By D. Wallace, Guest Contributor
With the HST set to take effect in July 2010, there are several crucial questions all tenants in Ontario should be asking: a) Do tenants know what impact the harmonized sales tax (HST) will have on their rent? b) Will HST be added if hydro is included in their monthly rent? c) How are landlords going to be reimbursed for a list of extra costs and, d) Do tenants know what costs are on this list? In apartments, this list includes utilities such as gas heat, electricity, hydro, and other costs related to maintenance contracts, property management services, retrofitting for energy saving, renovation contracts, and so on. When HST is added to these costs, will it be passed on to tenants? We do not know the answers, as the government has ignored these important questions from rental tenants. The Ontario government websites addressing ‘Exemptions’ and ‘Rebates’ the residential rent is listed. However, nowhere on their website is there an explanation of how landlords will recover the above costs. (Refer to:
http://news.ontario.ca/mof/en/2009/11/ontario-announces-new-hst-exemptions.html
According to a Press Release issued last year by The Federation of Rental Housing in Ontario (FRPO), it is estimated that this new action (HST) will increase residential rents in Ontario by 2.5 to 3.0 percent. “We estimate that this will increase rents for the average Ontario tenant by $270 to $320 per year” said Vince Brescia, President & CEO of FRPO. FRPO called on the province to exempt rental housing providers. So far, no response from the government! (Refer to: http://canadianapartmentbuildings.com/hst-effect-rental-housing)
The Federation of Metro Tenants’ Associations (FMTA) wrote a letter to The Honourable Dwight Duncan and, in conjunction with FRPO, also called for exempting rental housing providers from the HST. In the reply FMTA received from the Ministry of Finance, the question is ignored, not answered. Those letter(s) can be accessed at this link: http://www.torontotenants.org/news/hst-letter-finance-minister
In August 2009, I emailed specific questions about the impact of the HST on apartment rentals, to Premier Dalton McGuinty. In a response received from the Premier’s Office, these questions were ignored. In October 2009, I replied to the Premier’s letter again asking how the HST would impact my rental costs and, to date, have not received a reply.
A search at The Ministry of Municipal Affairs and Housing website (http://www.mah.gov.on.ca/page11.aspx) did not produce any information regarding the impact of HST for renters, I emailed the Minister on February 24, 2010, the following message: “Due to the HST, I know my landlord is going to incur increased costs for certain services like hydro, maintenance, repairs etc. I understand rents are exempt from the HST. However, the question as to how is my landlord going to recover these extra costs must be addressed? I can’t find this kind of information anywhere”? To date there is no reply from our esteemed Minister of Municipal Affairs and Housing.
On the website of The Landlord and Tenant Board, under the tab “What’s new”, not one word about HST! In fact, HST is not mentioned anywhere on this web site. That is not surprising since the Landlord and Tenant Board comes under the jurisdiction of the Ministry of Municipal Affairs and Housing.
The Toronto Sun published an article titled “Hudak appeals to renters in HST fight” where the Progressive Conservative Leader Tim Hudak says “he wants renters to hop on his anti-harmonized sales tax bandwagon, pointing to a study that says it could add $320 a year to the cost of a $1,000-a-month apartment”. (See this LINK). However, the Globe and Mail article “10 simple HST myths” seems sceptical about Mr. Hudak’s position on the HST.
Michael Prue, MPP, Beaches-East York, made this statement in the Ontario legislature on October 1, 2009: “I heard a question asked the other day and what a question: Are rents going to go up? No, the rents can’t go up and the rents aren’t going to go up, but the cost to the people who own the apartment buildings are going to go up approximately 3%, and they are going to apply to have that rent increased. You know and I know it’s going to happen”. (Refer to Ontario Hansard – 01-October2009 ). That last sentence by Mr. Prue is sobering and speaks volumes for what tenants could expect with regard to rent increases.
So far, this is what we know . . . . Landlords are going to incur extra costs! Residential rents are exempt from HST! What we don’t know is how landlords are going to recover their costs and the government is leaving tenants in the dark! Common sense dictates that the statement, “residential rents are exempt” has to be seriously questioned as to its veracity. Will landlords apply to the Landlord and Tenant Board for an Above Guideline Increase to protect their profit margins? Will the government exempt rental providers from the HST so that the HST on utilities and other maintenance and other operating costs are not passed on to renters? Will the HST impact Vacancy Decontrol thereby allowing landlords to increase rents for new tenants above and beyond the Annual Rent Increase Guideline? Why will our government not provide the details we need to properly anticipate the impact the HST will have on all renters? And …. What are they afraid of?
From a renter’s perspective and, given the uncertain economic climate, it is incumbent on the Ontario government to provide meaningful answers to crucial questions related to how the HST will impact their monthly rent.
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REFER TO THIS LINK TO CHECK OUR UPDATED POST ON HST … Are Residential Rents Exempt from HST? – Update
East York Tenants Group 
Hi nice rreading your post
This is all fine. Im in a room now instead of an aptment. Ill tell every person who is planning to immigrate to canada (through every web site I can find!) not to come to ottawa or canada for that matter!
