Landlords across Canada are grappling with mounting pressures that threaten both their financial stability and their ability to manage rental properties effectively. The Landlord and Tenant Board (LTB), intended to be a swift mechanism for resolving disputes, has become a bottleneck—its caseload ballooning to over 53,000 by mid-2024. While eviction hearings dominate the docket, a growing share of cases involve property damage, leaving landlords in limbo as they wait months, sometimes years, for resolution.
In this climate, proactive risk management strategies are essential. Here are two simple steps to help landlords protect their investments, streamline dispute resolution, and adapt to the evolving rental landscape.
1. Identify the risks
Real estate owners and operators face two major types of risks from problem tenants: defaults and property damage. Tenant defaults occur when a renter fails to uphold his or her lease obligations—most commonly by not paying rent. In some cases, the tenant abruptly vacates the property before the lease ends, leaving unpaid rental fees for the remaining term. In others, the tenant stays in the unit but continues to withhold payment. When it comes to property damage, many landlords require a security deposit at the start of a lease. However, this deposit often falls short of covering the full cost of repairs when serious damage to the rental unit occurs.
Recovering from either scenario—tenant defaults or property damage—poses a substantial challenge. These disruptions interfere with normal business operations and erode profit margins. Landlords face not only lost rental income but also the costs of re-leasing the unit, pursuing legal action to recover unpaid rent, and potentially evicting the tenant.
2. Manage the risks
Faced with mounting challenges like these, landlords may feel powerless, or at the mercy of an overburdened and inefficient court system. One seemingly straightforward solution is to require new tenants to provide a certificate of insurance (COI) upon signing a lease. However, maintaining compliance over time is difficult, especially when tenants remain in place without renewing their lease. As a result, owners and operators frequently lack confirmation that insurance coverage is still active.
To mitigate these risks, property owners must adopt proactive risk management strategies and insurance safeguards, including:
Tenant Screening – Leasing to the first interested applicant is rarely wise. Instead, require prospective tenants to complete a screening form and review their rental history and credit profile. A strong financial track record offers greater assurance that your investment will be respected.
Periodic Inspections – Conducting regular property inspections—several times a year with proper notice—helps ensure tenants are maintaining the unit appropriately. These check-ins provide owners with a clear picture of the property’s condition and allow for early intervention if issues arise.
Group Tenant Insurance – Offering a group insurance program to residents can streamline coverage and reduce liability. These plans typically include personal property protection and liability insurance at a discounted group rate. Owners benefit from consistent coverage across units and simplified administration, while tenants enjoy affordable premiums, easy enrollment, and reliable protection.
In today’s environment, protecting residential assets requires vigilance and strategy. By combining sound risk management practices with robust insurance solutions, property owners can strengthen their position and be better prepared to handle the next problematic tenant.
Drew Fenton is the real estate practice leader for global insurance brokerage Hub International in Toronto. Visit www.hubinternational.com for more info.
