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Housing Affordability in Canada: The Vancouver and Toronto Experience

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Introduction

These days, you’re bound to come across the issue of housing affordability in Canada, especially in Vancouver or Toronto. You have probably also heard about how housing affordability is especially difficult for Canadian millennials. Millennials, which are younger adults between the ages of 20 to 34, make up approximately 20% of the Canadian population. According to Statistics Canada’s net migration data, there has been an upward trend in millennials flocking to Vancouver and Toronto.

In addition to the property taxation changes, both Ontario and B.C. have implemented legislative changes to their residential tenancy laws, in efforts to protect renters and temper affordability issues in the rental market.However, living in Vancouver and Toronto comes at a steep price. If you are living in Vancouver or Toronto, chances are that most of your paycheck is being used to cover your mortgage or rent. As my fellow millennial friends living in these two cities can attest “we are house poor.” Where do we start when talking about this nebulous concept of being “house poor” or more appropriately, “housing affordability”?

Well, let’s first compare average home prices with average household income in these two cities. Based on the Canadian Real Estate Association’s MLS Home Price Index, the average single detached home costs approximately $1.545 million dollars in Vancouver and $863,500 in Toronto as of September 2018. The average household income is $92,300 in Vancouver and $104,100 in Toronto. While there doesn’t appear to be information on average household income on millennials in these two cities, there is information on median income for millennial families. For example, according to Statistics Canada, the median income for millennial couple families in Vancouver is $74,660 and $69,710 for millennial couple families in Toronto.

Even if you manage to make a 20% down payment for an average priced home in these cities, your monthly mortgage payments at the current 3.95% prime interest rate (with a 25-year amortization) would be at least $6,468 in Vancouver ($77,616 per year) or $3,615 in Toronto ($43,380 per year).

When it comes to housing affordability, the CMHC recommends that total monthly housing costs should be no more than 32% of gross household income. With the monthly mortgage figures mentioned above, a household would have to earn at least $242,550 per year in Vancouver (2.6 times the average household income) or at least $135,562 per year in Toronto (1.3 times the average household income) in order to meet the CMHC recommendation.

For the average millennial and non-millennial household, there’s not much left over, if at all, at the end of the month for other potential money pits in adulthood like everyday expenses, taxes, insurance, emergencies, children and retirement. In fact, you likely have no choice but to focus on servicing your mortgage for your entire life.  Now how about another fun thought experiment: imagine what those monthly payments will be with more interest rate hikes!

The speculation tax will apply to B.C.’s largest urban centres, which include the Greater Vancouver Area, Victoria, Nanaimo and Kelowna. The picture is also not so rosy for renters in either of these cities. Vancouver and Toronto are the most expensive Canadian cities to rent in, with the average two bedroom rental going for $1,552 in Vancouver and $1,392 in Toronto according to CMHC’s rental market reports. Average monthly rent for two bedrooms in the most desirable and/or central neighborhoods in both cities often exceed $2,000. High prices in home ownership and lack of rental supply have not only kept vacancy rates low at 1%, but have also helped drive rental prices upwards in both cities.

Responding to housing affordability issues: not just a millennial issue

It’s no surprise that industry reports have declared the Vancouver and Toronto housing markets as reaching crises levels for millennials and non-millennials alike. In the past decade, various factors have been blamed for housing affordability issues in these two cities – ranging from population growth, low housing supply, foreign buyers, real estate speculation, low interest rates, tax loopholes and evasion, and stagnant wage growth to lack of effective government policy.

With growing political backlash, both the British Columbia (B.C.) and Ontario governments have been confronted with housing affordability issues in their respective provinces. In the past two years, legislative proposals and changes have been introduced in both provinces to help address housing affordability issues.

The B.C. Response

In 2016, the B.C. government under the B.C. Liberal Party implemented a 15% property transfer tax for foreign nationals buying real estate in the province and a luxury tax on homes selling for over $2 million dollars. Housing affordability was a top concern in B.C.’s last provincial election in 2017, where the New Democratic Party (NDP) came to power.

The B.C. government under the NDP has since released its 30-Point Plan for Housing Affordability (the “B.C. Budget”) in February 2018. The B.C. Budget identified an immediate government priority to stabilize housing demand by introducing a new speculation tax, increasing and expanding the existing foreign buyer’s tax and closing legal loopholes used by property speculators.

