Landlords Need To Know

~ Don’t you wish?

CHMC Rental Report, Fall 2009

Province	Vac %
Newfoundland and Labrador	1.0
PEI	3.1
Nova Scotia	3.1
New Brunswick	3.8
Quebec	2.4
Ontario	3.5
Manitoba	1.1
Saskatchewan	1.9
Alberta	5.5
BC	2.8
Canada	2.8

*CHMC Rental Report, Fall 2009

Residential Landlord Advice

1. Get it in Writing. Get any notices or agreements written on paper with a copy for everyone, including both signatures and the date. This is especially important with the Tenancy Agreement, which should outline exactly what is expected of each party clearly and can be referred to if problems arise. Try to include: – The amount of rent to be paid and when – Who pays for utilities and services like TV – Who pays for repairs – Specific rules (e.g. no pets)

For a bit more help, try this Guide for What to Include in Your Lease.

Furthermore, have proof of all written notices. On many occasions, tenants deny they received written notices from the landlord. To avoid this, have proof that a notice was sent by sending it by Certified Mail. Include the Certified Mail Article # on the document and also send a copy by regular mail, and also keep a copy. Having the article # on the document shows that the notice sent was the same as claimed. ¹

2. Security/Damage Deposit. It’s obvious to everyone that a security deposit is a must, but how much do you ask for? The maximum amount a landlord may ask for can’t be more than one month’s rent and it can’t be increased as rent increases, but make sure you check with your provincial regulations. Interest also has to be paid to the tenant either at the end of each tenancy year or at the end of the tenancy, so it is a good idea to deposit all security deposits in an interest-bearing account immediately so you can use the bank interest to pay the tenants’ interest (in some provinces this may be mandatory). The minimum annual interest rate is determined by a formula set out in the Security Deposit Interest Rate Regulation, check out your provincial Tenancy Board for the current rate (see bottom of page). As a landlord, you are also required to keep security deposit records for at least three years.

3. Inspection Report. Always ALWAYS conduct both inspection reports. The inspection report describes the condition of the premises when a tenant moves in and again when they move out. You can’t make any deduction for damages or cleaning costs from the security deposit when the tenant moves out if you didn’t conduct these inspections. These inspections should be done one week before or after a tenant moves in and within one week before or after a tenant moves out. You should always check with your insurance company, though, as some companies require monthly inspections of the rental unit. Under normal circumstances both the landlord and tenant must be present for this but a landlord can conduct the inspection without the tenant if the landlord has offered the tenant two inspection times and the tenant has refused or did not attend. Also a good tip is to take pictures instead of just writing it down, a photo is 100% better than a debatable memory.

4. Rent Increases. Rent can’t be increased until a minimum of one year has passed since the last rent increase or since the start of the tenancy. If the 365th day occurs during the term of a fixed term tenancy the landlord cannot increase the rent until the tenancy agreement expires. Some provinces also limit the amount rent can be increased so check with your local or provincial Tenancy Board for the current rate (see bottom of page). The minimum amount of notice required to increase the rent depends on the type of periodic tenancy as follows:

• 2 full weeks for a week-to-week periodic tenancy
• Three full months for a month-to-month periodic tenancy
• 90 days for any other periodic tenancy

5. Tenants’ Clutter. “Sometimes a tenant moves out … but leaves belongings behind. A landlord has the immediate right to dispose of the goods if the landlord believes they are worth less than $2000, or if the value of the goods will depreciate substantially in storage (e.g. the goods will spoil). If the goods are worth $2,000 or more, the landlord must store them for 30 days. A tenant can reclaim their possessions by paying the landlord for the moving and storage costs. Once the tenant has paid these costs, the landlord must then return the tenant’s possessions. If the tenant does not claim the goods within 30 days, the landlord can sell the goods by public auction or by private sale with the approval of the court. The landlord can use the money from the sale of the goods to pay the costs for transporting, storing and selling the goods … (or) for rent or damaged property. If there is money left after those payments, the surplus is held by the provincial Minister responsible for the RTA…Landlords must keep a record of the storage and disposition or sale of goods for at least three years.”²

6. Shared Living Space. If a landlord shares a kitchen or bathroom or any area in the unit with the tenant, the Residential Tenancy Act (RTA) covers neither the tenant nor landlord. This situation also applies if the owner’s immediate family member(s) lives with the tenants.  In other words, if a parent purchases a home for their son/daughter to live in while attending McMaster, the RTA will not cover any other students/tenants who share this dwelling with the son/daughter. Because of this, the Tenancy Board can’t intervene for either party in any issue resolution.

7. Good Insurance. This is not an option – it’s a necessity. Make sure the unit has not only normal house insurance but also extras like tenant damage and loss of rental income. This way, if a nightmare tenant whirlwinds through, this can lessen the financial impact. An insurance policy is a contract so make sure you read ALL of it, or have a trusted lawyer sum it up for you. The policy should also cover “Injury to people residing in or visiting the premises” which can prevent lawsuits. It may cost more to insure the unit with all these additions, but it can save money in the long-run. Click here to compare rates in your area.

8. Drop By. A good idea, if you can do it, is to inspect the applicant’s current home. Make a reason, for example when handing out an application, tell the prospect that you will come by to pick up the completed application and while there, inspect where they are living. If they live out of town or are displaced and living with friends, and inspection is impossible, the deposit is doubled, with the consent of the tenant (may not be legal in some provinces). If things look good after 2-4 months, and all is going well, refund the extra deposit amount.

9. Make Renting Pay. “Once you have tenants and the rental is established, you will be liable to pay income tax on the rent you receive. However, landlords can offset many of their costs through taxable allowances, which can significantly reduce their tax bill and, in some instances, reduce it to zero. For example, landlords get tax relief on mortgage interest, professional fees such as solicitor and letting agent’s costs and they can also deduct the cost of replacement furniture, white goods and furnishings. For more information, visit the Revenue & Customs website, or speak to an accountant.”³

10. No Gaps. Don’t let a rental property sit with no tenants; these “income gaps” can cost a lot of lost revenue. Make sure to advertise the property BEFORE the current tenant leaves (as soon as they give notice). A sure fire way of having no gaps, and thus not losing any money, is to keep good tenants for as long as possible. Remember, renting properties is a business and tenants are customers, if they aren’t satisfied, they won’t continue using your service — it’s the same as any other business. Good tenants are like gold, keeping them will reduce the amount of rent lost due to vacancy, but also the amount paid for damage repairs, legal fees and anti-anxiety pills! If you have good tenants who are looking after the house, you don’t always have to keeping raising the rent every year – reward good tenants and increase your likelihood of retaining them by giving them a discount. This doesn’t even mean you have to lose money, if the tenant keeps up, or even improves the property, the capital value they are adding to your property may make up for the lower price you are charging.

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