Agent Blogs

For years, Waterloo landlords cautioned City Council that its "per unit/per bedroom" Rental License Fee was a "tenant tax" which would cause financial hardship for tenants and result in rent increases of between 6 and 8%. Unfortunately, municipal greed trumped the "health and welfare" of Waterloo tenants and Council imposed a license fee of several hundred dollars per rental unit. The license fee has now been ordered payable by tenants as a "municipal tax and charge" under the Residential Tenancies Act (RTA). Waterloo townhouse tenants will pay rent increases in 2016 of 8% whereas the annual "Guideline" set by the Province is only 2% (a copy of the order is available at the following link:   530675 Ontario Limited o-a Mayfield Estates LP v. Tenants of 20 30 40 50 60 Goldbeck).

In Waterloo, the license fees were supposed to address conditions in apartments made by conversion of houses in single family residential neighborhoods. Municipal staff, however, saw an opportunity for a tax grab and levied the tax on townhouse tenants living in purpose built, properly zoned and municipally approved residential complexes. Waterloo self-righteously argues that the tax is really a benefit for tenants by ensuring safe housing, and that the fee is no different than business license fees charged to taxi operators or restaurant owners who choose, based on the market, whether to pass the cost to consumers. Tenants however, have little choice: they either pay the tenant tax of several hundred dollars annually or pay even more money to move elsewhere. Taxis and restaurants can spread the fee over hundreds of customers, but with the tenant tax there is only one "customer" paying the fee: the tenant.

As for tenant safety: before the townhouses were ever built, they were zoned multi-residential to ensure neighborhood compatibility, then municipally inspected throughout the site development process to ensure compliance with building and fire codes, and all applicable by-laws relative to parking, waste disposal etc. The RTA, the Fire Code, and several other building by-laws apply to the townhouse complexes to ensure tenant safety and habitable housing. Long before licensing was implemented, municipal, electrical, and fire inspectors were all fully authorized to conduct inspections and issue orders to ensure tenant safety.

To make matters worse for Waterloo landlords and townhouse tenants, the City has, on two occasions, sent pairs of uniformed by-law officers into the townhouse complexes, knocking on doors and serving tenants with written demands for copies of rent receipts, financial records and maintenance request forms, and threatening the tenants with prosecution if they fail to comply. The intimidation and threats were made in an effort to harass landlords into giving up a legal challenge to the tenant tax: a challenge where both landlords and tenants experience financial loss due to the imposition of the tax.

As for the proceeds of the tax, some of the money has been used to buy a new car for fire inspectors (even though fire inspections are not required for issuance of license fees); to buy computer upgrades for City staff; to fund payroll increases and "empire building" by City staff; and substantial amounts were transferred to an unrestricted revenue account to supplement City coffers.

The legal challenge by Waterloo landlords continues, but that is cold comfort for tenants who have to pay the tax. It is also cold comfort for Waterloo landlords who not only face a substantial reduction in the value of their property, but the rent increases make it increasingly difficult to compete with apartment building rentals which are exempt from the tax, and which are also less preferable for family based tenancies.

Ultimately, like all government tax grabs, the consumers (tenants) pay the biggest price and bureaucrats at City Hall enjoy the benefits. The tax is imposed on a "per unit" basis and it increases with the number of bedrooms in the unit: the bigger the family, the higher the tax. The tenant tax is authorized by the province; imposed (and spent) by Waterloo Council; and approved by the province for a direct pass through on the tenants who occupy the rental unit.

Not a very merry Christmas for Waterloo tenants, thanks to Waterloo Council!

(Image provided by Federation of Rental-housing Providers of Ontario: "FRPO")