Speculation Tax

As part of the B.C. Budget, the provincial government released details in March 2018 about a proposed speculation tax on residential property (the “speculation tax”). Legislation implementing the speculation tax is expected in the fall of 2018.

The speculation tax will apply to B.C.’s largest urban centres, which include the Greater Vancouver Area, Victoria, Nanaimo and Kelowna. The speculation tax is meant to target non-B.C. owners of residential property who leave their properties vacant.

In 2018, the speculation tax rate will be 0.5% of the property’s value in 2018. In 2019 and beyond, the speculation tax rate will vary according to a person’s citizenship status and/or current residence situation, for example:

  • 2% for foreign investors and “satellite families” (there is no legal definition of what is a “satellite family” but the B.C. government has referred to satellite families as “households with high worldwide income that pay little income tax in B.C.”);
  • 1% for Canadian citizens and permanents residents who do not live in B.C.; and
  • 5% for British Columbians who are Canadian citizens or permanent residents.

There are also exemptions from the speculation tax. For example, British Columbians will be exempt if their property is their primary residence or is rented out as a qualifying long-term rental. People who report income in B.C. with a vacant second home will also be eligible for non-refundable tax credits of up to $2,000 for one property. There are also  additional  exemptions for special circumstances such as when an owner is:

  • undergoing medical care or residing in a care facility;
  • temporarily absent for work; or
  • deceased and the estate is being administered

Foreign buyers’ tax and other property tax changes

Other than introducing a speculation tax, the B.C. government introduced the following property tax changes in the B.C. Budget:

  • Property transfer tax on homes valued at $3 million or more will increase from 3% to 5% for the portion over $3 million.
  • Property transfer tax for foreign nationals will increase from 15% to 20% and will expand to cover other geographic areas such as the Okanagan and Fraser Valleys and Nanaimo.
  • School taxes on homes valued over $3 million will increase, with:
    • a 0.2% tax applying on the assessed value of a home that is greater than $3 million but under $4 million; and
    • a 0.4% tax applying on the portion of a property’s assessed value over $4 million

To illustrate the effects of these tax changes, a foreign buyer purchasing a home valued at $3.5 million in Vancouver would have to pay at least an estimated $793,000 in taxes:

  • A property transfer tax equal to $93,000
  • A 20% property transfer tax for foreign nationals equal to $700,000

The above example does not include the 0.2% school tax (which applies to homes with a value that is greater than $3 million but under $4 million) or the proposed 2% speculation tax which would apply if the foreign buyer is considered a “foreign investor” or is part of a “satellite family.”

Land Owner Transparency Act and the Information Collection Regulation

It’s no surprise that industry reports have declared the Vancouver and Toronto housing markets as reaching crises levels for millennials and non-millennials alike.In June 2018, the B.C. Ministry of Finance released draft legislation, the Land Owner Transparency Act (LOTA), which will require reporting of beneficial ownership of land in BC. This means that corporations, trusts and partnerships will have to disclose the names of individuals who hold beneficial interests in land directly, or through corporations or partnerships.

The proposed law is part of the government’s efforts to establish a public registry, with the intention to help end hidden ownership of real estate, as well as prevent tax evasion, fraud and money laundering.

Under the proposed LOTA, there will be administrative penalties and criminal offences for failure to meet those reporting obligations. For example, the administrative penalty would be up to $25,000 for individuals, $50,000 for corporations while the fine for a criminal offence is $50,000 for individuals and $100,000 for a corporation.

In the meantime, the B.C. government has recently enacted the Information Collection Regulation (effective September 17, 2018) as part of its mandate to increase transparency in property purchases. The Regulation requires corporations and trustees acquiring property in B.C. to identify all individuals with a significant interest on their property transfer tax returns.

Empty Homes Tax
In July 2017, the City of Vancouver also passed Vacancy Tax By-Law No. 11764, which introduced an Empty Homes Tax (“EHT”). The EHT is an annual tax on empty or under-utilized “Class 1” residential properties such as single-family residences, multi-family residences, duplexes, apartments and condominiums.

Under the bylaw, a residential property is considered vacant if it has been unoccupied for more than 180 days during the tax year. When EHT applies to a property, owners are required to pay 1% of the property’s assessed taxable value. There are certain exemptions from the EHT, for example, if an owner of the property is deceased or the property is undergoing redevelopment or major renovations.

