Provincial loophole makes above guideline rent increases legal
Tracie MacNeil doesn’t know how she’ll pay her rent if the owner of her apartment building convinces the Landlord Tenant Board that a 9% increase is justified.
“I’ll have to find a way to cover it or I will lose my apartment and I will be homeless,” says MacNeil who lives at 1270 Pontiac Court in Sarnia. ”I’m going to be one of those people eating Mr. Noodle and going to the food bank.”
She lives on disability, which means she is already stretching her budget to pay $847 plus hydro a month for her two bedroom apartment. A 9% increase – on top of the regular 2.5% regulated annual increase – will be a real hardship, MacNeil said.
The reason MacNeil and her fellow tenants may face a 9% increase above and beyond the usual annual hike, is due to an Ontario government initiative called Above Guideline Rent Increase (AGI), which allows landlords to apply to pass the cost of capital expenses on to their tenants.
The Ministry of Municipal Affairs and Housing takes the position that AGIs allow landlords to make capital-intensive upgrades to their units and ensure safer housing stock.
But tenant groups across the province are protesting AGIs, saying they make big corporations richer by pricing out long-term tenants who are otherwise protected by rent control.
McNeil’s 75-unit building is owned by Canadian Apartment Properties REIT (CAPREIT), a publicly-traded rental housing corporation with approximately 65,000 units in Canada and the Netherlands.
“It’s a multi-billion-dollar company that’s leaching money from ordinary people by using the government’s AGI,” says Darren Hakker whose sister and father-in-law live in two different units at 1270 Pontiac Court.
Hakker said he was furious when his family members were told they would have to pay 9% above the regulated rent increase. They were also told that CAPREIT has applied to collect retroactive lump sum payments from each tenant to cover the cost of capital improvements going back to 2020.
“I don’t think most of the tenants understood until just recently what all this means,” said Hakker. “There are a lot of seniors and a lot of lower-income people living there.
“Why would a big company sue low income earners? This could ruin lives. It’s just disgusting.”
He has tried to alert tenants at the building about CAPREIT’s AGI application currently under review by the Landlord Tenant Board. In July, four tenants and Hakker, on behalf of his sister and father-in-law, attended a video call with CAPREIT’s lawyer and the Landlord Tenant Board to see if they could hammer out an agreement.
Nothing fruitful came of it.
On Wednesday, Hakker called a meeting attended by about 20 concerned tenants including MacNeil.
She and many of the others are convinced CAPREIT wants them to move out of the building so rents can be raised even more.
“I am here on behalf of my parents who are 88 and 87 and have nowhere else to go,” said Gail Adamson at the meeting.
“They were just going to suck it up and pay the extra money because a new place would cost even more,” she said. “And besides, there are no other places to move.”
Adamson said the emotional stress is taking a toll on her parents.
“They’ve lived in that building for 40 years. Rent is affordable there because they’ve been there so long. What is happening here is just wrong.”
Eamon Davies also lives in the building and relies on the Ontario Disability Support Program to cover his $1,100 monthly rent. His mom, Michele, said she and her husband will do everything they can to ensure their adult son can continue to live independently but, if approved, the financial cost of an AGI could affect their retirement.
“If (CAPREIT) wins, it will impact a person with a disability living their best life,” Davies said. “It’s disturbing, but I think we will make an excellent submission to the Landlord and Tenant Board. We’ll do everything we can because he’s our son.”
The next step in the process involves written submissions to a Landlord and Tenant Board adjudicator in the next few months. No date has been set yet.
The tenants intend to prove that the $1.5 million in upgrades to their building were largely cosmetic. AGI is intended for repairs that are considered structurally necessary, not cosmetic.
CAPREIT is claiming approximately $1.4 million was spent on overcladding to cover deteriorating brickwork, as well as balcony repairs. It’s also claiming another $338,000 to modernize the elevators.
CAPREIT did not initiate the AGI process but inherited it when CAPREIT bought the building in 2020. Both the upgrades and the AGI application were done earlier that year by the previous owner.
When asked for comment from CAPREIT, the company issued a written statement to The Journal saying CAPREIT is committed to assisting residents facing financial difficulties as a result of the proposed AGI.
“As the matter is now with the Landlord Tenant Board, we do not feel it would be appropriate to offer additional comment through the media at this time, so as not to prejudice the process,” the statement said.
Hakker and the tenant group at 1270 Pontiac Court have also approached Community Legal Assistance Sarnia (C.L.A.S.) for help.
AGI cases are increasingly common in Sarnia, said C.L.A.S. executive director Andrew Bolter.
“It’s a huge issue for people on fixed incomes,” he said. “The problem is you have these large corporate entities interested in maximizing profits.”