'Explosion' of above guideline rent increases pricing out some Toronto tenants, advocates say

Sharlene Henry and her fellow tenants at an apartment building in Toronto's Weston neighbourhood had never heard of above guideline rent increases (AGIs).

But after their previous landlord applied for AGIs six times in the last 10 years, Henry says almost all of her neighbours at 33 King St. are now intimately familiar with the acronym. 

"It affects your whole life," Henry told CBC News. 

"Many of us are families, young families in this building who are just trying to survive. And a lot of seniors in the building are on fixed incomes — paying $50 or $60 more a month for a whole year affects how they eat." 

Henry's building is one of five Toronto rental properties where CBC News found the owner had applied to the Landlord and Tenant Board for five or more AGIs to help cover the costs of major repairs or renovations within the last decade. 

Without approval from the Landlord and Tenant Board, 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 1.2 per cent. AGIs allow landlords to tack on up to an additional three per cent per year.  

Although AGIs are legal under Ontario's Residential Tenancy Act to help cover the cost of capital expenses, tenants and tenant advocates argue they shouldn't be. Those who spoke with CBC News said corporate landlords are effectively using AGIs to maximize profits by pricing out long-term tenants who are otherwise protected by rent control. 

"You need to do a repair? Use the rent money for that. Use your profit. Get a loan," said Geordie Dent, executive director of the Federation of Metro Tenant Associations. 

"Landlords already have the money, they're just able to extract more because the government allows it."

Ministry says AGIs critical process for safety

But the province argues those repairs may not happen if landlords couldn't pass some of the cost off to tenants. In a statement, the Ministry of Municipal Affairs and Housing told CBC News AGIs "allow landlords to make capital-intensive upgrades to their units."

"This is a critical process to ensure that Ontario's housing stock remains safe and well-maintained," said spokesperson Matt Carter.

Dent says AGIs hurt those on fixed incomes — like seniors — the most. He told CBC News receiving a three per cent rent increase on top of what's been set for inflation two years in a row often means seniors have to move out of the building and the city altogether. 

"We see this all the time, specifically in buildings that get hit with a bunch of AGIs in a row," said Dent. 

The Federation of Metro Tenant Associations receives funding from the City of Toronto to help tenants dispute applications for AGIs at the Landlord and Tenant Board. In the last decade, Dent says the organization has seen an "explosion" of AGIs.

Only 252 applications for AGIs were filed with the Landlord and Tenant Board in the 2011-2012 fiscal year in Ontario, but by 2019-2020 that number had ballooned to 758 applications, according to the board's annual reports. 

AGIs granted 3 years in a row

Tenants in Henry's high-rise at 33 King St. had above guideline rent increases approved by the Landlord and Tenant Board for 2013, 2014, and 2015 for repairs and renovations to the building. 

Three more AGI applications are currently pending at the Landlord and Tenant Board for 2018, 2019 and 2021. Henry is chair of the building's tenant association, which was formed after she and other residents decided to fight the 2018 AGI application.

The previous landlord submitted that application to cover the cost of more than $2 million worth of repairs to the building's above-ground parking garage, which it now shares with a neighbouring rental building. 

"We've actually lost parking spots," said Henry. "We don't have a visitor parking area." 

Nearly four years later, the 2018 application hasn't been heard yet at the Landlord and Tenant Board, and the building was sold last fall. The new owner, Dream Unlimited, describes itself as one of Canada's leading real estate companies with over $15 billion in assets across North America and Europe.

"We've asked Dream to drop the AGIs," said Henry. "They've stated to us in an email that they're looking at all stakeholders, but they've never reached out to one tenant."

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In a statement to CBC News, Dream Unlimited said the company is currently reviewing the previous owner's AGI applications.

"We will determine what rent increases we will implement on the market rent units," said Vice-Chairman Jason Lester.  "In those instances, we are committed to working with tenants one-on-one to help alleviate financial pressures as we understand the challenges that come with rent increases."

The company's statement also said Dream is working with the federal government to increase the number of affordable housing units from 52 to 189 — so that 40 per cent of the building's units are considered affordable.

CBC News reviewed Landlord and Tenant Board records, including orders and applications for AGIs, which show at least four other rental properties in Toronto have applied for AGIs five or more times in the last 10 years.

Two of those other properties share the same landlord and are next-door neighbours at 5 Brookbanks Ave. and 15 Brookbanks Ave. in North York. Both buildings have had four AGIs approved by the Landlord and Tenant Board since 2014, and two applications are pending for each. 

'It's just all-around frustrating'

Dorothy McMillen has lived at 15 Brookbanks Ave. for eight years. The single mom says despite paying AGIs for repairs and renovations to the parking garage, elevators and other common elements, she's had to fight to get basic maintenance for her three-bedroom apartment. 

"It's just all-around frustrating," McMillen said. "Why am I subject to having to pay like $30, $40 more if I'm not even being taken care of as a tenant?"

In a statement, Realstar Management told CBC News its records don't show a significant delay in repairs for McMillen, but the landlord "is committed to providing high-quality, safe and well-maintained rental homes for all our tenants." Over $8 million in capital investments has been put into the aging buildings in the last 10 years, according to the statement. 

"To fractionally offset some of this significant investment, additional AGI applications were approved for major capital projects," said Senior Vice President Mark Hales. 

"AGIs for capital projects both encourage landlords to make these investments in existing buildings and create and investment climate for much needed new purpose-built rental
projects."

Despite the rent hikes, for now McMillen says paying them — if they're approved — is better than the alternative.
 
"I'm not going to find the price I'm paying now anywhere."