Renters finally getting property tax justice

Province has made moves to level playing field for all, says Alex Cullen.

Commentary on Ontario Premier Kathleen Wynne’s recent announcement of housing initiatives has focused on rent control and real estate tax on speculative properties.

However, buried among these 16 housing initiatives is a measure that finally redresses an injustice in Ontario’s property taxation that renters have had to bear: a proposal that the multiresidential sector be taxed at the same rate as the residential sector.

Historically, the multiresidential sector (apartment buildings of six units or more) were treated as businesses and taxed at a higher rate than residences. While the landlord received the property tax bill, it was the tenants who paid for it through rents. This creates the anomaly of a condominium building in Ottawa facing a rental building, built by the same developer and of equal quality, where the renters there pay 1.45 times the property tax as their condo cousins.

This injustice is underlined by the fact that the average household income of renters in Ottawa (at $51,725 a year) is less than half compared to homeowners ($118,200 a year). And, according to the same data, more than 38 per cent of renters are paying more than 30 per cent of their gross income on rent. That’s more than 45,000 renters carrying an unjustifiably higher property tax burden they can ill afford.

This injustice has been long known — in 1993 the Ontario Fair Tax Commission determined there was no justification for a distinction in property tax rate policy on the basis of tenure by the occupant. The commission recommended that all residential property should be assessed on the same basis, whether occupied by an owner or a tenant.

This recommendation was later echoed by a 2001 City of Ottawa task force. As a result, council adopted a policy of gradually reducing the multiresidential tax rate from 2.78 (in 2001) times the residential property tax rate, to the now 1.45 in 2017. It has been a slow process but the end is now in sight.

However, while the Ontario government’s initiative is welcome, it will have to ensure the reduction in the multi-residential tax rate to the residential rate is passed on to renters. The Residential Tenancy Act will need to be amended to provide for this.

It won’t be a big windfall for renters, but it is a matter of justice. Alex Cullen, former Ottawa city councillor (2000-2010) and chair, City of Ottawa Task Force on Property Assessment and Property Tax Issues (2001).