. We understand these are unprecedented times with COVID, but our opinion is that a better decision could have been made.”

Of course, all landlords will be affected by the forthcoming legislation but it’s the smaller landlords with limited resources who will feel the pinch the most. “Many of our members, having already delayed rent increases and been lenient with missed payments, were expecting that they could raise rents by a modest amount in 2021,” said Irwin. “For some of them, this could mean difficult times ahead.”