How to fix the impending evictions crisis

The Landlord and Tenant Board (LTB) will start residential eviction hearings again, now that the residential eviction moratorium due to Covid-19 in Ontario has ended. It is inevitable that residential evictions are going to rise, impacting thousands of households across Canada.

A recent Toronto Foundation survey found that between 8-13% of Toronto renters were behind on their rent.[1] For Toronto alone, if 10% of renters are in arrears, it means about 53,000 households and 130,000 people[2] at risk of evictions.

There is no silver bullet that will solve all the problems faced by landlords and tenants. Legislation and financial assistance will help, but governments have to be careful to not choose winners and losers resulting from the Covid-19 crisis. Any new legislation needs to balance the needs of tenants, landlords, and taxpayers.

Options on the table include: extending the residential eviction moratorium, offering rent relief; implementing a rent increase freeze, and repayment agreement caps.

Most jurisdictions in Canada, the U.S., UK., and Australia implemented some variation of eviction moratoriums for residential tenants. Both domestic and international renter advocates have asked for extensions, with some advocating for permanent bans of evictions that relate to rent arrears from Covid-19.

The extension of the eviction moratorium is a problem: (1) rent arrears are not solved, and instead we are merely kicking the can down the road and (2) it is unfair to landlords as they carry the burden of the arrears. Notwithstanding the financial impact on tenants, landlords need rent payments to cover their own costs such as mortgages, property taxes, and repairs.

If the eviction moratorium is extended, it should be part of a broader strategy to address what happens at the end of moratorium and how to assist struggling landlords.

In Canada, government subsidies to assist tenants to pay rent have been implemented in B.C., P.E.I., Northwest Territories, and the Yukon.

In the U.S., Congress passed legislation to create a $100-billion rental assistance fund[3] to help low-income renters for up to two years,[4] but this has not come into law yet.

A targeted rent subsidy program to assist low-income renters who have fallen into arrears due to Covid-19 would be beneficial in Ontario. Such a program would have to ensure that it balances assistance to those in need with the burden on taxpayers.

Assisting low-income tenants now will likely save taxpayers money in the long-run because as evictions rise, so do other costs to taxpayers including social assistance and healthcare costs. Plus, the shelter system was already overwhelmed before Covid-19 hit.

Alberta, B.C., and Manitoba implemented a rent increase freeze during the pandemic. Ontario did not. The mandated caps on rent increases have generally been in the 2%-3% range the past few years, so a rent freeze will have a relatively modest impact for most renters as compared to the more significant market-driven impact on rent.

The supply of rental properties is expected to rise through more evictions, more voluntary end of tenancies, and fewer short-term rentals (Airbnb), which should reduce average rent prices.

In fact, the July 2020 Rentals.ca report shows the average rent across Canada for properties listed on their site is down by 9.4%.[5] So, is there a need for rent freeze legislation?

Landlords and tenants are forced into negotiating rent repayment agreements to address unpaid rent. Moreover, the recently enacted Bill 184 in Ontario requires the LTB to consider whether the tenant was offered a repayment agreement as part of an evictions hearing.

One concern with repayment agreements is that there is a power imbalance between tenants and landlords. In these circumstances, landlords may force tenants to agree to unfair terms. 

B.C. created a repayment framework to be implemented later this summer to help landlords and tenants.[6] B.C.’s framework requires landlords to give tenants until July 2021 to repay any outstanding rent, as long as the tenant is regularly paying monthly instalments of their rent and outstanding arrears.[7]

Similarly, in the U.S., Senator Kamala Harris unveiled a plan that would give tenants up to 18 months to pay back missed rent payments.[8]

Providing a framework for repayment agreements would likely assist both landlords and tenants in their negotiations. Such guidelines may also assist the LTB in its adjudications to assess the reasonableness of proposed repayment agreements. The framework should act as a guideline instead of providing rigid criteria that landlords and tenants must follow when entering into repayment agreements.

(Special thanks to summer student Erran Lee for her assistance with the research.)

[1] Toronto Foundation: Better Toronto Coalition, Brief #1. June 1, 2020. COVID-19 and housing: Will new opportunity emerge from crisis? Found at: https://torontofoundation.ca/wp-content/uploads/2020/05/Final-BTC-housing-brief-for-release-June-1.pdf