GTA investors call for rent bank in wake of COVID-19

If you were to make a list of groups that will never have a fan club, Ontario’s Landlord Tenant Board would likely be one of the first to get jotted down. Investors have long been calling for improvements to the LTB’s methods, particularly the Board’s slow and costly approach to resolving issues with problematic tenants.

Those calls have only grown more strident as the COVID-19 crisis has destabilized the Canadian rental market and put thousands of Canadians behind on their monthly rental obligations, compounding whatever tenant issues landlords were already dealing with.

“Landlords cannot apply to the LTB as they are currently not hearing eviction orders,” says Kayla Andrade, founder and president of Ontario Landlors Watch. “If there was a tenant currently abusing the system and not paying rent prior to all of this, then the shutdown is going to be delaying it even further. Also, if a tenant was trying to fight for safe housing and an urgent repair was required, this too has been stalled. The concern goes both ways.”

There is concern among some investors that statements made by government and banking officials about deferred mortgages and halted evictions are being exploited by tenants to justify rent strikes, even though no official rent-relief policy has been put in place.

“It has also caused tenants to believe that since mortgages are being deferred that they do not have to pay rent, regardless of their circumstances. Some are also expecting rents owing in this case to be waived and not caught up in the future,” Andrade says, adding that a backlog of cases already before the Board prior to the COVID-19 pandemic means “tenants who decide to abuse the current situation could essentially live rent free during the pandemic and possibly many more months thereafter.”

Real estate investors are encouraged to chase predictable, reliable returns. Chaos, like what has been kicked into gear by the coronavirus, is bad for business. That is why Andrade is proposing a government-managed “rent bank” that would make up the difference between what landlords are due every month and what they actually receive.

“A rent bank will protect important parts of our housing stock, today and for the future,” she says. “It will ensure that housing providers can maintain their rental properties in good repair and provide a safe home for tenants through this difficult time for everyone.” Andrade says the proposed rent bank should remain available post-pandemic, as unpaid rent will remain a problem whether or not there’s a catastrophic backdrop to play out in front of.

Government coffers are going to be drained, strained and pained by the cascading effects of the coronavirus, so additional financial help for people who were experiencing positive cash flow on investment properties may not be priority number one for any level of government. But any improvements to the LTB will be welcome.