Renovictions: Everything You Need To Know

[00:00:00] Welcome to The Canadian Real Estate Investor, where hosts Daniel Foch and Nick Hill navigate the market and provide the tools and insights to build your real estate portfolio.

[00:00:12] The owner told them they needed possession of the unit to complete some major renovations, but shortly after vacating, they saw the unit available for rent again for more money than they were paying.

[00:00:27] Well, that's not very nice, nor is it very allowed, but who's to blame here? It kind of gives landlords a bad name.

[00:00:35] Not nice at all, Dan Bon Jovi.

[00:00:38] If you haven't guessed yet, today we are diving into a controversial topic in the real estate market that has recently been making headlines and that topic is renovictions.

[00:00:48] We're going to explore both sides of this double edged sword. Here's some of the topics we're going to be looking at.

[00:00:55] What are renovictions and why are they making the news right now? They're nothing new.

[00:01:01] We're going to go over the arguments for and against renovictions, the legal landscape around renovictions in different geographic areas across the country, and what is a good faith versus a bad faith renoviction?

[00:01:17] So you're a tenant, Nick. And I'm going to use you as an opportunity to relate to the people who pretend that all landlords and investors are evil.

[00:01:27] Since we probably don't get a lot of tenants listening to this show to learn how to be better tenants or learn how to navigate renovictions as an example.

[00:01:35] You know, we, one of the things we have a waiting Bolo from open room.ca coming on for an awesome interview at the end of this episode.

[00:01:43] But one of the things that we were discussing with her was our best opportunities to be able to educate landlords on how to be better, better landlords. Right.

[00:01:49] And so people, most people listening to the Canadian real estate investor podcast, probably a landlord, more likely to be a landlord than a tenant.

[00:01:55] But let me ask you as the tenant, have you ever been renovicted?

[00:01:58] You're right, Dan. I am a tenant. I am both a landlord and a tenant.

[00:02:02] And I have been lucky enough to avoid a renoviction myself.

[00:02:08] However, over the past about year and a half living in downtown Toronto and being known in certain circles as the guy to come to for real estate advice,

[00:02:18] I have probably been approached at least a dozen times by friends of mine, friends of my girlfriends and and just even even people that I consider acquaintances that have gone through this process and have come to me for advice on how to deal with it.

[00:02:35] Is it legal how to respond?

[00:02:36] So I haven't, but I have dealt with the situation many, many times.

[00:02:41] Yeah, it's same, actually. Like I've never done like a good faith renovation.

[00:02:48] I'm not, I wouldn't, I obviously wouldn't admit to it if I had done a bad faith renovation, but I haven't done that either.

[00:02:53] But I've never done a good faith renovation. I've never really felt that it's a super compelling strategy.

[00:02:58] But there are buildings that need repairs, right? There are buildings that need to be repaired.

[00:03:02] And in that case, like if the repair is substantial enough, you'd have to have somebody move out.

[00:03:06] But I have in a lot of cases, like we're young, right? Like we're both millennials.

[00:03:09] A lot of our friends are still tenants. They have landlords and there are a lot of bad landlords out there.

[00:03:14] There are probably just as many, if not more bad landlords as there are bad tenants, right?

[00:03:18] And so our goal would be to eliminate or to help educate people to not be either of those things.

[00:03:25] You know, people should be, what's that? Be excellent to each other, I think was the, or as Julie Chen Moonves from Big Brother says, love one another, right?

[00:03:33] Love it.

[00:03:33] Before I get too carried away and start singing Bon Jovi again, let's get into the episode here.

[00:03:38] Okay, so let's start with the first thing. What is a renovation?

[00:03:43] Well, it's a bit of a controversial practice where landlords evict tenants under the pretext of needing to perform a major, that's a keyword there, a major renovation on the property.

[00:03:55] And the term renovation is a blend of renovation and eviction, renoviction.

[00:04:03] So typically a proper renovation would occur when the property owner wants to upgrade their building to make the, either make the living situation better for the existing tenant, or because they are going through a CapEx program and they're maybe trying to get economies of scalar.

[00:04:19] For whatever reason, they would want to renovate the unit.

[00:04:22] In a lot of cases, there's this sort of ulterior motive, which is to attract higher paying tenants.

[00:04:27] But in most jurisdictions, you have to actually offer the unit back to the original tenant who's being displaced by the renovation process, or perhaps to sell the property at a higher value.

[00:04:40] After the renovations, the units are often re-rented at significantly higher rates, which would either price out the original tenants or would be considered a bad faith move because it violates what is allowable within the renovation program.

[00:04:53] And that's kind of where it becomes this.

[00:04:55] I don't think anybody uses the rent eviction word to talk about proper above board or good faith evictions for the purpose of renovation and returning the existing tenant.

[00:05:06] Yeah, for sure, Dan. It definitely has a bit of a negative connotation.

[00:05:10] And this practice has become contentious in many urban areas across the country, especially those that are experiencing rapid gentrification mixed with a combination of housing shortages.

[00:05:24] So that is a lot of Canada at this point.

[00:05:27] And while property owners argue it's necessary for maintaining and improving housing stock, which it is,

[00:05:35] critics view it as a loophole to circumvent tenant protections and contribute to housing insecurity.

[00:05:42] So there's that double-edged sword we were talking about.

[00:05:45] So who's right here?

[00:05:47] Our goal is to kind of try and see if there's a middle ground or find out who might be right.

[00:05:52] Rent evictions have been a hot button issue in Canadian housing, and it's recently really coming to a head because municipalities are now stepping up to regulate it.

[00:06:01] Yeah, which honestly doesn't make a ton of sense at face value since landlord-tenant rules are technically provincial jurisdiction.

[00:06:11] Right here in Ontario, we've got the landlord and tenant board, but that's just in Ontario.

[00:06:16] There's different operational boards that run every different province.

[00:06:19] And yet here we are.

[00:06:21] So we're going to go through the timelines of how we got here and the headlines to better understand this.

[00:06:26] Okay, so let's start off.

[00:06:28] Let's rewind and go back in time to 2019.

[00:06:32] We're in New Westminster, British Columbia.

[00:06:36] And for the past few years, they've been receiving numerous complaints regarding rent evictions.

[00:06:41] So on May 27th, 2019, in response, the City Council amended the business regulations and licensing bylaw to include part six, a section that specifically aimed to deter rent evictions and to provide protection to those tenants who may be displaced by large scale renovations.

[00:07:00] Now, landlords who violated that bylaw could be fined up to $1,000 per day and lose their business license.

[00:07:10] So landlords who wanted to evict for repairs still had to apply to the city and prove the renovations were necessary.

[00:07:18] The municipality claims the bylaw was successful in reducing the number of reported renovations, but it also withstood two court challenges.

[00:07:30] So almost immediately, the legislation was appealed by a numbered company, 1193652 BC Limited versus New Westminster.

[00:07:41] This is a court case that I'm referencing where the appellant landlord argued that the bylaw amendments were beyond the jurisdiction of the city since the provincial legislature intended to exhaustively regulate rent control and evictions under the act.

[00:07:53] According to a great note written in 2021 by a Kelsey Stuckert of civil civil legal LLP of BC.

[00:08:01] So the landlord sought to have all of the units vacant for at least a year to complete renovations and did not request an exemption.

[00:08:10] Further, the landlord did not provide alternative accommodation for those tenants that had to vacate.

[00:08:17] And both chambers judge and the court of appeal disagreed and held that the community charter authorized the city to regulate renovations locally, stating that the bylaw amendments had the lawful purpose of protecting renters.

[00:08:34] So basically they determined the city had the authority to do this pursuant to its powers to regulate businesses.

[00:08:39] Remember, we talk about real estate in the show as a business.

[00:08:42] You're running a business and you have to, you know, in many, you're starting to see rental licenses required in different municipalities, etc.

[00:08:49] I mean, like it's not uncommon for different businesses to require licenses, as well as the health and safety or protection of persons or properties in relation to residential property within their municipal jurisdiction.

[00:08:59] Now, that bylaw that we're talking about was eventually repealed by the British Columbia government, enacted similar legislation province wide.

[00:09:08] So a few years later, a report in the Toronto Star in 2021 stated that according to city statistics, renovations went from a combined 333 households between 2016 and 2018 to zero since 2019 when the bylaw came into force.

[00:09:22] So obviously it is actually having an impact on reducing again, these renovations would be your bad faith renovation.

[00:09:27] It's not saying that tenants were no longer evicted or displaced during the renovation period for legal and above board and proper renovation processes, but illegal renovations basically dropped 100%.

[00:09:40] Yeah, now we're going to continue to fast forward to almost present day 2024 where a similar wave of policy seems to be moving across the province of Ontario.

