If you’ve scored a Toronto condo at a reasonable monthly rent that isn’t so small you feel claustrophobic just thinking about going home, then you’re one of the lucky ones. It seems like every day we see another story about long lines to apply for cheap Toronto townhomes or rental bidding wars jacking up the price on a studio that’s a 20-minute walk from the subway.
But what happens if all of a sudden your landlord sticks a ‘For Sale’ side outside your unit? The inner-city units that many of us are currently happily renting are also still increasing in price – with the average selling price on all homes in the GTA up 5 per cent to $746,218 in July according to the Toronto Real Estate Board. That has many landlords looking to lock in their gains in the face of fears of a real estate slow down connected with the Ontario government’s Fair Housing plan, which included a 15 per cent tax on non-resident foreign buyers.
Since the Fair Housing plan also includes a strategy to cool rental increases by extending rent control to all rental units and limiting annual rent increases to inflation or no more than 2.5 per cent, that has some landlords considering selling their rental units.
So, what happens if you’re caught in the crossfire? Here’s what you need to know about your rights and what you need to know about finding a new rental in this market.
Ending a Tenancy
Did you know that a landlord can’t just kick you out because they want to sell the property that you’re renting? That might sound like good news, but don’t get too excited! The new owners might be able to ask you to leave once they take possession or when they’ve finalized the sale if they plan to occupy or renovate the suite.
Whether or not they can send you packing depends on your lease. If you’re currently on a month-to-month lease agreement, then the landlord or new owners can give you two months’ notice. If they do this, they also have to compensate you with the equivalent of one month’s rent.
“They have to provide tenants 60 days-notice from the first day of the month,” said Emma Pace, a Zoocasa real estate agent. “That means that if they decided to sell their place now, they would need to provide notice on September first and the tenants would have to vacate by November first.”
If you’re on a fixed-term lease, then you don’t have to worry because they can’t end your tenancy prior to the end date of your lease. If your lease gives you the option to continue on a month-to-month basis at the end of your fixed-term lease or to enter into another fixed-term lease, then your landlord will have to give you two months’ notice and one month’s compensation as well.
You can come to a mutual agreement in order to end your tenancy early in both scenarios, but you are able to ask for compensation for agreeing to do so. You could ask for the equivalent of several months’ rent or that the landlord reimburse your moving costs. If your landlord asks you to leave, you are not required to agree.
Many landlords would prefer to sell properties untenanted, but if they sell your property tenanted then, according to Pace, “The buyer would have to assume that tenant.”
Your tenancy with continue after that point with the new owners as your landlords and both you and the new owners would have the same obligations and responsibilities as if the landlord had remained the same.
Showing the Suite
If you are staying in the unit while it’s for sale, you might be worried about people coming in and out of your suite. You’ll be happy to know that the landlord can’t show your suite without giving you a heads up.
“Owners need to ensure that they’re providing tenants at least 24 hours notice and receiving co-operation from the tenants for the showings,” said Pace.
They are allowed to show the home between 8 AM and 9 PM unless you have agreed to a time outside of that window. Unfortunately, if you’re given proper notice, you can’t deny access to the suite.
The landlord can’t ask you to leave in order to show your suite, but they can show it if you are not there at the time. For that reason, make sure to store any valuables and secure any pets if there’s going to be open houses or showings. If you do stay while a showing is taking place, you are not allowed to interfere in any way with the sale of the property such as by making overly negative remarks about the suite.
One important thing to remember is that the landlord can’t use a lock box without first getting your permission to do so. A lockbox is often used to hold keys to the suite so that other real estate agents can easily get into your suite to show it. Some tenants are understandably concerned about the security issues a lockbox might provide and so can deny permission to use one.
Finding a New Place
According to recent Toronto Real Estate Board statistics, the rent on one-bedroom condos jumped 8.8 per cent since last year to $1,861. The rent on two bedrooms is up 8.7 per cent to a whopping $2,533.
According to Pace, it can be difficult to find a new place in this hot rental market. “I think the rental market is more competitive than the real estate market at the moment,” she said. “I helped with a lease a few weeks ago for a one-bedroom with no parking. It was going for $1,900 and it had six offers on it. It ended up being rented for just under $2,100 per month. People are paying over what something is listed for, even on rentals.”
Related Read: 5 Tips for Getting Ahead in the Toronto Rental Market
If you’re in need of a great place at a good price, make sure to take advantage of those two months notice to scour the listings. Before you apply, ensure you’ve done everything you can to give yourself an edge such as reaching out to your network and getting your documents and references in order. Pace said that landlords have so many options that they’re scrutinizing new tenants closely.
“Your credit score has to be above 640 or 650, your letter of employment has to be strong,” she said, “and your references have to be great.”
