Region and municipal tax increases could impact renters

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rent sign on a lawn

Those renting their apartments, condos or homes in Niagara could be in for a rude awakening given the sharp tax increase by the Region coupled with their local municipal tax increase (with the exception of Welland whose council passed a tax decrease this week).  Region and municipal property tax increases should be a concern for renters because any tax increase more than 3.3 % allows the landlord to appeal for a rent increase above and beyond the 2.2% provincial guideline.

The Region has raised property taxes 5.85% on 44% of the tax bill, St. Catharines for example looks like its taxes will increase 3.65% on 44% of your tax bill (St. Catharines is set to vote on its budget Monday Dec. 16). The school boards make up the remaining 12%.

As a result of these tax increases every property owner that rents out residential units is free to apply for rent increases above the provincial guideline of 2.2% for 2020. The Ontario Landlord and Tenant Board (LTB) issues a document titled Brochure: 2020 Rent increase Guideline.  In that document, it states, “The 2020 rent increase guideline is 2.2% and applies to most private residential rental accommodation covered by the Residential Tenancies Act.” The guideline is the most a landlord can increase rent without applying to the LTB.

Several paragraphs later it reads, “Above guideline increases: Landlords can apply to the LTB for an increase above the guideline for any of the following reasons:   Their Municipal taxes have increased by more than the guideline plus 50% (for example, if the guideline is 2.2%, the taxes must have increased by more than 3.3%).

The 2020 rent increase guideline is calculated by averaging the percent increase in the Ontario Consumer Price Index during the 12 months from June 2018 to May 2019.

Mayor Redekop of Fort Erie made the comment in the Regional Budget debate that when it comes to affordable housing and concerns about homelessness; “We’re part of the problem, if we keep piling expenses on the people who are paying the taxes. It’s a problem for people who are trying to stay in their homes. “

It’s also a problem for people trying to stay in their apartments or rented townhouses.

Renters are paying the taxes through their rent, and landlords are going to have a right to appeal for higher than guideline rent increases because of the tax increases from both the Region and the City.

A Regional property tax increase of 5.85% on 44% of the tax bill coupled with a municipal tax increase on 44% will in many cases cross the 3.3% threshold. Rental rates are all ready increasing at an incredible rate as home prices go up. These tax increases only serve to add to the problem. The result is less affordable rental housing.

This unexpected and perhaps unintended consequence is a surprise to most elected officials and this was never discussed in the budget debates.   Few renters are aware but many landlords are aware.

Renters beware, the municipal tax increases approved by the Region and most if not all of the 12 towns and cities of Niagara will trigger landlord applications to increase rent for 2020 beyond the 2.2% provincial guideline.  This is clearly true in St.Catharines.

rent sign on a lawn

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