[00:09:53] Hamilton passed a rent eviction bylaw in April of 2024, which will be enforced starting in January of 2025.

[00:09:59] Landlords must obtain a renovation license, provide relocation assistance and allow tenants to return after renovations, which isn't new.

[00:10:06] That is provincial code anyways.

[00:10:08] And a few months after Hamilton passed this law, Toronto adopted a renovation bylaw in June of 2024 as part of the Housing TO 2020 to 2030 action plan.

[00:10:22] The bylaw regulates the legal processes that landlords must follow when evicting tenants for renovations.

[00:10:29] Through Toronto's new bylaw, landlords issuing an N13 notice to end a tenancy will require a rental renovation license similar to New Westminster.

[00:10:39] To apply for the license, landlords need to get building permits, provide a copy of the N13 notice to end a tenancy and submit.

[00:10:46] This is the part that kind of annoys me because it is inflationary and it's a money grab.

[00:10:49] A $700 application fee, which is waived for multi-tenant housing operators.

[00:10:54] So it's impacting your smaller landlords basically.

[00:10:57] That's a nice hefty fee.

[00:10:59] They also must notify tenants of a license application after submission and advise on how to obtain information on eviction prevention and the rental renovations license bylaw.

[00:11:12] So you've got to go in and actually kind of work against yourself if you are a landlord trying to do this and provide all the information to your tenants to essentially say no or, you know, provide them the legal and information they need to fight back.

[00:11:26] You also must post tenant information notices in the building advising tenants of the license application so they can likely prepare for the incoming vacating of that property and provide a report prepared by a qualified person noting that the renovation requires vacant possession.

[00:11:46] Dan, who would that qualified person be?

[00:11:49] I guess it would be like a building inspector, a contractor.

[00:11:53] I don't know.

[00:11:53] That's interesting.

[00:11:54] I mean, there's probably an industry opportunity evolving there to be honest.

[00:11:59] They must complete a tenant accommodation and compensation plan to provide tenants who choose to return to the units with a temporary compatible housing at similar rents or provide monthly rent gap payments based on post-2015 average market rents to cover the rent difference with tenants finding their own temporary housing.

[00:12:16] And provide moving allowances of $1,500 for a studio one bedroom unit or $2,500 for a two or more bedroom unit.

[00:12:23] Like, so you're literally like, again, I actually like, I get this.

[00:12:27] It all makes sense to me, but it is like, it does make the whole process significantly more expensive,

[00:12:31] but they're basically just putting it together a more methodical way for landlords to actually follow rules that technically already exist within these Ontario legislature.

[00:12:43] Yeah.

[00:12:43] The last thing they must do is provide tenants with a prescribed severance compensation where the tenant chooses not to return to the unit after the renovation or that extensive repair work is completed.

[00:12:57] Yeah.

[00:12:57] And again, this is all kind of in line with Ontario's LTB rules.

[00:13:00] Anyways, I think where you have to provide monthly one month compensation, I believe anyways, a minimum of one month compensation.

[00:13:07] It could be more if there's like, you know, displacements, et cetera.

[00:13:10] Yeah.

[00:13:10] Yeah.

[00:13:13] So, and if we look even more recently to London, Ontario, they've approved the development of a rent eviction bylaw in September of 2024,

[00:13:24] requiring landlords to apply for a rental unit repair license and provide tenant information packages within seven days of issuing an eviction notice.

[00:13:34] Ottawa, similar in August of 2024, city council voted to explore feasibility of a rent eviction bylaw to protect tenants from unjust, unjust evictions due to rent renovations.

[00:13:45] And in St. Catharines, the city is exploring the possibility of implementing an anti-renoviction bylaw inspired by Hamilton's recent legislations to safeguard tenants from displacements due to said renovations.

[00:14:01] So, this hasn't yet been enforced or appealed in Ontario yet, which is an important part of the process from my perspective, similar to like what we mentioned took place in BC.

[00:14:11] So, we don't really know if this will end up surviving the provincial courts.

[00:14:15] And when it does end up, I would say probably it's very likely to end up getting appealed in Ontario, like similar to what happened in BC with the two landlord cases.

[00:14:25] So, I think that's probably also a very important next thing in the timeline to watch for.

[00:14:31] Yeah.

[00:14:32] And there's some framework from new Westminster's bylaw, a lot of which is pretty common where there is a renovation, renovation restriction.

[00:14:41] Sorry.

[00:14:42] Wow.

[00:14:42] That's a bit of a mouthful there.

[00:14:44] Yeah.

[00:14:45] We call those reno restrictions where I'm from.

[00:14:48] Is that a new one?

[00:14:49] I love it.

[00:14:50] We got to coin that one before it gets, before it spreads like wildfire on Twitter.

[00:14:55] Renestrictions.

[00:14:56] Remember, we heard it first.

[00:14:57] So, restrictions on evictions for renovations or repairs.

[00:15:05] Yes.

[00:15:05] I say that nice and slow because I couldn't.

[00:15:07] That's their act.

[00:15:09] Restrictions on evictions sounds like you're about to drop like a real estate Dr. Seuss book over here.

[00:15:14] Are we?

[00:15:15] Are we working on that?

[00:15:16] Something like that.

[00:15:17] Okay.

[00:15:17] So, owners cannot require tenants to vacate for renovations or repairs unless all necessary permits, including like building permits, plumbing, electrical development, are all obtained.

[00:15:31] And the tenant is either offered a new tenancy agreement for a comparable or better unit, or they are provided temporary accommodation with a plan for returning them to that original unit which they vacated.

[00:15:47] Yeah.

[00:15:48] Yeah.

[00:15:48] Yeah.

[00:15:48] So, that's, again, new Westminster's Dr. Seuss Act, the rent restrictions thing, but similar, I would say, in spirit to Toronto, London, Hamilton, St. Catharines, et cetera.

[00:15:59] So, we can probably use all of these as a case study for what could happen if your province or city starts regulating rent evictions.

[00:16:07] So, we started the episode off speaking about our personal experiences and tenants facing evictions.

[00:16:14] But what about the other side of the story, Dan?

[00:16:20] When we acquired this 12-unit building for $1.2 million, the rents were 40% below market.

[00:16:26] 18 months later, after our value-add strategy, the property appraised for over $2 million.

[00:16:31] 18 months later, $2 million.

[00:16:35] Was that your, like, real estate, private equity, Chad voice?

[00:16:39] Did you just put on a Patagonia vest?

[00:16:41] And I threw on a Patagucci.

[00:16:44] I got props in the studio here, literally running real tools for that soundbite.

[00:16:48] Sorry if I blew your ears.

[00:16:50] So, yes, it was.

[00:16:51] And the reason I did my Chad voice is because, as a homeowner, I'm going to be talking about all the good things about rent evictions.

[00:16:57] And actually, to discount here,

[00:17:01] rent evictions being an operative word,

[00:17:04] but the reason that we might need to evict people for renovations, let's call it.

[00:17:10] Yes.

[00:17:10] Okay.

[00:17:10] So, Dan, you are the homeowner.

[00:17:12] And I'm a landlord, similar to you, Dan, but I am also a tenant, right?

[00:17:17] I rent where I live.

[00:17:18] So, I guess that means I'm going to talk about all the bad things about rent evictions.

[00:17:25] Okay.

[00:17:26] Well, here we go.

[00:17:27] Let's touch gloves and come out fighting.

[00:17:29] Are you trying to bait me into making like a Mike Tyson, Jake Paul reference here?

[00:17:32] Because I'm not going to do it.

[00:17:33] No, I promise to anyone listening, this fight will be far more exciting than that fight.

[00:17:40] And real.

[00:17:42] Yeah.

[00:17:42] Both of us are in our 30s.

[00:17:44] Yeah.

[00:17:44] Yeah, exactly.

[00:17:45] Okay.

[00:17:46] So, let's dive into some of the primary arguments against renovations.

[00:17:51] Okay.

[00:17:51] So, first one is displacement of long-term residents.

[00:17:55] That's a pretty obvious one.

[00:17:56] Renovations force out established community members, disrupting social networks,

[00:18:01] neighborhood stability, and people's lives in general, right?

[00:18:04] There's increased housing insecurity where those tenants face uncertainty

[00:18:08] and usually a lot of stress when they're forced to find a new housing.

[00:18:13] And it often is in less affordable areas.

[00:18:17] It also is a gentrification acceleration, right?

[00:18:21] So, renovations or sorry, renovations can speed up neighborhood gentrification,

[00:18:26] pricing out legacy lower income residents or incoming lower income residents.

[00:18:32] We also witness a loss of affordable housing stock.

[00:18:36] When units are renovated and re-rented at higher rates,

[00:18:40] it reduces the overall affordability of over the overall availability of that affordable housing.