Owners of Class 1 residential properties must complete an annual property status declaration to determine if the EHT applies. If an owner does not make a property status declaration, then the property is considered vacant and is subject to the EHT.

The Ontario Response: The Non-Resident Speculation Tax

In April 2017, the Government of Ontario under the Liberal government released the Fair Housing Plan, which included actions such as protecting renters through expanding rent control and implementing Land Transfer Tax refunds for first time home buyers.

When it comes to housing affordability, the CMHC recommends that total monthly housing costs should be no more than 32% of gross household income. The cornerstone of the plan was the introduction of a Non-Resident Speculation Tax (NRST). The NRST requires “foreign entities” to pay a 15% tax when purchasing residential property. “Foreign entities” are defined as foreign corporations or foreign nationals. For example, a foreign national is a person who is not a Canadian citizen or permanent resident of Canada.

Similar to B.C.’s foreign buyers tax, the NRST applies to all transfers of residential real estate located in certain geographic areas. In the case of Ontario, the tax would apply to residential property transfers in the “Greater Golden Horseshoe”, which includes highly populated areas such as the Greater Toronto Area and its surrounding areas such as Kawartha Lakes (which apparently is known to Ontarians as “cottage country”).

Rebates for the NRST are available for certain foreign nationals, for example, foreign nationals who become permanent Canadian residents, full-time international students and foreign nationals legally working full-time in Ontario.

Rent control in B.C. and Ontario

In addition to the property taxation changes, both Ontario and B.C. have implemented legislative changes to their residential tenancy laws, in efforts to protect renters and temper affordability issues in the rental market. For example, both B.C. and Ontario have rent controls in place that set the maximum amount that landlords can increase rent –in 2019, the allowable increase is 4.5% in B.C. and 1.8% in Ontario.

Conclusion: What’s next?

Recent developments will keep housing affordability issues at the public forefront in the coming years. In Ontario, housing affordability was a top electoral concern when the former provincial Liberal government was in power and continues to be a top concern among Ontarians under the newly elected Progressive Conservative government. However, the Progressive Conservative government in Ontario has expressed their openness to dropping the NRST tax and letting the market regulate itself. It remains unknown whether this was campaign rhetoric, or will turn into something more.

In the meantime, B.C.’s foreign buyers’ tax is currently being challenged by Jing Li, a lead plaintiff in a civil class action claim against the B.C. government. While a summary trial is currently underway, some legal experts are expecting that the case will likely make its way up to the Supreme Court of Canada.

Millennials, which are younger adults between the ages of 20 to 34, make up approximately 20% of the Canadian population. Since the implementation of the foreign buyers’ tax and other property tax changes in B.C., the sales of single family homes, especially in the high end of the market, has slowed down in Vancouver. Similarly, the sales of real estate in the Greater Toronto Area have decreased since the NRST was implemented in Ontario. The average price of a single detached home in Vancouver has decreased by about 7% from a high of $1.6137 million dollars in September 2017. Likewise, the average price of a home in Toronto has decreased by about 11% from a high of $972,500 in May 2017. However, overall housing prices continue to remain high in Vancouver and Toronto.

Many questions remain about the effect of the various property taxes. For example, will the taxes necessarily stop foreign buyers and other non-resident buyers (such as out of province buyers) from purchasing in Vancouver and Toronto? Are the drops in home prices a result of local homebuyers refraining from buying and selling? Have other factors, such as tighter mortgage lending rules and increased interest rates, contributed to the recent drops in home prices? How will the various property taxes affect other housing markets in Canada – for example, will buyers move their money elsewhere and drive up housing prices in other cities?

Despite the implementation of rent control measures in B.C. and Ontario, some real estate industry experts and commentators are questioning whether such rent control is effective in curbing soaring rents in cities such as Vancouver and Toronto. Changes in taxation and rent control are important pieces of the housing affordability housing puzzle but other issues still need to be addressed, for example, the lack of affordable housing supply and transparency in real estate transactions. As legal and industry experts have pointed out, it is still too soon to come to a conclusion on whether such measures are effective in cooling the market to an affordable level.

Concerns about housing affordability are not just restricted to B.C. and Ontario, or Vancouver or Toronto alone. Nor is housing affordability just a millennial problem. For example, a recent survey done by Abacus Data indicates that housing affordability is a top concern amongst Canadian millennials. With the exception of Quebec, the majority of millennials in every province cited affordable housing as a top priority for the federal government to focus on. As the recent provincial and municipal elections in Ontario and B.C. have shown us, housing affordability is top of mind for voters in general. Various industry reports also indicate that overall, Canadian housing affordability has been getting worse in almost every city across the country. With further potential interest rate hikes on the horizon, it is expected that housing affordability will likely get worse for most Canadians – millennials and non-millennials included.

