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An efficient conflict resolution process could help clear the path for tens of thousands of new rental units

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By Murtaza Haider and Stephen Moranis

Rental housing is scarce in Canada, with demand far exceeding supply. Consequently, rents have skyrocketed over the past few years. The solution, of course, lies in rapidly increasing rental housing, which has proven to be a significant challenge.

The rental supply could be boosted immediately if over-housed homeowners made their redundant space available to rent. With aging demographics and many seniors choosing to age in place, tens of thousands of surplus basements and secondary units could help bridge the gap.

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However, would-be landlords may be easily deterred by the hopelessly broken dispute resolution mechanisms. It can take years for landlords to be granted relief from abusive or deadbeat tenants. Fixing the landlord-tenant dispute mechanisms holds promise for improving rental housing affordability in Canada.

Ontario’s Landlord and Tenant Board (LTB) is a broken dispute resolution system. Neither landlords nor tenants are satisfied with its functioning. The LTB’s dismal state caught the attention of the provincial ombudsman, whose report last year, titled “Administrative Justice Delayed, Fairness Denied,” paints a grim picture of a system in desperate need of immediate repairs.

The backlog of cases at LTB jumped from 20,000 in 2020 to 53,000 by March 2023. Data compiled by Tahmeed Shafiq, a Toronto-based researcher, found that, on average, it took 342 days for an eviction for non-payment case to be resolved. According to the ombudsman, as of March 2023, it took up to nine months to schedule a hearing for a landlord applicant, while tenant applicants might have to wait as long as two years.

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The delays at LTB have disproportionately impacted landlords. According to the ombudsman’s report, landlords filed the most complaints (84 per cent), while tenants filed only 12 per cent. As of November 2021, it took the LTB three months to process an application, and scheduling a hearing for rent collection or the eviction of a defaulting renter took an additional 66.5 days.

However, averages can be deceiving. The ombudsman highlighted the case of a landlord battling cancer who lived in the basement of her house and rented the upper half. She sought to evict her tenants in December 2021 to gain the space she needed for her illness. Months later, she was asked to refile her application due to an error in her initial submission. Tragically, the landlord passed away before the tribunal could act.

A lack of resources is a significant problem. The ombudsman reported that before their investigation, the Tribunal employed 40 full-time and 10 part-time adjudicators. By January 2023, the number of full-time adjudicators had decreased to 35, while the part-time staff had increased to 43. Given the growing caseload and expanding backlog, these staffing figures are clearly inadequate.

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The provincial government appoints the adjudicators in Ontario. The ombudsman found the appointment process cumbersome, which involved 122 distinct steps and took three to five months for government approval. The ombudsman also found that when adjudicators were replaced, the months or even years of progress made on a complaint was lost, necessitating a fresh deliberation of the case by the new adjudicator.

In comparison, British Columbia’s  Residential Tenancy Branch (RTB) deals with complaints much faster than in Ontario. Their website mentions that RTB schedules expedited hearings within 12 days. In urgent matters, a hearing can be scheduled within six days.

Wait times and backlogs in British Columbia worsened in 2022 due to a surge in workload, which increased from 1,200 monthly complaints in 2020 to 1,832 in 2022. RTB reportedly resolved regular disputes within five weeks in February 2020. By September 2022, however, it took nearly 15 weeks to resolve routine applications.

Despite the longer wait times in British Columbia, disputes are still being resolved within weeks and months. In Ontario, it can take years. An overhaul of the Landlord and Tenant Board would provide speedy relief to frustrated complainants.

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Homeowners in Ontario and elsewhere who might be considering renting out unused space for extra income would no doubt be deterred by the prospect of a deadbeat tenant essentially squatting in their house for months on end. An efficient conflict resolution process could alleviate such concerns and potentially help clear the path for tens of thousands of new rental units. Encouraging homeowners to consider renting out excess space is a promising way to help restore housing affordability.

Murtaza Haider is director of Regionomics Inc., a consultancy specializing in predictive analytics and machine learning. Stephen Moranis is a real estate industry veteran. They can be reached at the Haider-Moranis Bulletin website, www.hmbulletin.com.

Want to know more about the mortgage market? Read Robert McLister’s new weekly column in the Financial Post for the latest trends and details on financing opportunities you won’t want to miss.

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