[00:18:46] There's also a disproportionate impact on vulnerable populations.

[00:18:52] Think about elderly people, low income, and marginalized communities that are often

[00:18:57] hit the hardest by the practice of renovations.

[00:19:01] And then, of course, there's potential for abuse where we see

[00:19:05] some bad Apple landlords that may use this tactic of renovations as a pretext for evicting tenants

[00:19:11] when the actual renovations they need to do are minimal or even in some cases unnecessary, right?

[00:19:19] And then, of course, there's the main thing, which is the disruption of tenants' lives.

[00:19:23] They're forced to move, which can impact employment, children's education,

[00:19:28] or school districts, access to local services and support systems.

[00:19:32] And Dan, as we said in the top of the show, you and I have both been

[00:19:35] asked for consulting on a lot of these things.

[00:19:38] And when I was providing people with steps to do or things to look up or, you know, providing advice,

[00:19:45] there was a lot of stress, right?

[00:19:47] People did have to go through all the things that I just mentioned.

[00:19:50] So these arguments that I just made from the tenant side of things highlight the social

[00:19:56] and economic costs of renovations on individuals and their surrounding communities.

[00:20:01] Now, Patagonia, Chad, let's hear it from your side of things.

[00:20:06] Yeah.

[00:20:07] So let's explore some arguments that proponents of, again, I'm reluctant to use the word

[00:20:12] renovations because I think that that's the...

[00:20:15] It's just a bad word.

[00:20:16] It's a kind of euphemism.

[00:20:17] Yeah.

[00:20:17] Yeah.

[00:20:18] Yeah.

[00:20:18] It's like the...

[00:20:19] It's a critical word.

[00:20:20] But proponents of why we should be able to evict people for the purpose of renovating.

[00:20:25] So the first one would be property rights, right?

[00:20:27] Owners argue they should have the freedom to improve and maximize the value of their investments,

[00:20:32] but also just like, you know, they own the thing.

[00:20:35] So the libertarian in me wants to agree and say people should be allowed to do what they

[00:20:39] want with their property.

[00:20:40] After all, it is theirs.

[00:20:42] But the same libertarian would probably also argue that the tenant should be able to do whatever

[00:20:47] they want as well, such as resist the renovation.

[00:20:52] Touche.

[00:20:53] Honestly, I think like, you know, the libertarian perspective against renovations might argue

[00:20:57] that technically contractual property rights extend to tenants once a lease is signed,

[00:21:01] right?

[00:21:01] I mean, this is...

[00:21:02] That's how the law works.

[00:21:04] It's like, you know, commercial tenant can fully renovate space.

[00:21:08] So lease terms should be negotiated freely between parties, including provisions for renovations and, you know,

[00:21:15] maybe not get the state involved per se.

[00:21:17] Yeah.

[00:21:17] So I guess if that's the line of communication that we're going off of, the tenant in theory

[00:21:24] would also be free to resist an eviction, request a cash for keys or something of that

[00:21:30] nature, which is becoming a common theme in today's market for landlords.

[00:21:34] I remember when that was kind of a secret term for landlords, right?

[00:21:38] Cash for keys.

[00:21:39] Now it's wide out in the open.

[00:21:41] Yeah.

[00:21:41] The challenge with that that I have is that, you know, a free market technically should

[00:21:46] naturally balance landlord and tenant interests without government intervention.

[00:21:49] But I think the free market is limited by, at least in Ontario, and I would say in most

[00:21:54] jurisdictions, the landlord and tenant protection system, the board, being really slow, for

[00:22:00] example.

[00:22:00] So a tenant could say no, and the landlord would have no recourse for like 10 to 12 months

[00:22:03] until they get an LTB hearing.

[00:22:05] And that opens the door for a lot of abuse to take place.

[00:22:07] Yeah.

[00:22:08] Yeah, for sure.

[00:22:08] On either side, by the way, I'm not saying like, you know, like, cause there are bad,

[00:22:12] there, you know, there are bad examples on both sides for sure.

[00:22:16] A hundred percent, a hundred percent.

[00:22:17] And this is also why tenants have the ability to request cash for keys or stop paying rent.

[00:22:22] So going back to your free market comment, Dan, it's, it's not really a free market at

[00:22:26] the end of the day.

[00:22:27] Well, yeah, it's, I mean, it's free, I guess.

[00:22:29] Cause like the, the, the, it's free if you stop paying rent, I guess.

[00:22:32] Yeah.

[00:22:32] Yeah.

[00:22:33] Well, it's a free market in such that like, you know, eventually it arrives at a resolution,

[00:22:37] but yeah, it's, uh, it's delayed significantly by these inefficiencies.

[00:22:41] So there are more reasons why I think that, that renovation is a positive thing that I want

[00:22:46] to get to, but I first want to consider them sort of in the context of how rent controls

[00:22:49] of all forms can be considered negative.

[00:22:52] Thomas Sowell, who's one of my favorite economists, uh, mentions in his book, Basic Economics.

[00:22:56] I imagine you can guess what that one is about that rent control often has unintended negative

[00:23:01] consequences.

[00:23:02] He points out that while rent control may seem beneficial in the short term by keeping rents

[00:23:06] artificially low, it can also lead to housing shortages, which we have in Canada and we

[00:23:11] have rent control in Canada.

[00:23:12] Landlords have less incentive to build and maintain rental properties.

[00:23:15] And obviously the, the limitation on renovations would, would, um, exacerbate this, especially

[00:23:21] if they're limited to being legally, uh, be able to legally remove tenants.

[00:23:25] To renovate the property or increasing the cost of doing so, right.

[00:23:30] Which would, would, would lower the net benefit of doing so.

[00:23:33] You could see a deterioration of existing housing with reduced income or a higher cost to renovate.

[00:23:38] Landlords might neglect repairs or maintenance.

[00:23:40] Uh, you could see an inefficient allocation of housing.

[00:23:43] People, uh, you see this a lot, to be honest with you.

[00:23:45] People may hold onto rent control departments, even when they no longer need them, right.

[00:23:48] Or, or, or stay in a unit, even if they need to move because they can't, the, the, the cost

[00:23:53] is so cheap.

[00:23:54] Like, you know, you hear about this a lot in New York, right.

[00:23:56] Where they have like the, the rent control systems or you have people whose rents are

[00:23:59] like stuck in like the seventies.

[00:24:00] Right.

[00:24:01] And, you know, you could be in the same building as somebody and your rent would be like four

[00:24:05] or five times the place next door.

[00:24:08] So that would be, there's crazy stories.

[00:24:10] People are, you know, yeah.

[00:24:11] The, the old timers that started renting in, you know, maybe around our age, Dan, you

[00:24:16] know, early thirties kind of thing that are paying literally hundreds of dollars,

[00:24:19] not thousands, hundreds of dollars.

[00:24:21] And, you know, the guy two floors up who just moved in to a new unit is paying 10,000.

[00:24:26] Yeah.

[00:24:27] And like, because that person doesn't have to participate in today's market, they, you

[00:24:31] know, I'm sure that, that individual probably, if you look and live in Manhattan, even today

[00:24:35] setting rent aside, you know, probably could buy a house maybe in the suburbs or something

[00:24:39] like that, but they choose not to because they have like the best housing situation that

[00:24:43] somebody possibly could, but that limits the ability for somebody else to consume that

[00:24:46] unit.

[00:24:46] Right.

[00:24:46] And then I think the one other piece of that is that you, you get these like black markets

[00:24:50] that are potential to form.

[00:24:51] You saw this a lot in Canada with, uh, Airbnb arbitrage, right?

[00:24:54] So like basically people would rent a unit and then they would sublet it.

[00:24:58] They would either sublet it to, you know, like there was a lot of people doing this

[00:25:01] with student rentals as well.

[00:25:02] The good would go rent a unit.

[00:25:03] So tenants doing like sublet arbitrage or landlord, landlords actually just breaking the rules,

[00:25:07] which is kind of the whole topic here, right?

[00:25:09] Landlords breaking the rules to compensate for lost income.

[00:25:11] And those would both be, both be like black market forces.

[00:25:14] These are all things that you can see happening in Canada's market and they are negative externalities

[00:25:20] from rent control.

[00:25:22] Sowell concluded that, that rent control often ends up harming the very people it's intended

[00:25:26] to help by reducing the quality and quantity of available housing in the long run.

[00:25:32] And I guess expanding on that context, it is important to note that rent eviction limits

[00:25:37] are more a form of vacancy decontrol than rent control, right?

[00:25:40] So let's just quickly break down the difference between vacancy decontrol and rent control.

[00:25:43] I know I'm getting away from our argument here.

[00:25:45] I'm not scared of you.

[00:25:46] I just, I just want to explain things properly.

[00:25:48] That's right.

