Unintended Consequencies.


There was a very interesting story in the EB today as follows:

http://www.theenterprisebulletin.com/2014/06/19/low-vacancy-rate-disastrous-says-housing-advocate

Interesting to me because I have been a landlord in Collingwood for close to 10 years. I am in the process of getting out of that particular line of business.
It’s funny I had never heard of Gail Michalenko then all of a sudden in two days she is the lead story in as many days in the local paper. Gail is all in a froth about the local vacancy rate for rentals at an all-time low 0.7%. The back bone of supply of cheap rental accommodation is usually met by small operators like myself. I have been a landlord in various forms at different times for close to 25 years. From a landlords perspective it is very difficult in Ontario. The difficulties started back in the early 1990’s when the then NDP government as part of its socialist agenda decided to outlaw the practice of a landlord being able to take a security deposit from tenants. I will explain how that affects a landlord, with my own personal experiences.
Without a security deposit posted a tenant will usually give notice on or around the 5th of the month and inform me that the final months rent was paid when they first moved in.

Different versions of the following is usually what happens next:

1. I place an ad in the local paper, by the time that add is posted it’s usually half way through the month.
2. I arrange with the existing tenant to show the space. Usually on a weekend.
3. I weed through the perspective tenants. There are usually 20 to 30 people who enquire.
4. After weeding out the half dozen or so that are suitable. Suitable meaning they actually have a job. A previous reference from a landlord. Or they are not trying to squeeze 5 people into a space that is meant for 2 people. Or they don’t own a Great Dane that is quiet and house trained.
5. I arrive at the property at the prearranged time the first perspective tenant is already there. I knock on the door of the unit. No answer. Knock again, no answer. Never mind I have a key. Doesn’t work the locks have been changed. Try tenant on cell phone no answer.
6. So I wait at the property and apologize to all the folks that wanted to see the place and make the executive decision to leave any hopes of renting the place until a month later after this person has vacated the property.
7. The first day of the following month arrives. I attend the property with locksmith on hand. As I walk up to the door a neighbor approaches me and says “Very noisy party on the weekend. We called the cops”.
8. I enter the place. The first thing I notice is a strong smell of booze and stale cigarette smoke. Then the butted out cigarettes on that nice laminate floor I had laid 18 months previously. The place has beer and booze bottles spread from one end to the other. One of the draws from the nice fitted kitchen is broken and in pieces on the kitchen floor. In the second bedroom a cat litter box is filled to capacity with animal feces. All the persons worthless crap furniture is left for me to dispose of along with around 2 months of garbage that is stacked next to the over flowing cat litter box, because it’s too hard for some people to take a garbage bag from a house to the side of the road. The brand new fridge still has all the persons rotting food in it. The stove has never been cleaned since the last time I cleaned it prior to the person moving in.
9. 6 dump trips. 2 days of heavy duty cleaning. 1 day of making repairs. 100 more grey hairs later we are ready to start the process all over again.

From a landlords point of view the laws need to change. I need to be able to charge 1 month’s rent as a security deposit. So that when a tenant gives me notice, which should be 60 days. I can attend the property see what kind of shape it is in and act accordingly. Acting accordingly means that I am able to take pictures, attend a tribunal and start removal procedures if the tenant has given me notice and stopped paying rent. Rental properties especially low income rental properties should be exempt from capital gains to incentivize people like me to own and run rental units.
Tenants skipping out on rent should not be a civil matter it should be a criminal matter. Because it is stealing, it is exactly the same as someone going into a store asking to look at a $1,000 watch, pocketing it and walking out the store, or filling a car up with gas and driving away without paying, or doing a dine and dash to a restaurant.

I am a good landlord. I try and provide people with good clean accommodation at an affordable price. The socialist laws that folks like Gail put in place to try and protect renters, actually drive people like me away from wanting to be a landlord. I personally know of 3 other people that which in turn make things more difficult for the renters that Gail is being an advocate for.

It’s called the law of unintended consequences.

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7 thoughts on “Unintended Consequencies.

