Toronto Rental Cost (& AirBnB) Issues

[freshcutgrass]

Rent controls (in terms of the rate of rent increases) don't apply to buildings built after 91 - so no, that's not why new dedicated rentals aren't being built. (which also isn't true, as there are thousands of units currently approved or under construction by the city at this moment)

I said higher tax rates on purpose-built rental buildings account for it, which is the real problem. And no, there haven't been many rental buildings built in context at all, and how many of those "planned" buildings will be cancelled if they add rent controls to that higher tax rate? Exactly. The so-called "loophole" never had the desired effect in the first place, and removing it will simply result in exacerbating the problem. So tenant groups can cheer on the government to increase rent controls, but they will just be shooting themselves in the foot and putting more people in jeopardy in the process unless they make up for it by increasing social assistance in housing, which is what they should have done in the first place.

Also, condo owners still have to abide by every other rule that a rental only building would have if they choose to rent their unit out. Security deposits are still illegal, banning pets is still illegal, a landlord still has to give 90 days notice of rent increases, 24 hours notice before entering a unit, maintaining the unit in a good state of repair, etc.

Well, condo bylaws supercede the RTA, so that really isn't true, but the standard rules of conduct aren't the problem here. Condos will continue to have many advantages over purpose-built rental buildings even if rent controls apply to them.

 

[Momin]

Update: http://urbantoronto.ca/news/2017/04/rent-control-what-will-closing-1991-loophole-mean-toronto

 

[Bayer]

I left a condo I had been renting for 10 years and moved to a more expensive Manulife Centre apartment because I was tired of wondering every year if the owner would ask me to leave because he wanted to sell or use the apartment for himself, and I was also dreading stratospheric rent increases like those we heard about this week - and I have a six-figure income. Moving to a new purpose-built rental building would have solved only the first of those problems. The lack of social housing is a separate issue. You just shouldn't be allowed to double people's rent like that. Extending rent control to all rental housing would be wise, though I don't think owners should be prevented from resetting the rent when a tenant leaves.

 

[TrickyRicky]

All the properties I own or manage are subject to rent control so closing the loop-hole has no real impact on me; However, I find it choice that the government is playing the outrage card on this issue when on the other hand they have been raising operating costs on rental units by double digit figures every year. For instance I deal with a property that is facing a 300% increase in property tax. That example of the tenants facing a doubling of their rents is choice fodder for government outrage when they are tripling the tax on downtown properties.

You could argue that that tripling of property tax is viable because it reflects property value increases; however, you can't unlock that value unless you sell. You can't even borrow against that property value because lenders now only use an income test to determine how much you can borrow. Rates of return on buildings are starting to approach Government bond rates. How is that good for the rental housing market?

What tenants fail to appreciate is that in general the rent they pay is barely profitable. You make money in real estate leveraging against continuous property price appreciation. The rent tenants pay covers the operations and maintenance of the building with maybe a modest positive cash flow.

 

[rbt]

Rates of return on buildings are starting to approach Government bond rates. How is that good for the rental housing market?

Isn't that fairly typical in older high priced cities? To squeeze a profit out of real-estate in Paris/London/etc. you seem to need a half dozen buildings (for scale of management/maintenance team) and even then it's about 2% for the first 30 or so years until the debt is reduced.

Of course, in those cities some of the larger landlords have been operating for hundreds of years.

 

[Admiral Beez]

But they can afford them...that's why they are gobbling them up as fast as they come on the market...that's why there are record numbers of units, yet a 1% vacancy rate.

Stop bringing facts to the table.

 

[Admiral Beez]

Hey...if people don't like the deal, then stop renting and start owning.

Exactly.

If you can't or won't afford home rental or ownership, no one is forcing you to work and live in Toronto. It's a big country, go to where you can afford it.

My neighbour just moved to Saskatoon for work, says there's lots of jobs in a growing multicultural city. Paid less than $$500k for a nice house. Here's a nice one http://www.remaxsaskatoon.com/listings/?vdcsessionid=2w5sqtk2l3hrg1uy5iizxtcb

 

[nrb]

All the properties I own or manage are subject to rent control so closing the loop-hole has no real impact on me; However, I find it choice that the government is playing the outrage card on this issue when on the other hand they have been raising operating costs on rental units by double digit figures every year. For instance I deal with a property that is facing a 300% increase in property tax. That example of the tenants facing a doubling of their rents is choice fodder for government outrage when they are tripling the tax on downtown properties.

