Effects of the HST on Rental Housing
Tell provincial politicians to reduce the impact of the HST on rental housing.
The implementation of the 13% HST on July 1, 2010 will be one of the worst things to happen to rental housing in Ontario since the introduction of rent control in 1975.
The HST will increase costs tremendously, but rent control prevents landlords from passing on these costs to tenants. This will drastically reduce repairs and maintenance of Ontario’s ageing rental stock, negatively affecting tenants across Ontario.
The Ontario government is firmly committed to putting the HST in place – there will be no further exemptions or breaks from this new tax.
What can be done to reduce the impact of the HST?
The provincial government will not provide any further exemptions or rebates of the HST to impacted industries. They have said “NO” to FRPO’s request for such relief. There are numerous industries asking for such relief.
FRPO has been lobbying for other measures to recognize the huge and unique negative impact of the HST on our industry.
Our submission provides three types of options the government could adopt which would help mitigate the HST impact on our industry:
1) A rental home renovation tax credit
2) An energy conservation program targeting windows and appliances
3) A package of regulatory reforms which would lower costs, including a reform to the unfair annual rent control guideline
There are also regulatory changes that would reduce rental housing costs, help landlords to manage their properties, reduce energy consumption and enhance the rental living experience for tenants.
FRPO believes these proposals should be very attractive to the government – they help improve rental housing quality, they generate economic stimulus, and they are cost effective to the government since they are short-term. Many of the regulatory measures FRPO is proposing actually have no cost to the government at all.
You need to take action now
The provincial government will be finalizing the provincial budget within the next couple of weeks. You need to let your provincial MPP know now that without mitigation for our industry, the 13% HST will have a severe negative impact on rental housing: it will result in a dramatic reduction in repairs and maintenance; it will result in job reductions in our sector; and it will reduce the affordability of the rental stock.
While FRPO is asking the government to consider these measures, politicians at Queen’s Park also need to hear from individual landlords and property managers that these measures are important.
You can find your local MPP by entering your postal code at this website: http://fyed.elections.on.ca/fyed/en/form_page_en.jsp(then click where it says: “Click here for information on your Member of Provincial Parliament”).
FRPO’s Proposed Rental Home Renovation Tax Credit Program
The Executive Summary of FRPO’s attached submission summarizes the measures you should ask MPPs to support. Our preferred solution is a Rental Home Renovation Tax Credit program, much like the recent federal home renovation tax credit program. Here are some reasons that your local MPP should support such a program:
- It is easy for the province to implement and administer
- It will create jobs
- It will promote maintenance of Ontario’s rental stock, which is aging
- Tenants will see the benefits of the program, and will be very supportive of the program
It will address the fact that most federal and provincial programs ignore tenants and the rental sector
- the 2009 federal budget included $2B in funding for social housing
- this funding was matched in Ontario by the provincial government
- the 2009 federal budget included a home renovation tax credit program which excluded the rental sector
- the province introduced a senior homeowners property tax grant cost over $1 billion recently
- rental housing faces capital gains taxation, and ownership does not
- rental housing faces property tax rates across Ontario that are, on average about three times the rate paid by homeowners
Other solutions proposed by FRPO:
- An energy conservation program
- Reforming the unfair annual rent control guideline
- Property tax fairness for multi-residential housing
- A better AGI process for energy efficiency capital projects
- Allowing damage deposits
- Many others
Sample Message to MPPs
MPPs need to hear from the rental sector. This is just an example of an email or letter you can send to your MPP. Please write your own message in your own words, mentioning the issues most important to you.
The 13% HST will increase costs significantly for Ontario’s rental housing stock. Unlike other businesses, Landlords can’t recover HST cost increases due to rent control, leaving us no choice but to reduce investments in repairs and maintenance of rental housing.
One way to avoid this is for the Ontario government to provide a Rental Home Renovation Tax Credit. This is a simple solution and easy for the government to administer, and will benefit tenants by improving the quality of rental housing. The resulting investments by landlords will also create jobs and growth across Ontario.
To offset the impact of the HST on tenants and landlords, the government can also offer a new incentive program to help us replace windows and refrigerators to help conserve energy, or allow landlords to collect damage deposits, just like in other provinces, to help us maintain the quality of rental housing suites and provide better accommodations to tenants.
Thank you for considering ways to help the rental housing sector.
For more information, contact Mike Chopowick, FRPO, at firstname.lastname@example.org