Seemed like a normal time way back in March. I remember gearing up for March Break with the kids, plans in tow. In the days leading up to the final Friday before the Break, doubt started building about whether or not this “Coronavirus” thing that we keep hearing about was going to derail our plans.
That last Friday, we were told school wouldn’t be returning for a few weeks - this “Coronavirus thing” was forcing us to quarantine. We cancelled whatever plans we had for the break and bolted the doors to our home. Nobody in or out!
Then I had a thought: if I’m quarantining, and my wife is quarantining, and our peers are quarantining — everyone’s quarantining — was anyone working??
The answer was no. Nobody was working (not at first anyways - the infrastructure wasn’t ready in those early days). The entire economic output - the job force - was significantly reduced. Fewer people were able to work (and earn). With less/no income, expenses can’t be paid. That includes rent.
So what happened? Premier Ford realizes that without income, tenants may not be able to come up with rent. Well, if rent isn’t paid, evictions are inevitable. We all know this can’t be a real outcome - how can we stay home if we’re homeless! And so Ford announces a bit of a relief for tenants (it should be noted - there was no matching relief for landlords): the province defines rules that prohibit evictions of tenants that don’t pay rent.
And that’s when an idea emerges:
If I can’t be evicted for not paying rent, theoretically, I can choose not to pay rent without consequence!
Tenant groups form on social platforms and build a “Keep Your Rent” movement. Tenants encourage other tenants to withhold rent payments to their landlords. I see the logic here, from one perspective. There is certainly strength in numbers, after all. Tenants that have been hard hit by COVID-19 need a lifeline, and this idea of withholding rent from their landlord could be the solution they need to get by.
Many tenants definitely don’t want to execute on this strategy, but times are what they are and many are doing what they need to do to survive.
And of course, many other tenants simply have made a choice to not pay their rents. Because they don’t want to, and now they don’t have to.
In this “movement”, landlords are categorized (fairly or unfairly) as unfairly wealthy. Your landlord, the person you are NOT paying, is left without any assistance. Not paying their debt obligations isn’t an option. Without some source of additional income (rent), they can’t pay their expenses (mortgage/taxes/insurance), either.
Understanding each other’s position and operating in good faith, some landlords strike agreements with tenants on modified payments. Some don’t. Some tenants refuse to pay rent - since there is no risk of eviction. Because: “Screw you, rich landlord!”
Except, these missed payments are not ignored, or forgiven.
Debt is created.
Some tenants (including some of my own tenant partners - I’m not immune to this) choose to end their agreements and move back home. If work isn’t active, and you’re here for work - they don’t need to be here. Totally understandable. One of my tenants on a brand new lease did me a “favour” after consulting with his property manager father:
“Look Donny, I’m just trying to be honest here. I could just stay here and live for free, but I don’t want to do that to you. So I’ll just leave regardless of the agreement terms we agreed to a couple of months ago and you’re going to have to deal with it.”
Some tenants actually feel as though they have the option to pay rent, or not. And that’s a problem for everyone. I’ll explain more about this very point later in this article.
Back to increasing vacancies…
Many tenants are leaving or have left their rentals. These places are put back on the market. Flat out: supply is increased.
Fewer tenants are looking for rentals in light of the economic uncertainty.
Demand decreases.
This is straight up supply and demand at play. Economics 101.
When supply increases and demand decreases, prices fall. And that’s exactly what we’ve seen. Rental prices have dipped and more units sit on the market.
In time, the market will adapt. As of August - this is where we are in Toronto. A lot can and will change in the near term.
Very recently, a new bill was passed by provincial parliament that made some changes to this whole landlord and tenant dynamic. Many, many more tenant rights were given in this bill, and severe landlord penalties are now imposed under certain situations. However, tenant advocacy groups are particularly worried about the part of the bill that allows landlords to evict tenants for failure to pay rent. It’s now allowable to evict tenants for non-payment, and this can be applied retroactively all the way to March.
If you did not pay rent during the rent relief period, you face eviction right now.
Tenant advocacy groups are understandably now up in arms about the unfairness of this rule, and how it’s inhumane. They argue that tenants who entered good faith agreement with their landlords to make repayments or partial payments of rent are now at risk of being evicted. These groups choose to consider the fairness of this bill from a single angle.
Same deal with landlord advocacy groups. Their argument is that no mention is given to how non-payment has affected landlords and their inability to survive with multiple mortgages during an economic crisis. Their argument is that it’s assumed landlords are wealthy and can weather this storm.
Not all landlords are great people, and the term “slumlord” exists for a reason. But I know many landlords, and almost every single one of them is a small investor, and a perfectly fine human. The ones entering good faith repayment plans are not using this bill to evict tenants that they enjoy a good partnership with. I find that landlords are demonized among many tenant groups for some reason.
Landlords aren’t the boogeyman They’re people trying to make the best lives for themselves, just like everyone else. There are certainly some bad apples in the bunch. Same goes for any categorization of any human group.
Bottom line: I understand the perspective on both sides of this battle. And it is very much a battle.
I’m a landlord, and a tenant. I think I’m fairly level-headed. And I agree with every article written that tries to describe this tenant-landlord dynamic, and how the system is broken.
I believe in us. I believe in our country. I love living here. I love that there are rules and consequences and it’s not the Wild West. It levels the playing field and allows anyone to flourish.
I believe when a contract is violated there should be consequences. It’s applicable in all other parts of our amazing Canadian lives, except this. Some tenants are surprised when they are expected to follow through on promises they made. Why? If you don’t pay your phone bill, it gets cut off. If you don’t hold up your end of the bargain, you ruin your agreement.
My problem - and again, this goes to unfairness of application of laws - is that landlords can’t sever a contract because they changed their mind. I’ve seen first-hand how the wrong tenant becomes threatening and maniacal, and knows they can be because of provisions built-in by the current landlord-tenant guidelines.
The same rules that were put in to protect the vulnerable have become weapons in an arsenal for egregious, and often “professional”, tenants.
Evictions and pricing of future rentals
This new bill “threatens” (though it’s likely not realistic) to start a process of mass evictions. You failed to pay rent, you lived without any fear of losing your rental home, and now time’s up.
There may very well be a lot more places up for rent very soon, and certainly more tenants looking for a new home.
Trying to be the prognosticator, here’s a very possible outcome to all of this:
Supply increases again, along with demand. We’ve seen evidence already start on this point.
Increase in demand from tenants due to the number of evicted tenants seeking accommodation. Any landlord that does their research on a prospective tenant will reject tenants that are unemployed or who didn’t pay rent. These tenants will be under severe pressure to find a new home.
Many small landlords will remove their apartments from the pool of available rentals, citing the tenant protections as their motivation for getting out of this business. These homes will go up for sale, thereby reducing supply for rentals.
Tenants that have terrible qualifications (see “past non-payments” discussion above) will have to entice a landlord with money when competing against another tenant for the same apartment.
There will be greater increase in demand than in supply in light of all of this.
Rent prices increase significantly.
These very same tenants that sought to reduce their costs by withholding rent are going to have unintentionally created a surge in rent prices in Toronto.
This will serve as a classic tale of focus on short term over the long term, or cutting off your nose to spite your face.
I personally have held amazing relationships with my tenant partners. I value them as people and as partners. We win together. As long as they stay this way with me, I will do the same. Most landlords feel the exact same way.
I’ve been the exact same as a tenant.
The last thing any of us want or need is more friction in this already fragile world of landlord and tenant relations. I feel it’s about to get a whole lot worse.