As COVID-19 cases continue to surge and ICU beds fill up across the nation, the dispute over whether evicting tenants is ethical has reached fever pitch. Tenant advocacy groups, fearing a rise in homelessness and the rampant spread of the virus, are seeking a second ban on evictions to keep vulnerable citizens safe. On the flipside, landlords in the throes of another lockdown worry that such a ban will leave them exposed to a multitude of risks—financial ruin being one of them.
Risk of infection, rising utility costs, rigorous cleaning measures and knee-jerk legislation are just some of the challenges small landlords say they have been contending with throughout this pandemic.
“Landlords are at a loss for words. They can’t get someone out of their home, whether it’s someone damaging their property or preventing them from selling it,” said Kayla Andrade of Ontario Landlords Watch, a landlord advocacy group. “The current backlog at the Landlord and Tenant Board is a mess. The situation went from crisis to chaos as landlords are struggling to gain access to justice.”
Emphasizing this struggle, Ontario landlord Chris Seepe says his rental business has incurred its share of income loss as a result the first eviction ban, with six out of 81 tenants still owing six months’ back rent. Although these individuals are the minority, Seepe believes they are “playing the system”— and that conflicts and arrears will only escalate under the weight of a second moratorium.
“When you remove the consequence of eviction, the tenant no longer feels any obligation to pay rent,” he asserts. “Without law, society quickly devolves to a mob mentality. The tenant retaliates because the law is on their side by running up utility costs, damaging property, or resorting to abusive behaviour.”
Seepe adds that in recent months, he’s seen a distinct rise in tenant applications submitted with false paystubs and IDs—the kind that can be found on the Internet for $50 to $150 dollars. “I suspect many marginalized and desperate tenants are being forced to commit these fraudulent acts because landlords have been forced by provincial laws to become more cautious. It’s classic escalation in a new market.”
Canada’s COVID response plan: looking back
In March 2020, several provinces placed a temporary moratorium on evictions, including Ontario, B.C., New Brunswick and Alberta. All were lifted by summer’s end, at which point landlords were encouraged to work with impacted tenants to establish fair repayment arrangements so that they could continue living in their rental units without fear of eviction.
In B.C, the government created a Rent Repayment Plan framework giving tenants until July 10th, 2021, to pay back all money owed from the initial lockdown period. David Hutniak, CEO of LandlordBC, says his membership supported the move, but recognizes it “wasn’t a perfect solution” given that many landlords will likely never recoup some, or all, of those back-payments.
“Our members have worked collaboratively with their tenants since the beginning of the pandemic and continue to do so, and that includes demonstrating consideration with regards to the application of the repayment plan,” he said. “We are hearing anecdotally of situations where some of them have reduced the amount repayable and/or extended the repayment period.”
And now, as COVID numbers reach record-high levels, and the threat of a second eviction ban looms, small landlords are questioning what the future holds. Aside from fearing a state of “lawlessness,” Seepe says he worries that any legislation banning landlords from evicting tenants is guaranteed to wipe out the forward progress government has made in encouraging the development of new purpose-built rental properties: “Who in their right mind would build any kind of housing where the government tells tenants, “If you don’t have the money, don’t worry. There won’t be any consequence if you don’t pay?”
Offering his perspective, lawyer Joe Hoffer of Cohen Highley LLP, adds that this legislation also has an adverse effect on tenants, given discretionary costs like repairs and maintenance, are often the first obligations to be cut when funds are low. After that, it’s mortgage payments and vital service obligations.
“For large multi-res landlords, the losses can be absorbed and bankruptcy avoided,” he says. “But again, where numbers of tenants opportunistically withhold rent, the losses will ultimately be recovered through cuts in building operations, and this affects all residents.”
Then there’s the matter of the increasing bottleneck at the Landlord and Tenant Board. “An eviction moratorium will once again put the dispute resolution processes at the LTB into abeyance for all but “urgent” cases, triggering an even bigger backlog,” Hoffer says. “The failure of the adjudicative processes at the LTB has deeply tarnished its efforts to be a fair and expeditious venue for resolution of landlord and tenant disputes. Another moratorium on evictions will only exacerbate the problem.”
Meanwhile in B.C., Hutniak worries a second ban will create unnecessary harm to an already strained industry. “Our sector is still operating under the negative impacts of the earlier eviction ban and a rent increase freeze, all while experiencing significant cost increases related to the management of COVID, property taxes, general operating expenses, and a huge shock in the form of significant insurance cost increases,” he says. “This has created meaningful financial challenges for many landlords, and most certainly has impeded investment in existing rental buildings. It’s also worth noting that since the first wave of the pandemic we’ve seen increased vacancies and tempering of rents, which creates further challenges. There’s definitely uncertainty within the broader sector.”
In conclusion, Hutniak notes that while the rental housing industry has not been left unscathed, they have been more fortunate than other B.C. sectors like hospitality and tourism. “The provincial and federal government have committed to assisting British Columbians and Canadians, and we’ll all get through this sooner than later,” he says.
For a look at pandemic response plans by province, and the dos and don’t of evicting tenants, click here: COVID-19: Eviction Bans and Suspensions to Support Renters (cmhc-schl.gc.ca)