Fixing landlord-tenant dispute mechanisms could improve affordability

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An efficient conflict resolution process could pave the way for tens of thousands of new rental apartments

Published June 16, 2024Last updated 3 hours ago4 minutes reading time

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A house for rent in Ottawa, Ontario.A house for rent in Ottawa, Ontario. Photo by Sean Kilpatrick/The Canadian Press Files

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Rental housing is in short supply in Canada, with demand far exceeding supply. As a result, rents have skyrocketed in recent years. The solution, of course, lies in rapidly increasing the number of rental housing units, which has proven to be a significant challenge.

Rental supply could be boosted immediately if overcrowded homeowners offered their excess living space for rent. Given the aging population and the fact that many seniors are choosing to age in place, tens of thousands of excess basements and second homes could help fill the gap.

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However, potential landlords can easily be put off by the hopelessly broken dispute resolution mechanisms. It can take years to rid landlords of abusive or insolvent tenants. Fixing the dispute resolution mechanisms between landlords and tenants holds the promise of improving rental housing affordability in Canada.

Ontario's Landlord and Tenant Board (LTB) is a broken dispute resolution system. Neither landlords nor tenants are happy with the way it works. The LTB's dismal state caught the attention of the province's ombudsman, whose report last year, titled “Administrative Justice Delayed, Fairness Denied,” paints a grim picture of a system in dire need of immediate repair.

The backlog of cases at LTB increased from 20,000 in 2020 to 53,000 in March 2023. Data compiled by Tahmeed Shafiq, A Toronto researcher found that it took an average of 342 days for an eviction application for non-payment to be resolved. According to the Ombudsman, as of March 2023, it took up to nine months to schedule a hearing for a landlord applicant, while tenant applicants had to wait up to two years.

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The LTB delays have disproportionately affected landlords. According to the Ombudsman's report, landlords filed the most complaints (84 percent), while tenants filed only 12 percent. As of November 2021, the LTB took three months to process an application, and scheduling a hearing to collect rent or evict a delinquent tenant took an additional 66.5 days.

Averages can be deceptive, however. The Ombudsman highlighted the case of a landlord who was battling cancer, living in the basement of her home and renting out the top half. She attempted to evict her tenants in December 2021 to get the space she needed for her illness. Months later, she was asked to resubmit her application due to an error in her original submission. Tragically, the landlord passed away before the court could act.

A significant problem is the lack of resources. The Ombudsman reported that before its investigation, the Tribunal employed 40 full-time and 10 part-time arbitrators. By January 2023, the number of full-time arbitrators had fallen to 35, while the number of part-time staff had increased to 43. Given the growing caseload and growing backlog, these staffing levels are clearly inadequate.

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The provincial government in Ontario appoints the arbitrators. The Ombudsman found the appointment process cumbersome, involving 122 individual steps and taking three to five months to receive government approval. The Ombudsman also found that when arbitrators were replaced, months or even years of progress on a complaint was lost, requiring the new arbitrator to reconsider the case.

In comparison, British Columbia The Residential Tenancy Branch (RTB) processes complaints much more quickly than in Ontario. Its website mentions that the RTB schedules expedited hearings within 12 days. In urgent cases, a hearing can be scheduled within six days.

Wait times and backlogs in British Columbia have worsened in 2022 due to an increase in workload, which rose from 1,200 monthly complaints in 2020 to 1,832 in 2022. RTB reportedly resolved regular disputes within five weeks in February 2020. However, by September 2022, routine claims took nearly 15 weeks to process.

Despite the longer wait times in British Columbia, disputes are still resolved within weeks and months. In Ontario, it can take years. An overhaul of the Landlord and Tenant Board would provide quick relief to frustrated complainants.

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Homeowners in Ontario and elsewhere considering renting out unused housing to generate additional income would no doubt be deterred by the prospect of an insolvent tenant occupying their home for months. An efficient dispute resolution process could address such concerns and potentially help pave the way for tens of thousands of new rental units. Encouraging homeowners to consider renting out excess housing is a promising way to restore housing affordability.

Want to know more about the mortgage market? Read Robert McLister's new weekly column in the Financial Post and find out the latest trends and details on financing opportunities you can't miss.

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