[00:25:48] I will go from my, my role as a, as a tenant to my role as Nick Schoenarian, and I'll switch

[00:25:54] back over.

[00:25:55] So rent control, this policy basically limits how much a landlord can either increase rent

[00:26:02] for existing tenants, typically tying increases to inflation or a set percentage like we have

[00:26:08] here in Ontario Dan at 2.5%.

[00:26:10] And it applies continuously, even as tenants change, even as that unit turns over.

[00:26:17] Whereas vacancy decontrol prevents landlords from vacating properties to reset rent to market

[00:26:26] rents when a unit becomes vacant.

[00:26:28] So once a new tenant moves in, rent control may apply again until the next vacancy.

[00:26:35] So rent eviction limits operate more similarly to vacancy decontrol by allowing landlords to

[00:26:41] increase rents after renovations, but that, but with additional protections for existing tenants.

[00:26:46] Now, again, in most jurisdictions in Canada, the landlord can't actually increase the rent

[00:26:51] after a renovation to the existing tenant.

[00:26:54] And like, so let's call that the national standard.

[00:26:56] It's give or take, I think there's like a couple of jurisdictions where it's a bit different,

[00:26:58] but basically tenant has to be given the opportunity to consume that original unit at the same

[00:27:03] rate.

[00:27:04] So like that's, you know, it would sound like a smoking deal for the tenant, right?

[00:27:06] Oh, I got a brand new unit at the same price, but the consequences I have to move for

[00:27:11] X period of time to, um, so there's a displacement that takes place, right?

[00:27:15] Um, you know, renovation kind of has these benefits of improving housing stock, stimulating

[00:27:20] the economy, revitalizing neighborhoods and keeping the market in equilibrium and increasing

[00:27:25] the tax base, which the municipalities want, right?

[00:27:27] Cause every time you do a renovation, it gets reassessed, uh, and then your tax would increase

[00:27:31] accordingly.

[00:27:32] So renovations obviously can modernize and upgrade aging buildings.

[00:27:36] Like I would say, you know, you get this, you get the complaint about landlords being

[00:27:40] a-holes for doing rent evictions or illegal evictions.

[00:27:43] But then the other, I would say the other primary complaint you get is landlords not

[00:27:46] doing enough, right?

[00:27:47] Doing not fit.

[00:27:48] I didn't, they didn't fix this thing up or slumlord or this or that, right?

[00:27:52] So it's hard to get both.

[00:27:54] And it's, it's a, it's a difficult kind of, um, thing to balance, right?

[00:27:58] Um, renovation projects create jobs and inject money into the local economies.

[00:28:03] I'd say that's, you know, I mean, meh, it's whatever that's, it's an argument, but it's

[00:28:06] not, you know, revitalization of neighborhoods.

[00:28:08] Again, keeping the market in equilibrium and, and, and that increased tax tax base.

[00:28:13] So I guess what I'm trying to say is affordable housing shouldn't be, let's call it like cheap

[00:28:18] housing, right?

[00:28:19] And this is, this is what ends up pushing more people to be slumlords.

[00:28:24] You can see this in a lot of blue states in the U S right.

[00:28:27] Yeah, no, that's a great, uh, it's a great point.

[00:28:30] Um, and, and while it's true that many of those blue states have implemented rent control

[00:28:35] policies, they often still have some of the highest rents in the country.

[00:28:40] For example, California, New York, Massachusetts, uh, all traditionally blue states consistently

[00:28:47] rank among the states with the highest median rents cities like San Francisco, New York,

[00:28:53] Boston, which all have strong rent control measures are also among the most expensive

[00:28:58] rental markets in America.

[00:29:00] And the seeming paradox can be attributed to a few different factors.

[00:29:05] First being high demand in these urban centers where jobs and amenities are concentrated, right?

[00:29:11] Think about San Francisco, Los Angeles, and New York.

[00:29:14] Those are places people want to live seemingly in the United States.

[00:29:18] They also have limited housing supply due to zoning restrictions and slower development process

[00:29:24] than you would in, you know, let's say middle America or, or Texas, for instance.

[00:29:29] And the potential unintended consequences of rent control, such as reduced investment in new

[00:29:36] rental properties, which you just alluded to Dan.

[00:29:39] Yeah, I think like, you know, it's kind of just that you, you have this thing where if a place

[00:29:44] is likely to have a, some sort of rent control, uh, regulation, they're probably likely to have

[00:29:49] more regulations on lots of stuff.

[00:29:51] Right.

[00:29:51] So, you know, like if there's more bureaucracy, it's just, it kind of begets more bureaucracy,

[00:29:55] right?

[00:29:56] And so permits take longer, the zones restricted.

[00:29:59] Yeah.

[00:30:00] It's not to say that any of these things are bad, but the challenge is like the more

[00:30:03] government state involvement you have, the clunkier the system is, the harder it is for,

[00:30:08] you know, businesses to do things more freely for better or worse.

[00:30:11] Yeah.

[00:30:11] I mean, we should all know that well, uh, living in Canada here where for sure.

[00:30:15] Yeah.

[00:30:16] We won't get into that though.

[00:30:19] Yeah.

[00:30:20] So I guess while, while rent control can provide some stability for tenants, it doesn't necessarily

[00:30:25] leave to lead to lower overall rents in a city or state.

[00:30:28] Mertaza Haider actually did a good article on this, which we've read, uh, here on here

[00:30:34] before.

[00:30:35] And speaking of articles, maybe we'll get back to kind of why this is in the news.

[00:30:38] Yeah.

[00:30:38] So great segue, Dan, let's hop back over to the CBC article about this change.

[00:30:44] It says that counselors voted 25 to one bit of a swing there to adopt the bylaw this

[00:30:52] week and enforcement starts on July 31st, 2025, but it was a quote from counselor Diane Sachs

[00:30:59] that says, I quote, this bylaw doesn't stop good faith renovations.

[00:31:06] So I get why governments are trying, are doing this kind of stuff.

[00:31:11] The system is abuse a lot.

[00:31:13] Right.

[00:31:13] And I do think that bad landlords make the market worse for all of the good landlords

[00:31:18] in the market.

[00:31:19] So it really begs the question from my perspective, like where do you draw the line?

[00:31:23] What is a good faith versus a bad faith rent eviction?

[00:31:26] Great question.

[00:31:26] Let's break it down.

[00:31:28] What is the difference between a good faith and a bad faith rent eviction?

[00:31:32] Okay.

[00:31:32] So a good faith rent eviction would be necessary repairs or upgrades are needed that can't be

[00:31:38] done while the tenants are in place.

[00:31:39] Think about major structural work, ripping apart walls, changing knob and tube electrical, or

[00:31:45] even something more intense like asbestos removal, right?

[00:31:49] Substantial renovations that significantly improve the property's quality, or even more importantly,

[00:31:54] safety in some cases, renovations that are now required by law or in building code.

[00:32:03] Clear communication with tenants about the scope of work in the timeline would be part

[00:32:07] of that good faith.

[00:32:08] And then of course, offering tenants the right to return at a similar rent after those renovations

[00:32:15] are completed, right?

[00:32:17] That's good faith.

[00:32:19] Now, bad faith.

[00:32:20] A bad faith rent eviction could be minor cosmetic upgrades used as a pretext for an eviction.

[00:32:28] Think, hey, I got to, you know, paint this thing and put a new kitchen sink and faucet in

[00:32:32] so I can raise the rent to a thousand bucks.

[00:32:35] Renovations that could easily be done with the tenants are in place.

[00:32:38] Lack of transparency about said renovation plans.

[00:32:42] No intention to actually perform a single renovation.

[00:32:45] They just want to get the unit back so they can relist it at higher rents or at market rent.

[00:32:51] And the final point of a bad faith renovation is the primary goal is to simply remove those

[00:32:58] tenants to increase rent dramatically.

[00:33:02] Yeah.

[00:33:02] So I guess the key difference then is the necessity and scale of renovations as well as the intentions

[00:33:08] of the landlord.

[00:33:09] That's exactly it.

[00:33:10] The challenge is that the intentions can be hard to prove, right?

[00:33:14] Which is why many jurisdictions are implementing these stricter regulations and oversight for

[00:33:22] renovations.

[00:33:24] Yeah.

[00:33:25] So how do you think cities can effectively differentiate between what would be a good

[00:33:30] faith and a bad faith rent eviction in this practice?

[00:33:33] Yeah, it's a tough question.

[00:33:34] But I think some potential approaches could include things like requiring detailed renovation plans

[00:33:42] and even permits before approving evictions, implementing inspections before and after

[00:33:48] renovations, enforcing right of first refusal for tenants to return post renovation, imposing

[00:33:56] significant penalties for landlords found to be acting in bad faith.