Alberta’s Recreational Cannabis Landscape: An overview of restrictions in housing and public spaces

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Introduction

On October 17, 2018, recreational use of cannabis became legal in Canada. Canadians are now able to purchase recreational cannabis, publicly possess up to 30 grams of dried cannabis and grow up to 4 plants for personal use. Does this mean that Canadians can obtain and use cannabis anywhere they want then? Nope, think again.

Cannabis use among tenants and condominium residents and the difficulty in enforcing “no smoking” rules or bylaws are already common complaints among landlords and condominium boards. With the new recreational cannabis regime, provinces can implement additional rules for possession, use and cultivation of recreational cannabis. For example, in Alberta, individuals must be 18 years old or older to purchase or consume cannabis. Municipalities can also impose additional bylaws and land use and zoning laws to restrict where cannabis is sold and where it can be used.

Restrictions in housing

While there is no legislation in Alberta that prohibits cannabis use or cultivation in homes, landlords, property owners and rental companies may restrict cannabis use, cultivation and/or smoke in tenancy agreements. Likewise, condominium boards are also free to enact bylaws and rules restricting cannabis use, cultivation and/or smoke on their properties and common areas.
In other words, home owners can use recreational cannabis within their own homes or backyard and grow up to four plants on their properties as long as their municipality allows  it.   Tenant or condominium residents, you may likely encounter some form of restrictions through your landlord, rental company or condominium board on cannabis use and cultivation. For example, some landlords in Alberta have already banned cannabis smoking and cultivation in rental units, whereas some landlords allow cultivation and consumption of edibles in units despite a smoking and vaping ban. Tenants should review their leases and condominium residents should review their condominium’s bylaws and rules for further information on any restrictions.

Restrictions in public spaces

When it comes to restrictions in public spaces, the province’s Bill 26 (An Act to Control and Regulate Cannabis) prohibits smoking and vaping cannabis in certain places frequented by children such as:

  • any area or place where that person is prohibited from smoking under the Tobacco and Smoking Reduction Act or any other Act or municipal bylaws
  • on an hospital property, school property or child care facility property
  • in or within a prescribed distance from:
    • a playground;
    • a sports or playing field;
    • a skateboard or bicycle park;
    • a zoo;
    • an outdoor theatre;
    • an outdoor pool or splash pad; or
    • any other area/place that is prescribed or otherwise described in the regulations.

Tenant or condominium residents, you may likely encounter some form of restrictions through your landlord, rental company or condominium board on cannabis use and cultivation. Municipalities in Alberta also have additional bylaws and/or land use and zoning laws restricting where cannabis can be sold and used. For example, cannabis stores in Edmonton must be at least 200 meters away from another cannabis store, 200 meters away from schools and public libraries and 100 meters away from provincial health care facilities, public parks and public recreation facilities. In Edmonton, there are additional places where smoking of cannabis is not allowed, for example, in city owned golf courses, on patios or within 10 metres of a bus stop, doorway, window or air intake of a building. However, there are some public places where smoking of cannabis is allowed in Edmonton, for example, at designated areas at festivals and public events and in some parks and trails (as long as they do not contain children’s amenities).

In comparison, cannabis stores in Red Deer must be at least 300 meters away from another cannabis store, 300 meters away from a hospital and 300 meters away from K-12 schools. Public consumption of cannabis by smoking or vaping is prohibited in Red Deer as per the city’s smoke free bylaw. A summary comparing some of the municipal cannabis restrictions in Alberta’s four largest cities is provided in the table below:

Conclusion

Municipalities in Alberta also have additional bylaws and/or land use and zoning laws restricting where cannabis can be sold and used. Cannabis use among tenants and condominium residents and the difficulty in enforcing “no smoking” rules or bylaws are already common complaints among landlords and condominium boards. Some lawyers have suggested that an overall ban on recreational cannabis would be an effective solution, while others have raised issues about the enforceability of such bans and how they will hold up to existing tobacco smoking restrictions. There is also the issue of medicinal cannabis users and how they would be accommodated by landlords and condominium boards. Furthermore, it has been pointed out that cannabis cultivation in a property may affect insurance policies and premiums.

