Landlords in Toronto take note: the new year may bring with it a new scheme of landlord licensing applicable to approximately 3,300 rental buildings in the City.

The controversial framework for a multi-residential rental property licence was debated and approved by the City’s Tenant Issues Subcommittee and Licensing and Standards Committee in May 2016. In June, City Council voted 33-6 in favour of commencing public consultations, seven of which were held in August. The feedback gathered will now be taken back to City Hall where licensing staff will prepare a draft by-law for approval. Councillors are expected to debate and vote on the proposed program in December, and, if approved, the new licensing scheme could be implemented as early as January 2017.

As currently proposed, the licensing program would apply to all apartment buildings in the City that are three storeys or higher and contain 10 or more units. Condominiums and co-ops would be excluded. City-owned Toronto Community Housing buildings would need to comply with all licensing requirements, but would be exempt from the licensing fee. The proposed licence requirements include:

  • the annual inspection of common areas;
  • that landlords develop detailed plans for building maintenance, cleaning, waste management and pest control;
  • that landlords develop and file with the City state of good repair capital plans; and
  • that landlords advise tenants of service disruptions (e.g. out-of-service elevators, outstanding City work orders, etc.) by prominently posting notifications of same.

Landlords that fail to comply could face financial penalties up to $100,000 in addition to a number of non-financial penalties. It has been proposed, for example, that landlords with outstanding work orders be prohibited from applying for rent increases and/or renting vacant units.

In order to recover the licensing scheme’s estimated $3.5 million cost, landlords operating buildings to which the program will apply are expected to be required to pay an annual fee per residential unit of approximately $12-$15.

Proponents of the proposed program, such as tenants’ rights organizations, argue that landlord licensing will enhance building standards, lead to more widespread adoption of best practices, and ultimately improve quality of life for the significant proportion of Toronto’s population that reside in rental buildings.

Those opposed, such as landlord associations, argue that only a small number of landlords are “bad apples”, and that the City should concentrate instead on improving its existing audit and enforcement program to more specifically target these substandard buildings. These groups warn that licensing will effectively amount to an “apartment tax” that will ultimately be passed on to tenants in the form of rent increases.

At present, apartment inspections in Toronto are carried out through the largely complaint-driven Multi-Residential Apartment Buildings (“MRAB”) program, established in 2008 after a previous failed attempt to bring landlord licensing to the City. To date, the MRAB program has performed inspections at more than 1,046 buildings, identified more than 58,000 deficiencies, and issued more than 4,446 orders.

Needless to say, stakeholders on both sides of this contentious issue will be keeping a close eye on the Council debates in December, and, if the program is approved, Toronto’s landlords may have to adapt quickly to ensure compliance with the City’s newest licensing regime.