We don’t know what the new legislation will look like. Will it include some form of vacancy rent control?
Will it be for 2021 only or longer?
How much will the fines be for raising rents illegally?
Will it include a freeze for AGI too?
What else will be added to the legislation?
The 2021 freeze on rent increases will likely have unintended consequences.
What will those consequences be?
- Lots of small landlords are peeved off and have said they will be selling their properties because of this announcement. The final straw. How many small landlords will REALLY pack up and get out of the business?
- The announcement does not provide incentive to anyone considering getting into the business to actually get into the business. It doesn’t entice people to become landlords and build additional rental units.
- We will probably see an increase in the use of N12’s and N13’s (both legal and illegal).
- If AGI aren’t frozen in the new legislation, will we see an increase in AGI applications (I know that AGI only covers certain things).
- Small landlords are higher risk for failure because they don’t have the same financial capability as big landlords to weather these types of things. So far this year small landlords have endured the backlog at the LTB before COVID, the eviction ban, no financial support during COVID like the commercial landlords and businesses received from the government, Bill-184, the rent increase freeze, the constant “attacks” on landlords by the tenant advocates, elected officials, the media, and the general public, and in Ottawa the city just approved a new “Enhanced Property Management Bylaw) and the STR Bylaw will be published soon. The lack of a “small rent increase” matters, and when you put it all together it can take an enormous emotional toll on some people.
- I don’t know about you but my property taxes, insurance rates, R&M, water and sewer, snow removal, lawn maintenance, bookkeeper, accountant, legal assistance, and general office equipment and supplies costs went up in 2020 and most of these will increase again in 2021. I’m fortunate to have good cash flowing properties that can sustain these increased costs.
- The announcement is another reminder that small landlords should buy positive cash flowing properties. The positive cash flow will offset the rent increase freeze.
Tony Miller is SOLO member and a real estate investor based in Ottawa
