This past Sunday (November 24th) the Toronto Star published an article discussing the current provincial government’s reversion back to the rent control rules we’ve had since the late 1990s and the effects on tenants, some of whom are seeing big increases in rents on lease expiry. Of course, tenants in ‘old’ purpose-built rental buildings fall under rent control which means landlords can only increase rents for sitting tenants by the annual guideline, but tenants in ‘new’ buildings are exempt from rent control which means landlords can increase rents on lease expiry to (more or less) whatever price point they want. You can read the full article via the link below, although you’ll need a subscription to the Toronto Star since it’s behind a paywall.
The article quotes some tenants describing their situations as “economic evictions”, which is basically when your landlord increases your rent so much you can’t afford it and you have no choice but to leave.
This situation which some tenants living in ‘new’ rental buildings face makes me think that, given the rent hikes that are possible to get these days in Toronto, where rental housing supply falls well short of demand, it’s possible that some landlord with a non-rent controlled building could economically evict everyone, double the rents, suck up the bad public relations for a few months, and re-fill the building at the new rents. Even with his or her public reputation ruined by such a stunt, there’s such a spectacular shortage of rental housing in Toronto that the building would re-lease quickly. The landlord could offer multi-year leases with built-in rent increases to assuage concerns about future (unpredictable) rent increases, and many renters will overlook the heavy-handed economic evictions. And voila! The building is full again and earning much higher rents.
Of course, one could argue there’s no need to do this since a landlord could just economically evict tenants whose leases are expiring soon, replacing them with tenants willing to pay more, one tenant at a time. I guess that makes sense, and it’s certainly much less likely to attractive negative press, but on the other hand doing it one tenant at a time invites claims of discrimination, etc. The other thing a landlord could do is make it clear to incoming tenants that rents will be going up by 5% or 10% at the end of their lease and let them disqualify themselves when their leases expire—I’d be willing to bet that in tight rental markets like Toronto many tenants would actually pay the big rent increase, as long as they know it’s coming and it’s not a surprise.
Having said all that, I want to emphasize that this post is nothing more than a thought experiment. Economic evictions are awful and I certainly hope no landlord does what I described in this post!