I don’t believe for a minute this HST is to save us ordinary folk any money. So many of the items affected by HST are necessary for our daily needs. Tenants need answers to several unsettling questions about how landlords will recover the cost of items to be affected by HST … eg. heating, hydro, various maintenance costs etc… I feel certain these costs will be passed on us tenants. But How? Through the Annual Guideline Rent increase? Or maybe through Above Guideline increases? Will so-called ‘retrofitting’ for energy saving by landlord be affected by HST? Is retrofitting an ‘eligible capital expenditure’ that will be allowed under the 2010 Above Guideline increase? Coming to think of it, what exactly are the ‘eligible capital expenditures’ that are allowed under the Above Guideline increase? Why are so many landlords doing major repairs or retrofitting on buildings at this particular time? Does it hae to do with the July 1 deadline when the HST comes in effect? Anybody has answers to these questions?
JHD
You have raised some very important points about this HST. Does anyone really believe that rents are exempt from HST! Who does McGuinty and his pals think they are kidding? The landlord WILL pass all those additional cost on to tenants one way or another. Apartment living was suppose to be for those who couldn’t afford to purchase a home. Well, the days of affordable rental housing disappeared long time ago. I am paying more in rent than what some of my friends are paying for their monthly mortage and will have no equity at the end of the day. Why don’t we hear anything from Mr. Hudak on this HST tax gouging?
Does the McGuinty really think the electorate are a bunch of morons? How can a one time rebate of our hard earned dollars and “sales tax credits” offset higher rents in the future. Is this their idea of a bailout for us? Apartment living was supposed to be affordable housing – sorry, it has not been so for the past twenty years, especially if you are a single person. This HST will have our rents spiralling. Dalton and his gang “take”, pretend to give back, and then take again..
The McGuinty govt. thinks the electorate are silly sods. I am referring to that one-time rebate they are planning to dish out along with the tax credits. They are going to give us back our own hard earned dollars and then there will be tax credits to offset higher rents. Give me a break. Heaven help us tenants in the coming years. Just wait and see what those greedy landlords are going to do in the coming years…. they wil be smiling all the way to the bank. Tenants have no protection at all. We will be going to the Landlord and Tenants Board every year from now on …. the landlords will be asking for Above Guideline Increases every year.
How much do you want to bet that this new HST will make the so-called affordable rental housing idea truly be a thing of the past. Not that there has been affordable housing in the GTA for years now! Landlords will surely find a way to pass the HST on to us tenants or they simply just won’t do proper repairs and maintenance and we will have to live in even worse run down buildings. Even now we have to live in buildings with poor repairs and maintenance. This HST will not be good for tenants however you choose to look at it. The government is hiding imporant details from us. That being the case, you will likely see more overcrowding in apartments as tenants try to survive this recession.
We have to be very wary of a government that provides such scant information about a new tax while we are still struggling to get out of this economic downturn. Just what is this government hiding? Why did Ottawa give Ontario billions to implement this tax? What is the purpose of this tax anyway? The Ontario government claims it will create jobs! Jobs for whom? So we tenants will have a rebate and a sales tax credit to offset higher rents! But what about the next year and the next year and the next year after that? At the end of the day this HST is, plain and simple, just a cunning tax grab!
Agree totally with what Samir is saying about the HST. Wasn’t it Mike Harris who gave landlords the upper hand with the Tenant Protection Act? It should have been called the Landlord Protection Act! Remember, many these landlords were GIVEN TAXPAYERS DOLLARS to finance construction of apartment buildings. So many of these landlords are dreadful and refuse to do proper maintenance and repairs but they will reap the benefits of the HST! Where is Robin Hood when you need him?
How much do you want to bet the Ontario government will create a new department or agency to handle how the HST will be applied? They will give jobs to their useless dim-witted pals and families. We will have another bloated bureaucracy staffed by the usual government incompetents. The HST that they grind out of us will pay the salaries of these twits. Once again, it will be entitlement for these useless morons who happen to be well connected and will have plum jobs. They will have job protection that the rest of us can only dream about … thanks to the HST!
This is what I will call a clever conundrum dreamt up by the Ontario govt. and Ottawa for a mighty tax grab. They have to please their masters and those are the people who really run our country. Residential rents are supposed to be exempt from the HST but the landlords have to pay HST on utilities etc! Obviously the landlords will apply to the Landlord and Tenant Board for Above Guideline Increases and be approved! This HST will be very cleverly bundled with other operating and maintenance costs. How can this be justified at any time, let alone in these tough economic times! More of the incomes of us ordinary folk will have to go to housing costs and less will be spent on consumer goods. That does not bode well for an economy. Seems to me that this is a less than subtle attempt to protect those who caused the recession in the first place. That is those who run the financial industry and who were rewarded with a ‘bailout’ for getting us in this mess. These additional costs related to HST can, and should, come out of the landlord’s profits. They make good profits. Why else be a landlord? Landlords don’t run charities … it is all about maintaining profits by any means. This HST will be a financial boon to landlords.
I have been pondering the very same issues myself. There has been no application for an increase due to the additional taxes so there is as yet no ruling or decision.
Yet a Landlord may apply for rent increase for an increase in expenses or taxes. (once it occurs)
It will be interesting to see how it shakes out.
Thank you for being on the Pulse of a large issue.
I would very much like to repost your blog in to mine. DM me at david@davidpylyp.com
http://eleganthomesinwesttoronto.blogspot.com
The readers at the Humber Bay Shore condo concentration should aware of this.
Thank you
David Pylyp