The Landlord and Tenant Act in Ontario was revised effective June 1998 and is now entitled the "Tenant Protection Act". This Act reformed six pieces of existing legislation. Notwithstanding government officials' reassurances to the contrary, some of the changes are having an impact or rental prices.

According to Provincial officials, this law was designed to give landlords the necessary flexibility to maintain their properties while protecting tenants from large rent increases. Landlords have the legal right to annually increase rents by the provincial guideline amount. The guideline for rent increases on behalf of existing tenants remains at 3.0 percent for 1999, as it was in 1998. A 90 day written notice of increase from the landlord to the tenant is required.

A subtle change under this new legislation provides that any vacant rental dwellings, including units rented to new tenants, are no longer restricted by the rent increase guideline. A landlord can set a new legal rent rate at whatever "market value" they deem appropriate.

This change had an immediate impact on rents in Ontario. CMHC released data in November 1998, showing that between October 1997 and October 1998 rents in Toronto had increased 7.3 per cent. In the previous two years rents had only increased 0.2 and 1.7 per cent respectively. Rents are expected to continue to rise beyond the rent control guideline of 3 per cent throughout 1999 as vacant units come on the market at prices that are no longer subject to rent control.

The Greater Toronto Area is currently experiencing a very strong economy. This "boom" is accompanied by an overall low rental vacancy rate of only 0.8 percent. Highly desirable areas such as downtown, the Beaches and Harbourfront are facing a rental supply crisis that is too low to measure. Renters looking in popular areas can find themselves competing for units in bidding wars, facing line ups for showings, choosing from a smaller selection than ever before, as well as paying prices which are no longer subject to rent control.

Although rental vacancy rates have been very low in the GTA for years, this does not mean that it is impossible to locate a home or apartment to rent. It takes, however, a systematic search of the Real Estate Board's Multiple Listing Service, area property managers' inventories and the private sector in order to ensure that the relocating employee has the widest possible selection of properties to choose from in a very tight market.

Reprinted with the permission of the Canadian Employee Relocation Council, CERC News, July/August 1999, vol 100.

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