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Landlords need to work together to address common challenges

By John Dickie

Landlords in Canada are not in an enviable position. As an industry, we often face unsympathetic governments at each level.
    
Since most of the new and burdensome rules affecting landlords and property managers come from the provinces or cities, landlords tend to pay little attention to the federal government. However, in reality, the federal government has significant impact on landlords.

Tax Policy

Tax policy is the area which affects landlords the most. Every landlord in Canada pays substantial tax as a result of their real estate holdings, whether in the form of income, capital gains or goods and services taxes. Between 1970 and 1995, various federal governments made eight significant changes to the Income Tax Act which substantially increased the income tax burden on landlords. Currently, one of CFAA’s main goals is to seek reduced federal taxes on rental housing.  

Housing Policy

While the provinces and cities spend most of the government housing money, much of that money comes from the federal government.  The federal government determines how its money is spent: whether on supporting social housing or on supporting tenants in the private rental market. CFAA wants housing policies that work for the rental housing sector and that are good for the economy, as well as the millions of Canadians who live in rental housing.

These two key policy areas are relatively quiet because of the current federal deficit, and the overarching policy of reducing that deficit through expenditure restraint.  Since there is likely to be little movement in those two areas in the near future, CFAA intends to look at other areas where governments can affect the way landlords do business. Here are a few areas CFAA will be monitoring in the coming months.

Energy and the environment

Although more environmentally friendly than single family homes, multi-residential buildings use substantial amounts of fuel and electricity, making any government move on energy of great importance to landlords. CFAA seeks policies that make energy less expensive to landlords and tenants, while maintaining equitable and effective access to federal funding for energy efficiency.

Immigration

Since new immigrants to a city tend to rent rather than buy, immigration tends to drive rental demand. Provinces and cities have little control over where international immigrants choose to settle in Canada, but the federal government does control the total level of immigration. That influences immigration to each city, which in turn impacts on rental demand and on the labour supply.

Government bias toward home ownership

Numerous government policies encourage home ownership, including direct programs and incentives, as well as huge tax expenditures. Examples of tax expenditures are the tax free status of capital gains in an owner-occupied primary residence, and the tax free status of the imputed income received by owner-occupiers by living rent free. While home ownership has its advantages, rental living also has advantages, both for individuals and for society. A healthy rental sector enhances labour mobility, and provides cost effective housing for low-income Canadians. With home ownership rates of 70 percent or more in most provinces, the time has come for governments to scale back their incentives for home ownership.

Other issues

Other issues being addressed or monitored include bedbug/pest control issues, moves to license landlords for tenant protection, other municipal enforcement issues, new audit requirements by credit verification services, human rights laws and privacy laws. Some of those issues have a federal dimension.  

Even without a federal dimension, the issues noted have a national dimension because they may affect many landlords across Canada. Our industry will only be strong if landlords work together to address our common challenges.

John Dickie is President of the Canadian Federation of Apartment Associations. You can contact him at president@cfaa-fcapi.org. The CFAA (www.cfaa-fcapi.org) represents the owners and managers of close to one million residential rental suites in Canada, through 17 associations across Canada. In existence since 1995, CFAA-FCAPI is the sole national organization representing the interests of Canada’s $40 billion private rental housing industry, which provides quality rental homes for more than seven million Canadians.