Municipalities in Alberta also have additional bylaws and/or land use and zoning laws restricting where cannabis can be sold and used. With regard to public spaces, there have been mixed reactions to the different municipal restrictions. Some say the restrictions are too strict, leaving limited space for people to legally use cannabis. Some say that municipal restrictions are not enough and that public consumption sites should not be allowed at all. Some say the restrictions are just a starting point for possible future changes. Furthermore, the enforceability of restrictions in public spaces raises its own set of challenges. As some commentators have pointed out, it will be difficult to enforce smoking restrictions in public spaces. There is also the issue of whether there are enough resources in municipalities or law enforcement agencies to enforce restrictions in public spaces.

With the restrictions in place for recreational cannabis in housing and public spaces, it will be interesting to see how the range of issues arising out of the new recreational cannabis landscape will unfold.

Here are Some Things to Consider Before you Host your Holiday Party

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LandlordTenant

With the holiday season just around the corner, it’s that time of year again for hosting guests. If you are currently renting a property and plan to have guests over, there are several things you need to know. The Residential Tenancies Act (RTA) is the law that applies to most renting situations in Alberta. However, the law does not cover all aspects of renting. The RTA does not address the issue of guests.

Considering that the RTA is silent on this issue, you should review your lease. For example, your lease may define what a “guest” is. There may also be other terms regarding whether you can have guests visit you, the length of stay for guests, the number of guests allowed and whether the landlord’s permission is required to have guests stay in the property. Some leases may even specify whether there is a fee for having guests stay in the property.

..you have an obligation under the RTA to ensure that the rights of the landlord and other tenants are not interfered with, that no illegal acts or nuisances are carried out on the property, and that the property is not damaged in any way.There are also instances where guests can be restricted, regardless of what the lease says or what you and your landlord have agreed to. For example, in a condominium rental situation, the condominium bylaws apply. Bylaws are rules that apply to everyone living in the building. If the condominium bylaws restrict guests on the property, then you are bound by those bylaws. Unless you agreed in your lease that certain people could not visit the property, your landlord cannot typically prevent you from having particular guests visit the property. However, if a guest is, in effect, living in the property or has moved in, your landlord can serve a notice requiring that person to leave. Under the RTA, the landlord has the authority to provide any “non-tenant” with a 14-day eviction notice.

Last but not least, you have an obligation under the RTA to ensure that:

  • the rights of the landlord and other tenants are not interfered with;
  • no illegal acts or nuisances are carried out on the property; and
  • the property is not damaged in any way.

If you or your guests breach any of these obligations, your landlord can serve you with a notice to end your lease. In addition, you may be responsible for paying for any damage that is done to the property by your guests.

For more information on general landlord and tenant law matters:

Laws for Landlords and Tenants in Alberta, http://www.landlordandtenant.org/

 

Logo forThis column was produced with the generous support of the Alberta Real Estate Foundation.

Having Problems with another Tenant?

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LandlordTenantIs another tenant living in your building driving you crazy? Are they making excessive noise? Leaving garbage out in the hallway? Are they dumping dirty water or flicking cigarette butts onto your balcony? For many renters, living alongside people who they may or may not get along with is a fact of life. But that doesn’t mean that you can do nothing and continue to wallow in misery. After all, tenants have a right to peaceful enjoyment of the property – meaning that they have a right to not be disturbed while living in a rental property.  Here are a couple of ways to deal with any problems that arise with another tenant.

If there is another tenant that you are not getting along with, one of the first things you should do is to try to work things out. You can talk to or write to the person and voice your concerns politely. It’s not always the case that the person is aware of the impact of their actions on others.

The other person you should talk to is your landlord or property manager. One of the obligations that a landlord has under the Residential Tenancies Act (RTA) is to ensure that each tenant has peaceful enjoyment of the property. If the action of a tenant is depriving another tenant of their peaceful enjoyment, then it is up to the landlord to come up with a solution to the problem. To help your landlord or property manager come up with a solution, you can:

  • talk to your landlord or property manager about the steps that they are taking to deal with the other tenant;
  • make your complaint(s) to the landlord or property manager in writing; and
  • if your landlord or property manager is attempting to deal with the problem, you can assist them by providing a written record of what has occurred with the other tenant.

