Tenants fight above-guideline spike in rent
DENISE TOTH WALKS out the renovated front lobby of her east Hamilton apartment building with the weight of 150 fellow tenants in her arms.
The three hefty binders are thick with documents they’ll need to fight a spike in rent that’s meant to cover the cost of recent work at the complex off Quigley Road in Davis Creek.
Owner InterRent wants a 4.5 per cent increase, which is three per cent higher than the provincial guideline for 2017. That would add $33.61 to Toth’s rent, bringing it to $780.50.
“I don’t think it’s fair. They knew what this place was like when they bought it,” says Toth, 59.
InterRent, through property manager CLV, needs the Landlord and Tenant Board to approve the higher amount.
It’s not the only big landlord in the city gunning for an
above-guideline rent increase (AGI). More and more tenants here are complaining about AGIs, says Ali Naraghi, a lawyer at the Hamilton Community Legal Clinic.
The city’s hot real estate market has a considerable stock of older and worn apartment buildings whose value can be bolstered through renovations, he says.
“It’s the main driver of gentrification.”
While InterRent did not respond to a request for comment, CLV said the rent increases are to cover badly needed repairs.
Toth and other residents at a cluster of townhouses on Quigley Road and a highrise on Tindale Court are working with a pro bono paralegal to resist the hike.
But landlords, armed with specialized legal counsel and expert witnesses in accounting, architecture and engineering — at highly technical hearings — hold the upper hand, Naraghi says.
“The best outcome in these situations is to negotiate a lower increase.”
When units are vacant, landlords can hike rents without restriction. In fact, longtime tenants are offered buyouts ($2,400 in the InterRent case) to leave.
Existing renters are protected by the province’s increase guideline, which is 1.5 per cent this year. But a landlord can get around that if the Landlord and Tenant Board approves its AGI.
The spectre of more displacement of lower-income tenants in Hamilton is “ticking time bomb,” Naraghi warns.
“It’s the issue of fairness that we have to talk about in terms of public policy.”
The city’s real estate boom has led to higher rents. The market has tightened with landlords looking to cash in on spiking values, siphoning away affordable housing.
Cheryl Tardiff, who lives with her girlfriend and daughter, says she couldn’t afford another three-bedroom townhouse if she had to leave her unit. A hair stylist, the longtime resident pays $838, which includes hydro and parking. A few doors down, newcomers in an identical unit pay $1,750, she says.
Tardiff, who is president of the tenants’ association, says many seniors and others on social assistance in the complex won’t be able to afford the AGI. “Some of these people will not have a place to live.”
Landlords must show they’re burdened by “extraordinary” municipal tax or utility increases to justify an AGI. Significant renovations to address structural problems, health and safety, plumbing, heating or electrical issues, for instance, are also fair game.
But an AGI can’t ride on cosmetic or regular maintenance, notably, “work that is designed to enhance the level or prestige or luxury offered by the complex,” the province says.
This is where the landlord-tenant battles get tricky: What’s cosmetic and what’s essential?
Tardiff questions whether some landscaping, low-flush toilets and new shingles on townhouses were necessary.
Ryan Martin does, too. The 38-yearold has refused to pay the AGI until the outcome of the Oct. 30 hearing.
“They’re a big conglomerate. They see dollar signs. Our dollar signs aren’t big enough,” says Martin, who lives in the Tindale Court apartment building.
InterRent bought the Davis Creek buildings from Hamilton’s DiCenzo Management. It also purchased four buildings from the same landlord in Stoney Creek’s Riverdale neighbourhood for $51 million in 2015.
InterRent executives didn’t respond to requests for comment. But a CLV spokesperson said the buildings were in “dire need of substantial repair” when InterRent purchased them.
“We have been working hard to restore the buildings to their proper condition to provide a safe and clean environment for our valued residents,” Roseanne MacDonald-Holtman wrote in an email.
MacDonald-Holtman also said CLV follows “strict requirements” governing what landlords can claim through AGIs. “Our number 1 priority is always the safety and security of our residents and providing them with a pleasant place to live which promotes a sense of community.”
But InterRent makes no bones about its track record of hiking rents.
In a report posted online, it says that since purchasing and renovating a New Street complex in Burlington in 2012, the average rent has increased by 44 per cent, to $1,509 from $1,044.
In tandem with the “successful” rent hike, it has been “passing on hydro sub-metering charges to new tenants,” it also notes.
On its website, InterRent lists 12 buildings in its Hamilton portfolio. An investor presentation in September notes it has 1,249 suites in the city, which are among 8,059 in Ontario and Quebec. In 2016, its gross rental revenue was $99.5 million.
InterRent is not a traditional landlord but a real estate investment trust (REIT), which benefits from specialized tax policies. REITs aim to maximize profit for investors through acquisitions, mortgages and stock trading.
In a media release about the Riverdale purchase, InterRent CEO Mike McGahan said: “we believe that our repositioning program for this property will create value for our unitholders, similar to what we are experiencing with our previous Hamilton acquisitions.”
The REIT’s 2016 annual report also notes management expects to keep hiking rent “organically,” through suite turnovers, guideline increases and AGIs. Revenue was also anticipated through parking, laundry, locker rentals and cable/telecom agreements.
Arun Pathak, president of the Hamilton and District Apartment Association, welcomes REITs, relative newcomers to the rental market.
Pathak says the large players are making important investments in Ontario’s aging and deteriorating apartment stock. AGIs are necessary to follow through, he says.
“You can’t expect the landlord to operate at a loss. The costs are going up. There has to be a recovery and that is the mechanism.”
Coun. Chad Collins doesn’t fault landlords for making capital investments, but believes the process is flawed. “It’s the free market at play — with a footnote at the bottom that there are rules in place that are supposed to help tenants.”
Campbell Young, a member of the Hamilton Tenants Solidarity Network, takes a less nuanced stance. He says it’s unfair to make residents foot the bill — period — while corporate landlords reap the benefits of increased property values. “It’s not a millwright who owns a house and has a tenant. These are big corporations with working-class people and their interests are completely opposed.”
The solidarity network is helping organize residents of the InterRentowned buildings in Davis Creek and Riverdale to resist the increases.
The latter form a belt of highrises and townhouses on Delawana Drive, Violet Drive and Grandville Avenue east of Centennial Parkway.
They have been home to lower-income renters and immigrants for years. The buildings have a checkered past. In 2007, police discovered a $12million marijuana grow-op spread among 49 units there.
Christine Harnum, a nine-year resident who pays $783 a month, says CLV has improved the complex since taking over. “I do think they’re on top of everything in the building.”
But her unit remains “outdated” while vacated apartments have been renovated with new appliances, kitchen cupboards and floor tiles.
(Naraghi of the legal clinic says that’s a bitter pill to swallow for longtime residents who are suddenly slapped with the cost of a new lobby.)
Harnum says she’ll “suck it up” and pay the AGI when and if it comes, but adds many families will be left in the lurch.
Collins admires the Quigley-Tindale residents’ gusto in fighting the rental increase, but says there ought to be more resources to guide tenants through the complex process.
Agencies such as the legal clinic offer advice, but tenants are largely left to fend for themselves against wellheeled owners at hearings, the Ward 5 councillor says.
“The scales seem to be weighted toward the landlord in this instance.”