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One of the most common arguments against renting over owning is the “renoviction” problem. Basically, this happens when a landlord uses the excuse of a “renovation” to kick out their existing tenants so they can raise rent above guidelines.
This isn’t so much of a problem in small towns and suburbs but tends to happen in big cities where jobs are plentiful and, as a result, stiff competition and low vacancy drives everyone into a hunger games style fight for rentals.
Oddly enough, we’ve never run into this problem in the 9 years that we lived in Toronto, the fourth most populous city in North America. Maybe it’s luck, maybe it’s picking the right landlord and type of rental, but instead of renting a shiny new condo 5 mins walk from work, we chose to rent the top half an older townhouse from the 1960s, within a 25 min subway ride away. The landlord, a white-haired man in his 60s and self-proclaimed “not a dollar and cents kind of guy”, had bought the house decades ago and was less interested in maximizing profits, and more interested in minimizing landlord headaches. He was willing to rent to us below market value for almost a decade as long as we took good care of the place and didn’t bother him too much. In fact, we got along so swimmingly that he offered to give a $50/month discount to any trustworthy friends or family we refer to him when we left.
But what if you can’t negotiate a sweet deal with your landlord like we did? Will you have to constantly worry about being kicked out of your home because of a greedy landlord?
Well, turns out there is hope. I came across this article recently:
As it turns out, Toronto is considering copying New Westminster, BC (or “New West” as the cool kids like to call it), to create a new bylaw that prevents renovictions by:
- Holding landlords responsible for alternate accommodations if tenants need to leave a unit so it can be renovated.
- Allowing tenants to move back into their unit or another one at the same rent.
After implementing this law, the number of renovictions in New West dropped from 333 down to 0! And it has stayed that way since 2019.
And then everyone lived happily ever after, and no one got sued or threatened afterwards.
HA! I wish.
Immediately after this by law was put in place 2 years ago, a developer launched a lawsuit challenging it. In fact, it even went all the way up to the B.C Court of Appeal, but eventually lost when the judge ruled the city was within its rights to enact the bylaw based on the province’s community charter.
Take that, Real Estate Mafia! This got the attention of other cities and they’re trying to enact the same law.
Could this type of law work in your city? Well, here’s the thing about rent controls. As with any government intervention in the free market, there are always pros and cons:
Pro: Keeps Rent Affordable
San Francisco, New York, L.A, almost all of the expensive cities in the U.S have some type of rent control. Politically, this is a popular choice since, idealistically, most people think this will help those who are struggling be able to afford to continue living in an expensive city rather than be forced out onto the streets.
And they’re right, in a way. Rent control is inarguably helpful…for existing tenants.
But what about new tenants?
Con: Reduces Housing Stock
The first major paper on rent control, written in 1946 by economists, Milton Friedman and George Stigler, argue that rent control only helps existing tenants. It actually hurts new tenants by making it more difficult for them to find housing. This is because developers are no longer incentivized to build for-purpose rental units, so with no new buildings going up, and existing tenants refusing to move out because of their sweet rental deals, we end up with even more scarcity in rental stock.
Pro: Attracts More People to the City
Without rent control, lower income people will have no choice but to leave the city, making it more difficult for employers to hire workers. With affordable housing, more of those workers will be incentivized to stay and get to work easier without having to commute long distances. New potential employees will also not be scared off of moving to the city for a job.
Con: Disincentivizes landlords from maintaining property
One of the things a landlord can do is stop maintaining their property in a passive-aggressive move in order to save money and force their tenants out. There are laws requiring landlords to maintain safe living environment, but as we all know, those laws are not always adhered to. Also, they can let the building fall into neglect and disarray, thus reducing the appeal of the neighbourhood and increasing crime.
So, even though there are good intentions behind the New West bylaw, only time will tell whether this will reduce renovictions in other cities or just reduce housing stock.
In the Meantime…
If you’re renting, don’t live in B.C, and are worried about renovictions, here’s a few tips I picked up from renting in crowded, expensive Toronto:
Pick For-Purpose Apartments
Pick “for-purpose” rental apartments over shiny new condos. They might be older and not as easy on the eyes, but definitely easier on your wallet. Plus, they also help shorten your time to FI. In Toronto, you’ll want to pick units that were created or first rented before November 15, 2018. Those units cannot raise rent per year above provincial guidelines, which in Ontario in 2020 was 2.2%.
Find Older Landlords
Besides apartments, you can also rent places from older landlords (reverse-agism for the win!) who don’t need the money. These landlords aren’t real estate investors, they’re simply renting out a second property or part of their duplex to help offset the cost of their mortgage (which is generally low because they bought the place decades ago). They also don’t want much hassle and would rather charge below market rent to trustworthy tenants to avoid dealing with renter headaches. Our current rental was an Airbnb that turned into a long term rental and the landlord gave us a deal because he trusts us. Here’s how you can negotiate a lower rent like we did.
Know Your Tenant Rights
Read up on your local laws and know your rights. A lot of tenants get taken advantage of because they don’t know the law is on their side. They willing go along with whatever the landlord says just because they’re the landlord (eg. In Toronto, if you find out your landlord lied about renting their unit “to family” only to see them list it for a higher rent, or if the family member doesn’t live there for a full year, you can sue them for as much as $50,000! And you have an entire year after moving out to do this.)
If all else fails, you can always move to New West!
What do you think? Are you for or against rent control? Let’s hear it in the comments below!
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