If your organization is relocating employees to major cities with very low vacancy rates, high rents and an affordable housing crisis, such as Toronto or Vancouver, are they getting enough support in dealing with the rental market? It may be increasingly necessary to ensure that they do.
A recent case provides a good example of the difficulties someone can encounter, particularly if new to the market. It involved an expat living in the Toronto area who was informed by the landlord’s broker that the rent was to increase before the end of the existing lease period, citing the need to replace appliances, by an amount in excess of 3 times the Ontario legislated cap of 1.8%. All elements of the notice were in contravention of the current governing legislation: percentage increase, timing and using appliances as a reason. Although not referenced, the employee mentioned that his landlord was also facing expenses to repair the unit’s damaged ceiling caused by work done on other parts of the building.
In these highly competitive “landlord markets”, it is not uncommon to hear about tenants being subjected to predatory rent increases. Knowing that they can always find someone to pay more for their units, shady landlords will use a number of tactics to obtain increased rent from existing tenants or to push them out in order to place the unit back on the market at a higher price. These practices hinge on the tenant’s lack of knowledge of local legislation and/or limited access to applicable legal counsel.
Our client’s employee was rightly suspicious of the legitimacy of the notice and understandably concerned about the cost and stress of having to find a new apartment if they refused to comply. Luckily we were able to connect the individual with a respected professional for expert advice and coaching and, in the end, the landlord backed down and renewed the lease within the constraints of the law. Was the broker complicit or woefully uninformed? Difficult to know but this certainly gives cause to be concerned about the heightened level of greed in these extremely competitive markets.
In the interest of protecting ROI, whether a relocation is permanent or temporary, we recommend that organizations ensure their employees are aware of the destination’s current rental market conditions and consider offering professional services at the time of signing or renewing a rental agreement. A real estate professional and/or lawyer will protect the employee from agreeing to unreasonable or unlawful terms and conditions. Without this support, some transferees receiving housing subsidies or allowances may simply agree to additional rent without your knowledge, unnecessarily increasing housing costs for your organization. Alternatively, the actions of these “bully” landlords could push an employee without financial support to back out of a relocation, and possibly discourage others from accepting future relocations to these specific areas.