You could argue that that tripling of property tax is viable because it reflects property value increases; however, you can't unlock that value unless you sell. You can't even borrow against that property value because lenders now only use an income test to determine how much you can borrow. Rates of return on buildings are starting to approach Government bond rates. How is that good for the rental housing market?

What tenants fail to appreciate is that in general the rent they pay is barely profitable. You make money in real estate leveraging against continuous property price appreciation. The rent tenants pay covers the operations and maintenance of the building with maybe a modest positive cash flow.

And how much are you raising rents through an above guideline increase?

 

[Kat_YYZ]

....

I think this is a good idea, but it will be difficult to determine if housing units are unoccupied (just wait until the inevitable Star/CBC heart-tug article about some elderly owner who was unfairly taxed because of some reason):


https://www.thestar.com/business/2017/03/30/city-province-eye-tax-on-unoccupied-homes.html

I don't understand how they can know that individual units within a building are unoccupied. What if the owner is purposely not getting a renter for $1200/month because he puts it on Airbnb and gets $120/night for it, meaning he only needs to have it booked 10 nights per month to make the same money, and could potentially make three times that much. I could even see this happening in straight-up rental buildings. Heck, I could even imagine a building superintendent running this scam and not even telling the property management firm.

 

[Admiral Beez]

I don't understand how they can know that individual units within a building are unoccupied.

Indeed, and what does unoccupied even mean? My neighbour is a snow bird, and with the exception of insurance-mandated check-ins, leaves his house vacant six months of the year.

You can't look to the government to solve your housing problems. Buy or rent what yours means allows, and if that requires you to go elsewhere for career and housing, then do it. I'd love to live in London, UK, as I was born there and have some roots in the city, but I could never afford it. Just because you want it, the government doesn't have to make it so.

 

[freshcutgrass]

I don't understand how they can know that individual units within a building are unoccupied.

That whole problem can be solved fairly simply. Residential condos should be taxed the same as non-condo residential units....if it is your principal residence (easy to verify), then the unit should be taxed at the residential rate and no capital gains tax if sold. If it isn't your principal residence, then it should be considered a business and should be taxed at the commercial tax rate and subject to capital gains taxes if sold. That way you level the playing field in the rental business (although there are still inherent advantages to condos).

 

[Kat_YYZ]

Indeed, and what does unoccupied even mean? My neighbour is a snow bird, and with the exception of insurance-mandated check-ins, leaves his house vacant six months of the year.

You can't look to the government to solve your housing problems. Buy or rent what yours means allows, and if that requires you to go elsewhere for career and housing, then do it. I'd love to live in London, UK, as I was born there and have some roots in the city, but I could never afford it. Just because you want it, the government doesn't have to make it so.

How I wish I could wave a magic wand and make your vision come true overnight.

Fast drive to work as the streets are half empty. But no Egg McMuffin today -- McDonald's employees all moved to cheaper apartments far away. No Tim's either. Hope you brought lunch from home.

Watch where you step! Some rich lady's baby projectile-puked all over the floor, but the Eaton's Centre and Commerce Court have no cleaning staff. Those people can't afford to live here, so why should they work here, eh? (You don't want to slip and fall and end up in the hospital; the doctors are top-notch, but with no janitorial staff, the place is rife with infections.)

You get to your office but more than half the people aren't even at work. Guess what? They weren't really making enough to live here, either -- they were just scraping by and supplementing by using credit. Guess you'll have to do your own filing and data entry, and sign for deliveries. Your boss is also not there -- because all the nannies and child care workers don't live in Toronto anymore. So your boss is trying to work from home & watch the kids at the same time.

You must be hungry, but the grocery stores are locked up -- no cashiers or stock people came to work... they can't afford to live in Toronto on what they're paid, right? The franchise owner/manager can't run the place himself.

I could go on and on and on.

 

[freshcutgrass]

And how much are you raising rents through an above guideline increase?

Your insinuation that guideline increases provide profit opportunities for landlords is hilarious.

 

[freshcutgrass]

Just to interject a little reality into the idea that Toronto is somehow super-expensive.

 

[Admiral Beez]

I could go on and on and on.

I sense that. But even the most expensive cities in the world have an underclass to do the work you describe, and they manage to afford to live within reach of their employment. What helps is good trains and transit, plus bike lanes - something we're woefully short of. In the 1990s I worked at Pearson airport and lived at Vic Park and Kingston Rd, without a car it would take me 2 hours or more to get to work.