One of the obligations that a landlord has under the Residential Tenancies Act (RTA) is to ensure that each tenant has peaceful enjoyment of the property.In most situations, problems with another tenant can be resolved between the two of you and/or with the help of your landlord or property manager. However, there are some situations where you may need to contact the police.

For example, if you believe that you are in danger, you should contact the police. You may want to write a letter to your landlord or property manager informing them that you are concerned for your safety. One of the obligations that a tenant has under the RTA is to not interfere with the rights of other tenants. If your rights are being interfered with, then you can inform the landlord of this interference in writing and request that the landlord take action against the other tenant.

If a tenant assaults or threatens to assault you or other tenants, then you should inform the landlord/property manager and police immediately.  A landlord can serve a tenant with 24-hour notice to vacate if he or she assaults or threatens to assault other tenants. For more information about 24-hour notice, please see: http://www.landlordandtenant.org/notices/eviction-notice/.

For more information on general landlord and tenant law matters:

Laws for Landlords and Tenants in Alberta, http://www.landlordandtenant.org/

 

Logo forThis column was produced with the generous support of the Alberta Real Estate Foundation.

Tenant Move-Outs: Cleaning and Security Deposit Deductions

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LandlordTenantYour lease is expiring in one week and you have already given notice to your landlord that you are moving out. You think that everything looks clean but you are just not sure whether you should stay up until 2:00 a.m. to scrub the place down before you leave. You may also be wondering whether your landlord can make deductions from your security deposit and charge you for cleaning …so, what are the rules for cleaning and security deposit deductions anyway?

First of all, a landlord cannot make any deductions from a security deposit for damages resulting from normal wear and tear of the premises. Normal wear and tear means the declining condition of the rental premises that occurs over time, even though the tenant has been regularly cleaning and maintaining the premises. For example, having mild scratches on a kitchen work surface is probably normal wear and tear. On the other hand, having food and dirt on your walls, cupboards and appliances is damage beyond normal wear and tear.

FAQ:  What can a tenant do if the landlord does not provide the security deposit?

Secondly, a landlord can make deductions from a security deposit if there are damages beyond normal wear and tear on the premises (assuming that the landlord did a proper move-in and move-out inspection). For example, a landlord could make deductions from your security deposit to cover the costs of cleaning up food and dirt on your walls, but not for mild scratches on the kitchen work surface.

One common dispute between landlords and tenants is carpet cleaning. If you left obvious stains and dirt on the carpet while living there, then it could be considered damages beyond normal wear and tear and the landlord could deduct carpet cleaning costs from your security deposit. However, if you left the carpet clean with only signs of normal wear and tear, then the landlord could not charge you for cleaning it.

..a landlord can make deductions from a security deposit if there are damages beyond normal wear and tear on the premises (assuming that the landlord did a proper move-in and move-out inspection). In order to avoid difficulties when it comes to cleaning and security deposit deductions when you move out, here are some tips:

  • You have an obligation under the law to keep the premises in a reasonably clean condition. It would be prudent for you as a tenant to regularly clean and maintain your rental premises.
  • Clarify expectations with your landlord in writing about what will be required in terms of cleaning when you move out. It is a good idea to do this when you first move in or well ahead of moving out.
  • If you have a pet, it is a good idea to take extra precautions in cleaning the property. For example, if you have a dog, make sure that you clean up any fur, excrement and dirt tracked into the premises. Be prepared for any security deposit deductions when you move out as you may have to pay for professional carpet cleaning of any obvious dirt and stains caused by your dog.
  • If you need extra time to clean before moving out, talk to your landlord and see if you can make an agreement to a different move out time. Any agreement should be in writing.
  • Keep any photographic and video evidence of what the premises looked like when you moved in and moved out, in addition to the inspection reports. If you ever have a dispute with your landlord over security deposit deductions, the evidence and reports will be helpful.

FAQ:  If two tenants rent an apartment together and one of them moves out, does the landlord need to return half of the security deposit?

Keep in mind that there are also other situations where the landlord can make deductions from a security deposit. For example, a landlord can keep money from a security deposit when:

  • you owe money for rent.
  • you damage the property (and the landlord completes proper inspection reports). For example, if you punched a hole in the wall, then your landlord can keep money from your security deposit to fix it.
  • you owe the landlord money for utilities or fees.