[00:34:00] Ultimately, look, it's a complex issue that requires balancing both property owners' rights

[00:34:07] while at the same time protecting tenants.

[00:34:10] And this doesn't destroy the business of real estate.

[00:34:14] This just increases the best practices.

[00:34:17] Right.

[00:34:18] Yeah.

[00:34:19] So I guess the big question for the province of Ontario then becomes whether or not this

[00:34:23] ends up surviving the provincial court of appeals and becoming a provincial precedent

[00:34:27] that is like provincial standards similar to New West minister and BC.

[00:34:32] Yeah.

[00:34:33] I guess I would turn that back to you, Dan.

[00:34:35] What are your thoughts?

[00:34:36] Could you see it going the same way as New West?

[00:34:40] Yeah, maybe.

[00:34:41] I think, I don't know, like, I guess it would depend on how much the courts feel this would

[00:34:48] help make the landlord and tenant system more efficient, right?

[00:34:51] Like it is, you know, we hear a lot about in the development space offloading some of

[00:34:55] the burdens of different tasks to municipal versus provincial governments.

[00:35:02] Like, you know, the province may be wanting to take over development approvals, but passing

[00:35:06] some of the other stuff off to municipal governments.

[00:35:09] This does like kind of make sense to be one of those things that's regulated at a municipal

[00:35:13] level.

[00:35:14] Like, you know, property is taxed at a municipal level.

[00:35:17] Zoning, et cetera, is done at a municipal level.

[00:35:19] So it does kind of like make sense.

[00:35:21] The challenge is like as you start shifting some of the roles of certain levels of government,

[00:35:28] be it provincial or municipal, you're kind of really changing the whole structure of

[00:35:32] the government in Canada.

[00:35:35] And so that's where I think a decision needs to be made whether or not that's actually what

[00:35:39] we want to see take place and whether or not municipalities can do a good job at this.

[00:35:44] I can't say anybody would do a worse job than Ontario is already with running the court.

[00:35:48] But, you know, I think in some provinces where the system seems to be working a little bit

[00:35:52] better, a different argument could be made.

[00:35:55] With all of that being said, I think it does give people the ability to like geographically

[00:36:01] move like their investments, right?

[00:36:03] You can move your investments from one city to another if it was more done at a municipal level.

[00:36:08] Whereas it's harder to move to geographically move your investments or if you're a tenant,

[00:36:13] right?

[00:36:13] It's harder to geographically move your tenancy from Ontario to Quebec or Manitoba as an example.

[00:36:20] But it's not as hard to do it maybe from Toronto to Vaughan or some other city, right?

[00:36:26] So I'm kind of interested to determine what existing provincial renovation limitations look

[00:36:32] like across the country to compare it.

[00:36:34] Because like, again, there's a lot of alarmism that this is so bad in Ontario.

[00:36:37] But I actually, I think I kind of determined that it's sort of seems standard across the country,

[00:36:43] honestly.

[00:36:44] Yeah.

[00:36:44] I mean, it is and it isn't, right?

[00:36:45] Because you just brought up Ontario being by far the worst.

[00:36:49] But if we go over to Alberta, Alberta is actually like the website, like Alberta's website

[00:36:56] actually has a page called Ending a Tenancy under the heading Ending a Periodic Term.

[00:37:02] Now, under this page, it says if a landlord intends to do a major renovations that require

[00:37:07] the rental premises to be vacated, or the landlord intends to convert the premises to a

[00:37:13] condo unit, the landlord must give the tenant one year's notice to terminate that periodic

[00:37:19] tenancy.

[00:37:20] Major renovations do not include things like painting or replacing flooring or, you know,

[00:37:26] routine maintenance, which would really just fall under OPEX, right?

[00:37:29] So for a fixed term, they can terminate it at the end of a fixed term.

[00:37:35] Yeah.

[00:37:36] So that one did surprise me, right?

[00:37:37] Because you always hear about Alberta being this like super landlord friendly jurisdiction

[00:37:42] compared to Ontario, but it's basically the same thing.

[00:37:44] Like actually the fact that you have to give that much notice, like a full year, it's crazy.

[00:37:49] So yeah.

[00:37:49] So Saskatchewan's falls under evictions for personal use there.

[00:37:53] So it's very much the same as like the same process as evicting for you or a family member

[00:37:58] to move in according to their website.

[00:37:59] But much like Ontario, it can be contested and it has to be approved by the court in that

[00:38:03] case, which could limit bad faith rent evictions at a provincial level.

[00:38:06] So far, it doesn't really seem like Ontario and BC's municipal protections really change

[00:38:11] anything other than making it so that you have to get a license to do that rent eviction,

[00:38:17] which is basically just a layer of enforcement for existing provincial policy.

[00:38:23] Yeah.

[00:38:23] And maybe like a little bit of a money grab along the way, right?

[00:38:26] Like they're just kind of collecting their fee on the highway or whatever.

[00:38:30] I can totally see why like the spirit of doing it because the Ontario and BC landlord

[00:38:34] and tenant courts have huge backups and are inefficient.

[00:38:37] So like this actually could be, could improve the experience for a landlord if they have

[00:38:41] done it in a, in a very, like the ones who are doing it the way that the municipality is,

[00:38:45] is asking.

[00:38:46] I mean, think about it.

[00:38:47] You pay a $700 fee.

[00:38:49] You got to get building permits.

[00:38:50] You got to provide like a couple of these things that the, I'm using Toronto's example

[00:38:53] that the city is asked for, but you know that you have a legally approved way of doing

[00:38:59] this, which could have, you know, avoid, let's say you, you were, you were doing it in bad

[00:39:02] faith or whatever, uh, or do you, you know, you had, it was contested and there, there

[00:39:07] was a rent dispute as a, uh, where rent was being withheld as a, as a result of it.

[00:39:11] That would cost you tens of thousands of dollars by the time, because by the time you made it

[00:39:14] to court in six or seven months because of how slow the Ontario process is.

[00:39:20] So it could, you know, again, if I'm trying to give municipalities the benefit of the

[00:39:23] doubt, it could, um, just be them trying to actually like sort of force the hand here and,

[00:39:27] and, and speed things up and create a bit of efficiency.

[00:39:30] You could get more and more cities doing this for my opinion, especially as we move to more

[00:39:34] towards a renter's economy and more and more tenants are deciding municipal elections, right?

[00:39:39] Even though a national, uh, homeownership rate is over 66%.

[00:39:43] So obviously your provincial and federal politicians cater to the policies of homeowners.

[00:39:48] It's, it is different at a municipal level as we move towards this.

[00:39:51] You've heard us talk about this a lot on the show as we move towards this European housing

[00:39:54] model where cities are populated with tenants more than owners.

[00:39:57] You get politicians and policies that will cater towards tenants more than owners.

[00:40:02] Yeah.

[00:40:02] And speaking of, of cities and rentals, Dan, you and I were just in Winnipeg last week.

[00:40:08] I had a, it was short and sweet visit.

[00:40:10] I believe we were there for about, I think 20 hours, maybe 19 or 20 hours, but a really great

[00:40:16] time.

[00:40:16] Shout out to, to Dawson, our, uh, our host out there and to shout out to the 50 plus people

[00:40:22] that came out to that, um, that meetup man, just such an amazing group of, of people, really

[00:40:28] a younger demographic out there, tons of fun.

[00:40:31] And Dan, you and I got to go see some really cool, really cheap, uh, single family homes,

[00:40:37] which were, which were just fascinating.

[00:40:38] So, but on that note of, of Winnipeg, right?

[00:40:41] Let's talk about Winnipeg.

[00:40:42] Let's talk about Manitoba.

[00:40:53] Now, similar to Ontario, if the tenant chooses not to return to the unit after the renovations,

[00:41:00] the landlord is required to pay the tenant an amount equivalent to one month's rent as

[00:41:05] compensation.

[00:41:06] Landlords must also obtain all the necessary permits and approvals before issuing notice

[00:41:11] determination for the renovation.

[00:41:13] And this ensures that renovations are legitimate and of course comply with local building codes

[00:41:18] and regulations.

[00:41:19] The landlord also must act in good faith and generally intend to carry out the stated renovations.

[00:41:27] Again, using renovations as a pretext to evict tenants strictly for the purpose of increasing

[00:41:32] rent or changing the use of the property is prohibited here in Manitoba and Winnipeg, just like it is

[00:41:39] basically everywhere else.

[00:41:40] Yeah.

[00:41:41] So it seems pretty standard coast to coast.

[00:41:43] So I guess basically these renovations bylaws are in a lot of cases, just local municipal

[00:41:47] governments trying to expedite things and kind of charging a fee and a license to do a renovations

[00:41:51] within the framework that seems generally agreed upon by most provinces so far.