  1. Hi Colin: it might surprise you to hear me say that I totally sympathize with you and any landlord that has the experience of dealing with a bad tenant. In fact, I have often provided support to landlords who find themselves saddled with theses situations. I agree with you regarding the ineffectiveness of the Residential Tenancy Act in these situations. I in no way condone tenants who do not behave responsibly. I did not create the current laws and would support changes that would give landlords better protection from bad tenants as well as better protections for tenants who have a bad landlord. I too have been a landlord and dealt with the good and the bad.

  2. Colin, I couldn’t agree with you more…one tenant always came to my home and paid his rent in cash, I was fair to him and let him pay it on the first day after payday even though that’s not the agreement we had but he didn’t like cheques. Not once did he show up without a large Tim Horton coffee in his hand and a cigarette in his mouth 😦 The tenants who left all the damage also left me with about $50.00 in beer bottles and it took me months to unload the booze bottles. Yes, I have heard all the stories about tenants, well, years ago I was a tenant too and the first place I rented I went to my school for references and also to my bank. I told my new landlord that if he had any concerns, my Dad could back me up and I turned over the lease and wrote on the back that I gave him my word that I would leave the house in the exact condition it was rented to me or better….and I did 🙂 We are still friends 🙂

  3. As both a real estate Broker and a private citizen I have always struggled with the term “affordable housing.” I believe there is a definite distinction between “affordable” housing and “subsidized” housing. I will speak more to this during my election campaign but the reality is the dynamics of the market establishes the “affordability” factor. Our local municipality has little control over that. The fact is they often make it more of a problem by implementing high development fees and other building related charges. I believe that government especially at the local level can do more about affordable housing by implementing a strong economic development strategy that will result in better paying jobs thus making the current available housing “affordable” stemming from a strong local economy and better wages.

  4. I totally agree with you Mr. Nobody, we owned two rental units, a three bedroom house and a three bedroom condo. The house had four renters during the ten years we owned it, the first two were okay then we ran into mayhem with the last two renters. The place was a left a pig sty, rent was always paid late and when I decided to sell ‘as is’ in 2005, one renter actually came to my house and said “since you’re going to make money selling, I don’t want to pay this months rent”, this was a person who came highly recommended to me, even had his minister write him a reference…I got my money from him but lost about 20K on the house when I sold it. The condo people lived in the condo for ten years, kept having children, never kept the place clean, I had many calls from the property management and when I finally gave them their notice..they asked for an extra week to move out. I said “n way” and they kept packing until midnight (I helped) the next morning they came to my house and said the toilet had overflowed during the night and there was a small hole in the ceiling! I went to check and THERE WAS NO CEILING, there was a golf ball in the toilet and when flushed, it ran all night! Anyway, 35K later and many hours of dump runs, painting etc. I put the condo up for sale as well…..I would suggest you sell now because the big real estate downfall is coming and although I’ve had some very good tenants, I’ve also had ones like you have described and they can cause many a grey hair.

    • Sue these types of story’s never make it to the paper just how hard it is for the poor tenants. One thing I always noticed was rent is late but there is always money for smokes and beer.

  5. I will preface this comment by stating that I am referring to fair and reputable landlords and not the unscrupulous ones that are out there. As a former landlord downtown I can relate to your experiences. We were fortunate to have a couple of excellent tenants in 2 of our apts for many years. However, it was quite an eye-opener when you had to go through the process of getting a tenant evicted due to non payment of rent. The laws are skewed in favour of the tenant and as you state, by the time you go through all the legal hoops available to the landlord to succeed you are out a minimum of 4-5 months rent as well as your time and more money to clean up the messes. It is no wonder that vacancy availability is low – people are not in the housingapt. rental business to lose money. There needs to be a solution that in some way fairly protects the landlords as well as the tenants.

    • I very much agree with you. Fortunately I have also had some great long term tenants but when it goes wrong it is a nightmare. On the other side of it I have seen some rental accommodation that I wouldn’t keep a dog in. For me it would change a lot if I could take a security deposit.

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