FAQ:  Can a landlord deduct carpet cleaning or painting expenses from the security deposit?If your security deposit does not cover all of the damages beyond normal wear and tear, a landlord can go to the Residential Tenancies Dispute Resolution Service or court to recover extra money from you. It will ultimately be up to the dispute resolution officer or judge to decide whether you should pay for the damages.

To learn more about security deposits and how you can get your security deposit back, you can view our following resources:

Laws for Landlords and Tenants in Alberta, Security Deposits – http://www.landlordandtenant.org/security-deposits/

Getting Your Security Deposit Back – http://www.lawnow.org/getting-your-security-deposit-back/

Stuff I Wish I’d Known Yesterday – http://www.cplea.ca/stuff-i-wish-id-known-yesterday

Even More Stuff I Wish I’d Known Yesterday – http://www.cplea.ca/even-more-stuff-i-wish-id-known-yesterday

For more information on general landlord and tenant law matters:

Laws for Landlords and Tenants in Alberta, http://www.landlordandtenant.org/

 

Logo forThis column was produced with the generous support of the Alberta Real Estate Foundation.

Shared Accommodation Problems: What Can A Tenant Do?

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LandlordTenantHere at CPLEA, we have been getting more questions lately about shared accommodation problems. There are two living arrangements that typically fall under the term shared accommodation: roommates living together in a rental property and a landlord and tenant(s) sharing living space (for example, a kitchen, bathroom or living room). We regularly receive questions about the following issues:

  • I share a house with my landlord but I can’t stand living with him/her anymore! How do I break my lease?
  • I’m renting out a room in my home to a tenant and he/she is not paying rent! What can I do?
  • My roommate is constantly throwing crazy parties at our place. Can I evict him/her?

Unfortunately, tenants living in a shared accommodation situation fall into a grey area of the law. Let me explain.

FAQ – If two tenants rent an apartment together and one of them moves out, does the landlord need to return half of the security deposit?

In Alberta, the Residential Tenancies Act (RTA) applies to most landlords and tenants in Alberta. Under the RTA, landlords and tenants have certain rights and responsibilities (http://www.landlordandtenant.org/responsibilities/). The RTA also outlines the basic rules for things like security deposits, evictions, and ending leases. Under the RTA, landlords and tenants can turn to the Residential Tenancy Dispute Resolution Service (RTDRS) when they have a problem (http://www.landlordandtenant.org/dispute-resolution/).

However, the RTA does not apply to shared accommodation situations where the landlord and tenant are living together. For example, under the RTA, if a landlord serves an eviction order to a tenant for non-payment of rent, the landlord must give the tenant at least 14-day written notice.  On the other hand, if a tenant is living with their landlord and did not pay rent, the landlord does not have a legal obligation under the RTA to give 14-day notice. That said, it is good practice for the landlord to provide reasonable written notice to evict a tenant in a shared accommodation situation.

If a dispute arises in a shared accommodation situation, the first step should be to communicate concerns to the other side and to try to reach a resolution.The RTA also does not cover issues that arise between roommates. For example, there is no legislated eviction procedure through which one roommate could evict the other. For some more examples of other problems that may arise in shared accommodation situations, you should check out our “Living with your Landlord” article (http://www.lawnow.org/living-with-your-landlord/).

There is a common impression that the Innkeepers Act applies to a shared accommodation situation. The Innkeepers Act only applies to hotels, motels, and other places that provide lodging to guests (for example, a bed and breakfast). The Innkeepers Act does not apply to tenants renting a room in a landlord’s home – unless the landlord meets all of the rules under the Act (for example, posting liability signs in the office and in every bedroom).

Since landlords and tenants living in shared accommodation are not covered by the RTA, they do not have the option of resolving their dispute through RTDRS. So, what can you do as a tenant living in shared accommodation if you are having problems with your landlord or other roommates?

You can minimize disputes in the first place by having a written agreement outlining rights and responsibilities with your landlord (see our Sample Living with Your Landlord Agreement ) or with your roommate (see our Sample Roommate Agreement). For more information, go to our website: http://www.landlordandtenant.org/roommates-and-subletting/.

If a dispute arises in a shared accommodation situation, the first step should be to communicate concerns to the other side and to try to reach a resolution. It is a good idea to write down your concerns and give it to the other side in writing in case there are problems in the future. If an agreement is reached to resolve a dispute, make sure it is in writing and signed by everyone.

If you cannot resolve a dispute, then you may wish to go to mediation or Provincial Court.