[00:41:56] Kind of feels like a cash grab, but it kind of feels like maybe an attempt to expedite the

[00:42:01] process.

[00:42:02] I think time will tell what ends up actually being the case.

[00:42:06] I get why they're doing it in spirit, but I sort of struggled to see it having a positive impact,

[00:42:12] honestly.

[00:42:13] Like, yeah.

[00:42:14] Yeah.

[00:42:15] I mean, okay.

[00:42:16] So look, we've talked about just about everywhere from Ontario all the way west to BC.

[00:42:21] Let's head next door going east to Quebec, where there's probably the strictest limitations

[00:42:28] on renovations in the country.

[00:42:31] There is actually an article you put here, Dan.

[00:42:34] Quebec issues a memorandum on renovations.

[00:42:38] Moratorium.

[00:42:39] Thank you for that.

[00:42:41] On renovations until 2027.

[00:42:43] Yeah.

[00:42:44] So this three-year moratorium on evictions is part of Bill 65, which was tabled by the

[00:42:49] National Assembly by Quebec Housing Minister France-Hélène Duranceau this morning.

[00:42:55] The law would prevent landlords from evicting tenants to subdivide a dwelling, enlarge it,

[00:42:59] or change its use, i.e.

[00:43:01] renovations, but would not restrict repossessions with the purpose of having a landlord's family

[00:43:05] move in.

[00:43:05] So in a lot of cases, the challenge is bad actors are just going to move from, I'm going

[00:43:10] to use the renovation stream of a bad actor to, I'm going to move my family.

[00:43:16] And the burden of proof would be if the tenant says, oh, I think that this landlord did either

[00:43:21] of those things in bad faith.

[00:43:22] They would still have to prove it.

[00:43:24] And the renovation, you have, I don't know, what, a two-month window to prove that whether

[00:43:28] or not they didn't renovate, kind of, because they should be starting a renovation immediately.

[00:43:31] Whereas the family moving in, like maybe their family did move in for two weeks after and then

[00:43:36] they re-leaded it or whatever, you know what I mean?

[00:43:39] So anyway, it's challenging.

[00:43:41] I think this is tough, tough stuff to try and regulate.

[00:43:44] Yeah, it is.

[00:43:45] And look, this is in effect for three years there.

[00:43:47] It starts in June of 2020, June 6th of 2024, and it's set to last until again, 2027.

[00:43:54] And, you know, it aims to curb the practice of renovations, Dan, like you were just saying,

[00:44:00] where, you know, there's a lot of these bad faith landlords doing kind of shady things.

[00:44:07] Yeah.

[00:44:08] So again, trying to prevent bad faith, which I don't have a problem with, but I think it's

[00:44:12] tough.

[00:44:12] Like this one seems to limit the ability for investors to genuinely renovate in the process

[00:44:18] if it requires an eviction to do that.

[00:44:19] So let me be more clear on my position here.

[00:44:21] Bad faith renovations are bad, right?

[00:44:23] That's how I feel.

[00:44:24] So genuine eviction for renovations are not bad because that's improving housing stock.

[00:44:31] And in a lot of cases that has to be done, right?

[00:44:34] My challenge is the same people complaining that landlords don't renovate their properties

[00:44:38] and calling people slumlords are often the ones taking away their ability to renovate

[00:44:42] their properties.

[00:44:42] And that's really from my perspective where it is that double-edged sword, right?

[00:44:46] Yeah, exactly.

[00:44:47] Now we are done with Quebec.

[00:44:50] So let's keep going east now.

[00:44:52] We're in Atlantic Canada.

[00:44:53] In New Brunswick, the government has implemented measures to protect tenants from renovations,

[00:44:57] says a CBC article heading that New Brunswick to close renovation lease loophole with new

[00:45:04] rules.

[00:45:05] So as of May 2023, landlords intending to terminate a lease for renovation purposes must adhere

[00:45:11] to the following regulations.

[00:45:13] Provide proof of renovation plans and three months notice.

[00:45:17] Yeah.

[00:45:17] So again, not an unreasonable step to verify that people are actually renovating the property

[00:45:21] to eliminate cases where people are pretending to do the renovations and then doing something

[00:45:25] minor and relisting higher.

[00:45:27] I think like if these things actually worked, they would probably have an improved outcome

[00:45:34] on the landlord and tenant relationship.

[00:45:36] People wouldn't hate landlords so much.

[00:45:38] People wouldn't talk poorly about tenants so much.

[00:45:40] But all of these things from my perspective, the fact that this whole thing exists is really

[00:45:45] a result of just us having a huge mess of a housing system where it leads to these bad outcomes

[00:45:51] to begin with.

[00:45:52] Anyway, let's move over to Nova Scotia quickly.

[00:45:54] Yeah.

[00:45:54] So similar story there.

[00:45:57] Landlords and tenants can mutually agree to end tenancy for renovations.

[00:46:00] This agreement must be documented using a form DR5, which is an agreement to terminate

[00:46:07] for demolition, repairs or renovations.

[00:46:09] And they're eligible for compensation ranging from one to three months rent, depending on

[00:46:14] the size of the building.

[00:46:15] So buildings with more than four units, three months rent, buildings with four or fewer

[00:46:20] units, one month's rent.

[00:46:22] And apparently tenants can also push for the difference in rent between the new and the

[00:46:26] former unit for up to 12 months.

[00:46:28] Yeah, again, all similar to Ontario, except for larger buildings here, which kind of seems

[00:46:36] counterintuitive from my perspective, because a landlord there would have multiple units.

[00:46:40] They could just move the tenant into one of those other units in the building, ideally

[00:46:43] during that period of time.

[00:46:44] Yeah.

[00:46:44] Do the old Kansas City shuffle.

[00:46:46] You know, things aren't so different over in Newfoundland.

[00:46:49] One to three months notice, have to offer the unit back to the tenant the same rent.

[00:46:53] And if they fail to do so, one month rent compensation is required.

[00:46:56] Yeah.

[00:46:57] And then going back to the moratorium idea, PEI has a moratorium on renovations initially

[00:47:03] in 21 to 2023.

[00:47:04] And then they kind of have this whole thing going on there right now where it expired and

[00:47:10] people are advocating for an extension of it.

[00:47:12] But very similar story.

[00:47:14] Again, there has to be a notice period.

[00:47:15] So six months and one month rent if the tenant chooses not to return to the unit again.

[00:47:21] Yeah.

[00:47:21] So look, when discussing renovations, it's important to consider the likelihood of tenants

[00:47:27] actually returning to those units after the renovations are completed.

[00:47:31] Well, many jurisdictions offer tenants the right of first refusal.

[00:47:35] Several factors influence a tenant's decision and their ability to return.

[00:47:41] First things first is renovations take months or even years.

[00:47:44] In some cases, tenants need to go and find an alternative place to live and potentially

[00:47:50] would lay down their roots and, you know, get a new job and go to attend a new school.

[00:47:55] And they might not want to go back after.

[00:47:58] And even if rent control measures are in place, the cost of moving twice, moving out to that

[00:48:03] new unit and back into your old one can be prohibitive for many tenants.

[00:48:07] So many actually don't go back after.

[00:48:10] And during that renovation period, tenants may experience significant life events, right?

[00:48:15] Get a new job, getting into a new relationship, starting a new business that might make returning

[00:48:21] to that old unit impractical.

[00:48:23] So given these factors, the likelihood of tenants returning post-renovation is often pretty low.

[00:48:30] Yeah, I think it's a really good point.

[00:48:32] And it kind of emphasizes how the renovations can really change the fabric of like buildings,

[00:48:37] communities where even if these laws are there to protect it.

[00:48:42] And I think like, you know, again, if I imagine myself having to move for like a year

[00:48:45] to wait for a renovation and then get the unit back, I don't know.

[00:48:48] Like it feels like it would probably just be too much of a headache to want to do it, right?

[00:48:52] Let's just quickly jump to some comments from professionals in the industry.

[00:48:56] And so we're going to go.

[00:48:57] I asked for some comments from Varen Sriskanda from member of the board of directors at Solo,

[00:49:03] the small ownership landlords of Ontario.

[00:49:04] And then we have a conversation coming up with Wei Ting from openroom.ca.

[00:49:09] You know, Varen said it's something we really need on paper because we need to show the tenant

[00:49:15] groups and unions that the city is doing something to protect them.

[00:49:17] It would be nice if tenant groups realize legislation like this doesn't contribute to

[00:49:21] what we ultimately need, which is more rental units that are clean, safe and affordable.

[00:49:26] In reality, the law is completely unworkable.

[00:49:29] It provides penalties, not incentives for making repairs to rental units.

[00:49:33] So I thought that was an interesting comment.

