Toronto tenants fight rent increase, argue landlord is partially using it to cover redevelopment costs

September 5, 2024 Canuck

Tenants of a Toronto apartment complex are fighting an application for an above-guideline increase to their rent, because nearly half of it is covering an environmental assessment that’s typically used to help the landlord sell or redevelop the property.

“It’s ridiculous,” said Amy Nyp, who has lived in one of 115 units in the three low-rise buildings near Black Creek Drive and Eglinton Avenue for nearly nine years.

“Why are we paying for something that doesn’t actually pertain to the tenants?”

Without approval from the Landlord and Tenant Board (LTB), landlords in Ontario are only allowed to increase rent for most existing tenants by the province’s annual rent increase for inflation. (This year, that guideline is set at 2.5 per cent.)

Above-guideline increases, or AGIs, allow landlords to tack on up to an additional three per cent per year to help cover the cost of capital expenses like major repairs and renovations.

CBC Toronto has previously reported on how the number of AGI applications made to the LTB has increased dramatically in recent years — which tenant advocates attributed to corporate landlords using AGIs to maximize profits by pricing out long-term tenants.

But in this case, tenants, and the area’s tenant union, argue the landlord has taken that strategy a step further, by claiming expenses they say aren’t eligible for an AGI under Ontario’s Residential Tenancy Act.

“It’s just such a blatant disregard for the law,” said Chiara Padovoni, co-chair of the York South-Weston Tenants Union. “It’s a slap in the face for tenants who live here.”

Woman standing infront of low-rise apartment building. — Chiara Padovani, co-chair of the York-South Weston Tenants Union, believes the landlord’s AGI application was made in bad faith and should be thrown out. (Rob Krbavac/CBC)

In a statement, the landlord, QMW Corporation, said it is pursuing the AGI application to “recover costs related to significant property upgrades that directly benefit tenants.”

“The AGI request aligns with regulations allowing recovery for upgrades that enhance tenant living standards, not for future redevelopment,” reads the emailed statement.

AGI filed during pandemic rent freeze

The application was filed during the 2021 pandemic rent freeze for a 3.81 per cent AGI to cover roughly $647,000 in expenses from replacing a boiler, roof, paving and for “site remediation.”

But according to records submitted in support of the application, it appears only about $26,800 of the $295,373.72 claimed for “site remediation” was spent on disposing contaminated soil found under the parking lot. That was in spite of an assessment finding that the soil wouldn’t pose a health concern to residents, unless the property were redeveloped.

WATCH | Why these Toronto tenants are fighting an above-guideline rent increase:

Tenants accuse landlord of asking for rent increase to help cover costs linked to redevelopment

2 hours ago

Duration 3:24

Toronto tenants at this apartment complex near Black Creek Drive and Eglinton Avenue are fighting an above-guideline rent increase application at Ontario’s Landlord and Tenant Board.

The remainder of expenses claimed as site remediation went toward the costs of a geo-environmental investigation and assessment of the site, according to engineering reports and invoices submitted with the application.

QMW did not address specific questions in its statement to CBC Toronto about what remediation work was completed. Instead it said “recent site improvements, including remediation work, have been conducted in compliance with all relevant standards.”

An environmental site assessment is needed to obtain a record of site condition, which is filed with the provincial government before redeveloping a site — and can also provide assurances to potential buyers of a property.

The investigation and study were paid for by the previous owner of the apartment buildings who applied for the AGI before selling the complex to QMW Corporation in October 2021. QMW has taken over the AGI application from the previous owner.

Potentially ‘dangerous precedent’

The inclusion of the cost of the environmental investigation and study in the AGI raises alarm bells for Nemoy Lewis, an assistant professor in the school of urban and regional planning at Toronto Metropolitan University.

“I have never seen anything like this before,” said Lewis, who researches the corporatization of housing.

“We could be setting a dangerous precedent if the adjudicator at the Landlord Tenant Board tribunal approves these expenses, largely because these expenses are non-essential.”

The application is currently before the LTB for a merits-based hearing through written submissions. The York South-Weston Tenants Union provided CBC Toronto a copy of the finalized submissions it plans to file with the LTB on Friday.

Tenants holding signs in front of apartment building against raising rents. — Tenants of three low-rise apartment buildings near Black Creek Drive and Eglinton Avenue held a rally last week calling on their landlord to stop raising rents. (Andrew Johnson/York South-Weston Tenants Union)

In them, tenants argue that any expense associated with acquiring a record of site condition does not constitute an eligible AGI expense, as such a report does not improve the building or the well-being of the people who live in it.

“We’re already in a housing crisis as it is,” said Nyp, who decided not to pay the increase before the LTB rules on it.

“If this AGI gets approved, it’ll be a ‘Do I pay the rent this month? Or do I eat?'”

If the increase is approved, Nyp would owe at least $1,000 in retroactive rent for a three per cent increase starting in November 2021, and another 0.81 per cent increase in November 2022.

“That’s like one entire paycheque,” she said.

Plan to renovate units, sell property

On top of fighting the AGI application, Nyp and other tenants are worried about their landlord’s future plans for the apartment complex.

Internal QMW Corp. investor documents reviewed by CBC Toronto show in 2021 the company’s plan was to renovate 85 of the 115 apartment units over time “to achieve increased rental income” before eventually selling the property by 2028. In the interim, the document said it had established a tenant incentive fund budget of $804,000 to increase unit turnover.

“I don’t want to go anywhere,” said Sheik Husein, who has lived in the complex for more than a decade. “The biggest fear is that we’re going to be out on the streets trying to figure out where we’re going to live with affordable rent.”

Man standing in his apartment in front of the kitchen. — Sheik Husein has lived in the apartment complex for more than a decade and worries about what the landlord’s future plans for the property could mean for him as a tenant. (Rob Krbavac/CBC)

In its statement, QMW told CBC Toronto any claims the landlord is displacing tenants to raise rents are false.

“Any resident turnover is due to natural circumstances, not a strategy to remove residents,” said the statement. “We aim to provide stable, high-quality housing and adhere to all regulations to support our tenants responsibly.”

A second-quarter investor update this year said 42 units have turned over to new tenants since QMW bought the building, and six units were renovated in 2024 so far, which increased rent for those units 36 per cent a month. The report also revealed the landlord has hired architects to assess the site’s potential for redevelopment.

Concept drawing for redevelopment of low-rise apartment buildings. — In its second-quarter report to investors, QMW Corporation included this conceptual drawing of how to add condo density to the apartment complex. (Clearview on the Park report)

Conceptual drawings included in the report show the addition of a potential 36-storey condo tower and another nine-storey condo addition. According to the second-quarter report, the landlord has a pre-application consultation meeting about its potential redevelopment plans next week.

In the meantime, tenants and their tenant union are arguing the LTB should deny the entire AGI application, claiming the inclusion of the environment assessment means it was filed in bad faith.

“They shouldn’t get away with actually increasing any rents through this application because of just how blatant of an abuse of process it was,” said Padovani, from the tenant union.

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Canada News

Toronto tenants fight rent increase, argue landlord is partially using it to cover redevelopment costs

AGI filed during pandemic rent freeze

Tenants accuse landlord of asking for rent increase to help cover costs linked to redevelopment

Potentially ‘dangerous precedent’

Plan to renovate units, sell property

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