'Nightmare' tenants, high costs make rental landscape a challenge for landlords, too

After 21 years as a Toronto landlord, FrancesNewbiginis calling it quits.

In spring 2014, she says a "nightmare" tenantmoved into her Bloor West Village duplex. By the second month, the woman stopped paying her rent on time, or in full.Andsoon enough, the woman's son and ex-husband an abusive, alcoholic, "full-time smoker" had moved in as well, jacking up utility costs for Newbigin.

But that was the least of Newbigin'sworries.

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Her tenant's ex-husbandbecame a neighbourhood nuisance, cutting branches off trees for his barbecue, punching holes in the walls, and leaving threatening messages on Newbigin'scell phone.

"He'd be out in the backyard swearing, yelling, urinating in front of the neighbours' children," she recalls.

And it took her more than a year to get the threesome out the door.

WhileCBC Toronto's No Fixed Address series has highlighted the challenges facing renters in Toronto, landlords like Newbigin say they're often the ones leftin thelurch, thanks to the day-to-day financial challenges of owning rental properties that are, at times, compounded by troublesome tenants and a system they say doesn't workin their favour.

The economic challenges of being a landlord

Thanks to the financial pressures,Newbigin is hardly alone in wanting out of the landlord business.

KaylaAndrade, founder of an online landlord group calledOntario Landlords Watch,says "many, many" people across the province are trying to get out over high utility costs and other financial concerns that turn being a landlord into a costly, 24/7 job.

"I've lost track of how many people are getting out of the business," says Andrade, who started her group back in 2010.

Others are sticking it out, but still feeling the pinch.

Stephen Scanlan owns an eight-unit mansion in Cabbagetown and says he strives to keep rent reasonable to increase the number of applicants in hopes of getting a good fit.

It doesn't always work out.

• No Fixed Address: These are your stories about renting struggles in Toronto

In one instance, a tenant sublet a second bedroom in his unit without Scalan'spermission, and the person his tenant rented to brought bedbugs into the building. Since it's the landlord's responsibility to handle bedbugs, Scanlan wound up shelling out upwards of $8,000 for several rounds of extermination.

"In my 11 years, I've dealt with bedbugs, rodents, termites, hoarders, and all the challenges that come from owning a century-old building in constant need of repairs," he says.

The 1991 rent control loophole

Those ongoing costs can be compounded for landlords like Scanlan who ownbuildings built before 1991 thanks to what some see as a two-tier rent control system in Ontario.

• What's the deal with the 1991 'loophole?'

According to the province's Residential Tenancies Act, 2006, rent control only applies to units that were first built or occupied residentially before Nov.1, 1991.

For buildings built after 1991, it's a different story,whichcan lead to tenants of new downtown condos, for instance, having their rent jacked up by hundreds of dollars or more. CBC Toronto reporter Shannon Martin, for example, sharedthe story of how herrent shot up by nearly $1K a month.

More broadly, higher Toronto rentscan be tied to ashortage of rental units, coupled with demand that's at a 30-year high. And that demandstems from population growth, high immigration levels, and skyrocketing GTA home prices that are leading more people to rent instead of buy.

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But sudden, massive monthly rent increases at newer buildings? Those can often be tied to the 1991 loophole.

On the flip side, the 1991 issuecreates a problem for landlords who own older buildings: How can they cover spikes in utilities or taxes without being allowed to adequately raise rent?

Newbiginsays the 1.5 per cent increase that's allowed for older buildings like hers doesn't cover the higher increases in taxes, water, and hydro that she's paying.

As the CBC has previously reported, rising hydro rates have spiked several times in recent years by far more than 1.5 per cent.

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The Ontario Energy Boardsaid hydro rates rose in May 2016 by2.5 per centforhouseholdsthat consume750 kilowatt hours per month, and in November 2015, theyjumped by about 3.4 per cent on average.

Landlords can, however, apply for a rent increase above the province's rent increase guidelines if their costs for municipal taxes and/or utilitiesheat, water, and electricity combined are "extraordinary."

Under provincial law, "extraordinary" means those costs have increased beyond the current provincial guideline, which is 1.5 per cent right now,plus another 50 per cent of the guideline.

• Ontario rent increases set at 1.5 per cent for 2017

So that means a landlord's increase in costs for taxes or utilities must go up beyond 2.25 per cent before they can apply for a rent increase for their tenants.

There's also a provision that allows landlords to provide for bigger rent increases if they made significant renovations, repairs, or new additions to the property.

Still, landlord advocate Andradesays the current rent control system simply isn't fair to tenants, or to landlords facing those kinds of steep hikes.

There needs to be a review of how rent control operates in Ontario, she says, "based on trying to keep up with market rent, and the utilities, and the maintenance landlords have to incur."

Newbigin agrees, and says the allowed rent increases need to be in line with those costs, rather than some "arbitrary evaluation."

And she says the current system has to go.

"How can you have, and justify, two classes of landlords?" she says. "It's illogical and it's unfair."

The drain of a 'nightmare tenant'

But perhaps the most costly and frustrating situation for landlords is the arrival of a challenging tenant.

Vetting potential tenants is key, says paralegal Howard Tavrogas, who represents landlords throughout the province. If the wrong person moves in, the resultcan be a huge financial drain.

In one case, he says afirst-time landlord had tenants who "totally destroyed" his house, leaving $40,000 to $50,000 in damage.

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And getting them out can be the hardest part of all, as Newbigin found out.

When she went through Ontario's Landlord and Tenant Board hoping toevicther "nightmare" renter, she found out tenants have seven days to fixthe problems, then it's "back to square one again" for a landlord trying to get them out the door.

And while a second eviction notice within a six-month span should allow a landlord to then apply to the board to evict the tenant,Newbigin says tenants can skip hearing dates and find ways to abuse the system.

In the end, more than a year after the tenant moved in, Newbigin was rid of them. A settlement was negotiated with the board, and the family agreed to go.

"But knowing the truth about the way the system works now, and how biased it is, and how little protection it affords you on your own property I'm done," Newbigin says.

The No Fixed Address series

This week, CBC Toronto is bringing you stories about Toronto's rental housing market and its implications. We'll tell your stories about searching for affordable housing, look at what's driving up prices, and search for solutions.