[00:49:35] And then, yeah, let's just jump over to someone who we're very excited to have on the show

[00:49:39] here, which is waiting from open room.

[00:49:42] Before we do that, I guess we didn't make a note of the Christmas party, holiday party.

[00:49:47] We're having a big, big holiday party in the city of Toronto at Paris, Texas.

[00:49:51] So all of our meetups from anywhere within driving distance of the GTA will be kind of aggregated

[00:49:57] into one.

[00:49:57] It's going to be a good thing.

[00:49:58] So we'd love to see you there.

[00:49:59] Want to see the listeners.

[00:50:00] Nick and I are going to do a big presentation, big crystal ball prediction session for next

[00:50:05] year.

[00:50:07] And we also have a promotion going on.

[00:50:09] If you send us a message, if you've been kind of thinking about getting involved in the

[00:50:13] realist.ca course, we have a really, we're kind of testing out something new.

[00:50:18] So we're not, we're kind of like reluctant to really, let's say, publicize it.

[00:50:21] We're going like to see if we can scale down to more of like a group coaching format than

[00:50:24] an individual for certain new members.

[00:50:27] So if you're interested in getting involved, this would be the time to do it.

[00:50:31] We're going to kind of run this until the new year at the point where we see the new

[00:50:35] year, we get this like new me, new, new year, new me rush of people joining.

[00:50:39] And so, you know, you know, sort of in an effort to avoid exposing or, you know, overexposing

[00:50:45] ourselves and getting too many people.

[00:50:46] We want to kind of run this, see how many people we get.

[00:50:49] And then we'll kind of go back to the original format for that new year, new me rush.

[00:50:52] So if you're interested in getting involved with the community, coaching, realist, give

[00:50:58] us a shout on Instagram through the podcast email on the realist free community, wherever

[00:51:05] ask us about it.

[00:51:06] And we'd love to see if you're a fit for that.

[00:51:09] Anyway, Nick, anything before we hop into this interview and we'll just leave it at that?

[00:51:14] Nope.

[00:51:14] Nope.

[00:51:14] That was great, Dan.

[00:51:15] Hope to see everyone at the Christmas party.

[00:51:16] And yeah, let's hop over to that interview with Weyting, one of the co-founders of open

[00:51:22] room.ca democratizing information for both landlords and tenants.

[00:51:28] So we're very excited to be joined here by Weyting from Open Room, who I would consider

[00:51:33] one of the foremost experts in policies like this and in things that are happening in the

[00:51:38] landlord and tenant space in Ontario and beyond.

[00:51:41] So Weyting, could you give us a quick introduction of Open Room and of yourself?

[00:51:47] And then we can sort of spiral out of control from there.

[00:51:50] Sounds good.

[00:51:51] Thank you very much for having me, Nick and Dan.

[00:51:53] My name is Weyting Balu and I am the CEO and co-founder at openroom.ca.

[00:51:59] So at Open Room, what we do is we aggregate tenancy court orders from across Canada.

[00:52:04] We'll extract the information from them and we put it to public use.

[00:52:07] So think we make it all court order search engines, searchable by the public.

[00:52:12] You can search for names and addresses of individuals who have had evictions or unpaid

[00:52:16] rent.

[00:52:16] You can then take these court orders and put it into impacting the tenant credit history

[00:52:22] if there is rental debt owed on it.

[00:52:25] In terms of my background, my last decade before Open Room was all in software product management.

[00:52:31] So I manage products from the AI space to the education tech to telecom.

[00:52:36] So that's how I got into Open Room where I was a small scale landlord and decided this

[00:52:42] is something that I needed to do to help the rental ecosystem.

[00:52:46] Awesome.

[00:52:46] Yeah, I'm really excited about the work that you're doing.

[00:52:49] I think that it's gotten a lot of attention and I'm interested to see sort of the long-term

[00:52:58] impact that happens as a result of it.

[00:52:59] So I guess one of the big things outside of sort of the work that you're doing, one of

[00:53:04] the big things that seems to be a sticking point in Ontario at least, but I would say in

[00:53:08] most of the parts of Canada is we have this friction with the landlord and tenant system.

[00:53:14] Ontario probably being the worst example of it.

[00:53:18] Can you talk a little bit about that to start?

[00:53:21] And then we'll dive into the rent eviction portion of the conversation.

[00:53:26] Yeah, over the last few years, especially since COVID-19 pandemic, what we've noticed is an

[00:53:32] uptick in the number of application filings into the Landlord and Tenant Board LTB.

[00:53:37] What that stems in, what we look at it from the statistics side is that 65% of it was for

[00:53:44] non-payment of rent.

[00:53:45] So these are individuals who don't pay rent and then they wait multiple months before they

[00:53:51] get to the Landlord and Tenant Board, then at the end, end up in an eviction situation.

[00:53:56] So that has been some of the latest trends that we've seen in Ontario.

[00:54:01] So I would call that like a, I guess a landlord led eviction, but for the purpose of a violation

[00:54:08] of the contract in the way that they didn't honor the consideration of paying rent, right?

[00:54:13] I guess one of the alternative trends, because one of the things Nick and I really want to

[00:54:18] make clear to people in the real estate investment business, and we call it a business.

[00:54:23] And this is actually something that I really inherited from conversations with you was a

[00:54:27] lot of people aren't running, like you would say, compliant businesses, right?

[00:54:30] And if you want to be successful in business and successful as an investor and in using

[00:54:34] your capital, you need to do or run your business properly.

[00:54:38] And so probably among the biggest examples of this is this rise that we're seeing in bad

[00:54:47] faith evictions.

[00:54:48] And it comes in kind of two forms.

[00:54:50] I would say one is the bad faith eviction saying for personal use, and then the other

[00:54:54] bad faith eviction saying that you need to do a renovation or now this is being called a

[00:54:58] rent eviction.

[00:54:59] Yes.

[00:54:59] And so what we're seeing is municipal governments layering policy on top of the provincial policy,

[00:55:05] starting in BC in 2019, actually even before the pandemic, to try and let's call it crack

[00:55:10] down on, but I wouldn't even call it that really.

[00:55:12] I would just say to eliminate one of these negative externalities that's happened as a

[00:55:16] result of this inefficient system.

[00:55:19] Is that kind of right?

[00:55:20] And then if it is, could you describe the rent eviction process and the changes that are

[00:55:25] taking place?

[00:55:25] Yeah, let's just dive into a little bit about what is a renovation so the audience understands

[00:55:30] it.

[00:55:30] It's when a landlord claims they are doing a renovation on a tenanted unit and then they

[00:55:35] request the tenant to move out.

[00:55:37] But then the landlord increases the price and rents it to somebody else.

[00:55:42] Okay.

[00:55:42] So then we look at some of these stats on why we think Ontario even did take a look at this

[00:55:49] as a concern.

[00:55:50] So what I was looking at in stats was in 2025 to 2016, sorry, 2015 to 2016 year, there were

[00:55:58] about 350 renovations.

[00:56:00] And then three years after, so the year 2018 to 2019 year, we were looking at about 650.

[00:56:06] So that's like double the amount.

[00:56:08] So I believe that what triggered action from municipal governments to do something about

[00:56:12] it is this uptick in renovations.

[00:56:16] Yeah, that's crazy to see that those kind of numbers and what was behind that?

[00:56:22] Like why do you think we saw that first of all?

[00:56:25] And then I know that there's existing ways to deal with this stuff, right?

[00:56:31] The N form.

[00:56:32] So maybe I'd love to hear your insights on to why these massive jumps and then on the

[00:56:38] existing infrastructure to deal with them.

[00:56:40] Absolutely.

[00:56:42] This might be controversial to some, but when we look at what is the root cause of why an

[00:56:46] eviction for renovation even exists in the first place, I believe that one of the main

[00:56:50] root causes, if not the root cause is rent control.

[00:56:54] So rent control is where there is a maximum increase allowable for rent per year that a

[00:57:01] landlord can issue to the tenant.

[00:57:03] And because this law is in place, it resulted in people doing renovations as a mean to evict

[00:57:09] and raise rents.

[00:57:10] And Dan, you were saying earlier is that this is a business for landlords or housing providers.

[00:57:15] And if they can't raise rents to cover the cost, then why would anybody want to be in

[00:57:19] this business?

[00:57:20] So I believe that when it came to the renovations, it's a loophole that some people have found

[00:57:25] to evict and raise rents.

[00:57:28] And then to Nick.

[00:57:29] Oh yeah, sorry.

[00:57:30] Go ahead, Dan.

[00:57:32] No, I just kind of play the devil's advocate.

[00:57:34] Like, you know, you've heard a lot about this property values going up and up and up.

[00:57:38] And so like, you know, while landlords don't necessarily have pricing power, most people,

[00:57:43] what we would argue, most people probably were buying real estate for the speculative value,

[00:57:48] not purely the cash flow value.