Mediation is an informal, confidential, and private process that helps people work out their problems and come to a solution with the help of a neutral third party (the mediator).

Provincial Court is available for tenants to apply for a remedy of up to $50,000. You must fill out certain forms, file them, and serve them on the other side. The other side then has a chance to respond, and a trial date will be set. Sometimes the Court will schedule a mediation session with a mediator or a pre-trial conference with a judge so that you can have a chance to reach a resolution before trial.

While mediation and Provincial Court do not require a lawyer, you should consider seeking legal advice before proceeding with either option.

For more information on dispute resolution, go to our website: http://www.landlordandtenant.org/dispute-resolution/

For more information on where to get legal advice, go to our website: http://www.landlordandtenant.org/resources/

For more information on Mediation or Provincial Court:

Mediation: https://albertacourts.ca/resolution-and-court-administration-serv/mediation-programs

Provincial Court: https://albertacourts.ca/provincial-court/civil-small-claims-court

Logo forThis column was produced with the generous support of the Alberta Real Estate Foundation.

Renting Out Your Condominium: Six Facts You Need to Know

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LandlordTenantDid you know that both the Residential Tenancies Act (RTA) and Condominium Property Act (CPA) apply to condominium rentals? As a landlord and owner of a condominium unit, you must be familiar with your responsibilities under both pieces of legislation. In Alberta, the RTA is the law that applies to most landlord and tenant situations. It outlines specific rules that both landlords and tenants must follow. The CPA contains additional rules that apply to the rental of condominiums. Here are six key things you need to know before you rent out your unit.

Fact #1: You must inform your condominium corporation

If you have found a tenant and are ready to rent your unit, you must provide the following information to your condominium corporation, in writing:

  • your intention to rent out your unit;
  • an address where you can be personally served with documents; and
  • how much rent you will be charging

Within 20 days of the tenancy starting, you must give your condominium corporation written notice of the name(s) of the tenant(s).

If you stop renting your unit, you must provide notice to your condominium corporation within 20 days of the tenancy ending.

Fact #2: The condominium corporation can ask you for a security deposit

If you are renting your unit, the condominium corporation has the right to ask you for a security deposit to cover any damage that may be caused by your tenant to the common property. The security deposit can be a maximum of one month’s rent. Note: this is not the same as the security deposit you can ask for from your tenant!

Fact #3: Your tenant’s security deposit cannot be used to pay the condominium corporation’s security deposit

As a landlord and owner of a condominium unit, you must be familiar with your responsibilities under both pieces of legislation.You can ask your tenant for a security deposit but you cannot use this money to pay the condominium corporation’s security deposit. You must put the tenant’s security deposit money into a trust account within two banking days of receiving it and keep records of the security deposit for at least three years. A security deposit cannot be more than what you are charging for one month’s rent. For more information about security deposits, visit our Laws for Landlords and Tenants in Alberta website: www.landlordandtenant.org

Fact #4: You can only deduct money from a security deposit for damage if you have completed move-in and move-out inspection reports

Under the RTA, you must complete a written property inspection within one week of a tenant moving in and out of your unit. Once an inspection is completed, you must immediately give the tenant a copy of the written inspection report. As best practice, take photos at both inspections in case there is a dispute in the future. You must keep copies of the inspection reports for at least three years after a tenancy ends. If the inspection reports are not completed, you will not be entitled to take money from the security deposit to cover damage to the unit.

Fact #5: Tenants have to follow your condo bylaws

Tenants are required to follow the condominium’s bylaws during their tenancy and they should have access to a copy of the bylaws. As a responsible landlord, you should familiarize yourself with the bylaws so that you can properly advise the tenant about the condominium’s rules. You should also ensure that the lease agreement accurately reflects the bylaws.

See:  Renting Your Condo

FAQ – I’ve heard that condominium boards can evict tenants. Is that true?

Fact #6: Unpaid condo contributions can be taken from your tenant’s rent

The lease should clearly state whether or not your tenant is responsible for paying the condominium contributions (also known as condo fees). You can get into serious trouble if your contributions are not paid. If you are renting out your unit and condominium contributions go unpaid, the condominium corporation can require your tenant to pay rent to the corporation instead of to you to cover the unpaid contributions.

To learn more about renting out your condominium, see Renting Your Condo.

 

Logo forThis column was produced with the generous support of the Alberta Real Estate Foundation.

 

 

 

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