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Tenants receive notice of 30% rent increases

BY TRACEY DUGUAY Tenants of an apartment complex on Nesbitt Dr. were shocked to receive notification their rent was increasing by over 30 percent.
Building290
Rent control does not apply to new units occupied in Ontario after November 1991like this property on Nesbitt Dr.

BY TRACEY DUGUAY

Tenants of an apartment complex on Nesbitt Dr. were shocked to receive notification their rent was increasing by over 30 percent.

For retiree Richard Marcotte, who lives on a fixed income, this means his two-bedroom unit, which used to cost $743 a month, will now skyrocket to $975, effective April 1.

The increase was the last straw for Phenney Larue, 82, and his wife Germaine, 80, both of whom have health issues. The couple gave their notice and will be moving into an assisted-living facility.

“It’s not the idea of having to pay more. I can pay more, but I want to leave my savings to my kids when I’m gone,” Larue said.

Like most people, Marcotte and Larue assumed their rent could only be increased in accordance with the rate set by the provincial government, which is 1.4 percent for 2008.

However, there is an exemption under the Residential Tenancies Act (RTA) that states the provincial guidelines don’t apply to new rental units occupied after Nov. 1, 1991.

This provision allows landlords to set an annual rent increase in these buildings to whatever level they see fit, without a cap of any kind.

According to the Canada Mortgage and Housing Corporation, there have been 1,845 multi-family units built in Greater Sudbury since Nov. 1, 1991. This includes semi-detached homes, duplexes, row houses, condos, as well as private and subsidized apartments.

Joe Cimino, the city councillor for the area, has been working with the tenants but his hands are tied because it is a provincial matter. Cimino said he was just as surprised as the tenants to find out about rent increase exemption.

“It’s bewildering to say the least,” he said. “The true impact of this exemption is not known.”

Sonya Rolfe, manager of market housing for the housing policy branch of the Ministry of Municipal Affairs and Housing, said the exemption was put in to ensure there is a “vibrant rental housing history” and to foster the creation of a “new stock” of units.

“If developers feel they are operating in a market free of restrictions, they might build more units. As the supply becomes more workable, then rents will go down by market forces.”

Unfortunately, in the case of Sudbury, the community is caught in a catch-22 situation. Not only does it have the lowest vacancy rate across the province, rental prices are also the lowest in the province, meaning landlords can justify steep increases.

For the Nesbitt Dr. tenants, their choice is to either pay the money or move. But, due to the 0.6 percent vacancy rate, there is nowhere for them to go, let alone find somewhere they can afford.

The tenants have already approached Sudbury MPP Rick Bartolucci who referred them to the Landlord Tenant Board. But, as Rolfe pointed out, they can’t even fill out an application for appeal because they have no grounds.

“This act does not provide controls for them, so they have no grounds to challenge that rent increase,” Rolfe said.

They can continue to pay their old rent amount and withhold the increase portion, which could prompt their landlord to evict them and thereby get a rental tribunal hearing, but ultimately they would lose.

“When do the elected officials step in?” Marcotte asked. “When do they help empower us to deal with it?”

The only other option for the tenants is to try to talk to their landlord, but Marcotte said his phone calls to date have gone unanswered.

The rental complex is owned by Angelo Butera, who manages it under a company called Panoramic Properties Inc., based out of Niagara Falls.

In total, there are 172 units in the three buildings that make up the Nesbitt Dr. complex. The 30 percent rent increase won’t impact all the tenants, only the units considered to be undervalued in the new market.

“These specific units are way too low,” Butera said.

The landlord said he is more than willing to talk with tenants but had just returned to the office  Wednesday after being off work due to illness for the past two weeks.

“We are not in the business to throw people out. It’s my business to bring them in and keep them in.”

He’s not promising to reduce the increase and blames it on “dramatic increase” in property tax and utility costs.

“When we bought the building, (gas) was 18 cents per cubic metre, now it’s 39 cents per cubic metre. Somebody has to pay for those increases.”

He also pointed out that even with the substantial rent hike, the tenants are still being charged less than what he rents the units for now.

“The rent is still about $100 less than (for) someone walking in off the streets.”

Butero said the tenants don’t need to worry that he is trying to force them out so he can rent their units for even more money. To prove his point, he stressed the fact he could have increased their rent even more if this was his goal.

“We have the right to go even higher if we want to but we didn’t. We choose to keep them below the newcomers.”

Butero owns other apartment buildings in the Sudbury area, but said he would prefer not to the name them.

His reassurances that tenants won’t face another substantial increase will be cold comfort to those who feel they should have been told from the outset about the rent exemption.

Judy Bowman, another tenant of the Nesbitt complex said, “When we signed our lease, nobody said ‘by the way, you know you’re going to get annual increments; however, at any time, just out of the blue, the guy who owns this building can jack the rent up to what he wants.’ Nobody told us that.”

For more information on the Residential Tenancies Act, visit the Municipal Affairs and Housing website at www.mah.gov.on.ca.