This month we are going to address three different topics. First, I will be looking at the proposed changes to Ontario’s Tenant Protection Act. Now that parliament is back in session, I expect that modifications to the Act will soon be addressed by our Liberal government. As a landlord these suggested changes to the Act can have a significant impact on your investment properties. I will then be introducing you to two of the more important landlord/tenant websites that you should be aware of. From there, my associate Howard Esakov has provided me with a brief synopsis of his views on the income property market this year to date. Lastly, our investment specialist David Riseman has prepared a section on where he feels Toronto real estate is heading.
The Ontario government has now reconvened and is set to unveil its long-awaited changes to rent control in a bid to fulfill an election promise to repeal the controversial Tenant Protection Act. Municipal affairs ministry staff say the twice-delayed bill to repeal the controversial piece of legislation brought in by the previous Conservative government in 1998 will be introduced when the Legislature resumes sitting in the next few weeks. Areas of the Tenant Protection Act that the Liberals are expected to address include:
Moving to ban rent increases until landlords complete outstanding repairs to rental units — a protection removed by the Tories.
Changes to the rental housing tribunal. Critics have charged that the tribunal members are not qualified for the job and side with landlords in most disputes.
Changing a rule that allows for tenants to be evicted without appeal if they do not properly fill out a formal notice of dispute within five days.
The Liberals promised during the 2003 election campaign to bring back rent controls on vacant apartments — price controls that were eliminated by the Tories — and to do so in their first year in government. A spokesperson for Municipal Affairs Minister John Gerretsen, who is responsible for housing issues, has acknowledged that the Liberals are late in delivering on their promise, but added they were taking the time necessary to consult with tenant and landlord groups over what has emerged as a political hot potato. As a landlord it is important that you stay aware of these developments as they can have a direct impact on your tenancies and the overall profitability of your real estate investments.
We have tried to accumulate as many local landlord and real estate investment resources as possible on our website (www.plex.ca). We are currently working on adding several new features including a new engine for you to search our picks for the best income properties on the market at any given time. In order to be as complete as possible, we also provide many links to other relevant sites that contain useful and robust information for active landlords and investors.
The leading website for landlords is the Ontario Rental Housing Tribunal website at www.orht.gov.on.ca. This is the place to get all the relevant forms and publications that you may require over the course of your tenancies. For example, if you need to evict a tenant, it has to be documented on the prescribed form. All of the official publications are available in PDF format which is very useful. There is also a very handy online services section as well as a complete up-to-date version of the Act. Bookmark this site as it truly is one of the better government websites out there. Another excellent site is the “Toronto Tenants” website at www.geocities.com/torontotenants. Like plex.ca, this site is a directory of many useful links and popular landlord destinations.
The following thoughts come from Plex agent Howard Esakov, who spends plenty of time with me looking day in and day out at the income property inventory in the GTA:
“As with any cyclical market, the income property market looks to be an area of opportunity going forward. The past few years have been particularly challenging for landlords – with increasing pressure on rents and rising upkeep costs. While income property cap rates have been fairly low – in the 6-7 range – we believe that as the supply of income properties on the market begins to increase we will see better cap rates. The rental market will remain stable in the core of the GTA; due to increasing demands, however, its is important to note that the properties that have the best chance of renting at market rents are those that have been updated and well maintained.”
I agree that the market will remain very strong in the middle of the city. Since we still are in an under-supply situation and the borrowing climate remains strong, I think that quality investment real estate will continue to sell, provided that it is priced right. Remember that income properties make good financial sense as a means of property ownership, so it’s not surprising that in the Tier 1, high rentable areas, that the market remains very active.
Many of our faithful readers know that I often speculate on where the Toronto real estate market is going. This month I turn the discussion over to my business partner David Riseman, who provides a critical analysis at the macro level that I’m sure you’ll find quite engaging.
“Where are interest rates going? Does Toronto real estate still have value? What is going to happen with all the condos? These are just a few of the many questions I get from my Investor clients … and my response is always the same. The under-pinning for rising prices in any product or service is a lack of supply coupled with an increasing demand. The real estate market in the city of Toronto has less to do with fundamentals that the rest of Canada might have and more to do with these very significant facts. Nearly 75% of all immigrants entering Canada reside in the GTA. Interest rates cannot change the fact that people need a place to live … and finally that condos serve a very viable purpose – increasing the population density, providing affordable housing (since a great majority of the condos being built are in the $180,000 – $280,000 range) and successfully allowing upwards of 1000 people to live, play and spend in under a few acres of land – an extremely efficient use of space. With a projected population of 1 million more people in the next 6 years … I ask only one question, is good real estate going to be worth more in the future?”
Next month, we will be focusing on renovating your investment property for future capital gains and look at all the pitfalls to avoid when using third party contractors and labour. Hopefully, the spring weather will be upon us then and we can finally put away our hats and gloves.