[00:57:49] I think the trouble now is you do get people buying or you do want people buying for yield

[00:57:54] or cash flow.

[00:57:54] And now we're learning that this is a headwind for yield, right?

[00:58:00] Yeah.

[00:58:01] Because you don't have pricing power.

[00:58:02] Yeah, absolutely.

[00:58:03] So when we go back to Nick's question about the N13, N13 is already what the province have

[00:58:12] dictated to housing providers when they want to do a renovation and end the tenancy.

[00:58:17] So some of the guidelines in here include if depending on the size of your residential

[00:58:21] complex, like more than five versus less than five, you'd either have to pay one month's

[00:58:26] rent compensation to the tenant if you want to do renovations or three months.

[00:58:31] And then you have to offer the rental back to the tenant after the renovations are done.

[00:58:37] All right.

[00:58:37] So then we look at what is the municipal government trying to do here with these bylaws?

[00:58:43] So some of the additional elements that they've added in would be, for example, you have to

[00:58:47] register for a license to do any renovations.

[00:58:50] And in Toronto, we're looking at about a $700 license just to say, I want to do renovations.

[00:58:56] You're in a tract registry.

[00:58:58] So you're known publicly to everybody that you are doing this.

[00:59:01] And if you do it in bad faith, then people can more easily catch you on it.

[00:59:05] Then you have to provide a moving allowance and then severe fines if you don't abide by

[00:59:10] it.

[00:59:10] And then actual timelines to when you need to file certain notices.

[00:59:14] So these are the additional elements put in place.

[00:59:18] It is interesting, right?

[00:59:19] Because it almost becomes an enforcement challenge at that point.

[00:59:21] Like, you know, you're making it.

[00:59:23] This would make the assumption that somebody who, because I guess their enforcement is at

[00:59:29] the building permit phase, right?

[00:59:30] Like, and this is where it's fascinating from my perspective.

[00:59:33] Like, you're making the assumption that somebody who's going to do a bad faith rent eviction

[00:59:38] is also going to get a building permit.

[00:59:40] And I would say the likelihood of, you know, like somebody who's going to break one rule is

[00:59:42] probably going to break two, right?

[00:59:43] So it's tough to have an impact with a policy like this, but I understand it in spirit.

[00:59:48] Yeah.

[00:59:48] I mean, if you think about all the bad actors in the world, once you come out with the law

[00:59:52] or a guideline or a rule, the bad actors are still going to find a loophole to it.

[00:59:58] So yes, maybe we're going to see a reduction in the renovations because what we've seen in

[01:00:04] the BC side is that there were 333 evictions for renovations back when they were assessing

[01:00:11] all the numbers across three years.

[01:00:14] And then once they implemented it in 2019, apparently there were zero, right?

[01:00:18] I don't know all the details behind how they've calculated that, but we still hear issues in

[01:00:24] BC about the rental ecosystem.

[01:00:27] So I think that the bad players are still going to find loopholes.

[01:00:31] For example, they might be intimidating tenants to the extent that they, the tenants want to

[01:00:35] move out and that's causing mental distress.

[01:00:38] Right.

[01:00:39] Yeah.

[01:00:39] Well, I think the other piece is like, you know, if you're uprooting somebody from a

[01:00:43] unit, the likelihood of them, like it's kind of one of those things where it's like, yeah,

[01:00:48] that you have to offer it back to them after, you know, but if it, if it takes six months,

[01:00:52] like their life has changed so substantially that they're not likely to want to get that

[01:00:56] unit back at the end, right?

[01:00:58] Like they've already moved into a new place, you know, change their life patterns, et cetera.

[01:01:02] I mean, you'd think, but we have come across anecdotally stories where tenants still want

[01:01:07] to move back and there are still disputes back and forth.

[01:01:10] Yeah.

[01:01:11] Yeah.

[01:01:11] It makes sense.

[01:01:12] I got that.

[01:01:13] That would make sense to me.

[01:01:14] You know, people don't realize that property rights extend to tenants, right?

[01:01:18] Like once you have a lease, that's an, that's, that is a property right.

[01:01:21] Yeah.

[01:01:22] And that's where, you know, where you come in, where your team teaches individuals about running

[01:01:27] a compliant rental business because landlords or housing providers, especially if you're

[01:01:32] small, you don't really understand your own rights.

[01:01:35] And then on top of that, you don't understand that tenants have rights too.

[01:01:39] And you need to be able to understand or at least know what those are to play in this game.

[01:01:46] Absolutely.

[01:01:47] Yeah.

[01:01:47] I couldn't agree more.

[01:01:48] It's interesting because I think, I think there's, it's, it's a two-sided story, right?

[01:01:51] Like landlords are always the first people to get demonized and the easier ones to demonize

[01:01:56] in the public.

[01:01:57] And, you know, Dan and I have been in this space for a long time and I've seen a lot of

[01:02:00] really bad landlords, people that I don't think deserve to be in the space, but at the

[01:02:04] same time, tenants can be absolutely horrible as well.

[01:02:08] And, you know, the professional tenants that do the things like wait it out and, and not

[01:02:13] pay, you know, they, they should be just as demonized as, as the, as the slumlords

[01:02:17] that are doing it.

[01:02:18] Wait, Tina, I want to, I want to just, because I want to respect your time here.

[01:02:21] I want to just see if you have any kind of final closing thoughts on, on the new policy.

[01:02:26] What do you, do you think it's going to change things drastically?

[01:02:30] You know, provide some insight on, on your, on your take on this.

[01:02:33] My final thoughts on this is that the renovation bylaws around Ontario is aimed at the corporate

[01:02:39] landlords.

[01:02:40] I do believe that they are honing in on zoning in on those types of landlords, but it's really

[01:02:46] hurting the small mom and pop housing providers.

[01:02:49] And it's making all of the 600,000, uh, small mom and pop shops in Ontario.

[01:02:54] Very, very scared.

[01:02:55] Can you just elaborate very, very quickly on, on what you mean when you say, you know, are

[01:03:00] we talking like BlackRock versus, you know, a guy like guys like Dan and I kind of thing,

[01:03:04] or what, what does that mean?

[01:03:05] The difference between the, the corporate landlord and the, and the mom and pop.

[01:03:08] I'd say folks who have, um, multi residences or like apartments that are in numbered companies

[01:03:15] that own multiple, like maybe REITs, uh, big thousands of units under management.

[01:03:21] When we look at the small housing provider, right?

[01:03:24] These are people say, for example, with one basement unit, they want to rent it out or they

[01:03:28] have rented it out.

[01:03:28] And then the city comes one day to say, your unit is not up to code.

[01:03:32] At the same time, this housing provider can't enforce an eviction until say they file for

[01:03:37] that $700 license, compensate the tenant a few thousand dollars, uh, to live in another

[01:03:41] unit and then pay for rent eviction costs.

[01:03:43] And then all of this, after that, they have to give it back at the same price without any

[01:03:47] rent increase.

[01:03:48] These costs add up and this, this small mom and pop shop just cannot stomach it.

[01:03:53] Yeah, no, I appreciate the distinction there.

[01:03:56] Um, thank you so much for, for joining us today and providing some, some insight.

[01:04:00] I would encourage everyone listening, whether you are a landlord, a tenant, or both like

[01:04:04] me, uh, go check out open room.ca, uh, democratizing the, the information that everyone is looking

[01:04:12] for out there just to avoid, uh, bad tenants or bad landlords, which I'm sure we all want

[01:04:18] to do.

[01:04:18] So waiting.

[01:04:19] Thank you so much again for joining us.

[01:04:20] We'll put your, uh, information as well as open rooms in the show notes here so that anyone

[01:04:25] with, uh, with further questions can, can reach out.

[01:04:29] And I will also say that people should look forward to having a much more exhaustive episode

[01:04:33] with you.

[01:04:33] Cause I think we do certainly want to have you back, but this was one of those, was one of

[01:04:37] those things we just had to get to the news episode out on it.

[01:04:39] So hopefully he'll, uh, he'll join us again.

[01:04:42] Absolutely.

[01:04:43] Let's make it happen.

[01:04:44] Thanks.

[01:04:44] Thank you.

[01:04:44] Thank you.

[01:04:46] The Canadian real estate investor podcast is for entertainment purposes only, and it

[01:04:51] is not financial advice.

[01:04:53] Nick Hill is a mortgage agent with premier mortgage center and a partner in the G and H mortgage

[01:04:59] group license number one zero three one seven agent license.

[01:05:08] Daniel Foch is a real estate broker licensed with rare real estate, a member of the Canadian

[01:05:15] real estate association, the Toronto real estate board and the Ontario real estate association.