Open Letter re: Waterloo’s proposed residential rental licensing bylaw

The Kitchener-Waterloo Association of REALTORS® sent the following Open Letter today by email to Waterloo City Council concerning the city’s proposed Rental Housing License Bylaw

April 25, 2011

Dear City of Waterloo Councilors and City Staff,

RE: Revised proposed residential rental housing bylaw

The Kitchener-Waterloo Association of REALTORS® (KWAR) would like to commend the city for what has clearly been a challenging bylaw. We appreciate the accessibility that staff and councilors have extended during this collaborative process to receive input from stakeholders within the community.

After reviewing the latest draft of the proposed Rental Housing License Bylaw (RHLB), we still have some serious concerns about aspects that remain which we fear have the potential to acutely impact the health and welfare of the citizens of Waterloo.

The greatest is with the three bedroom limit that continues to be proposed in the RHLB. This restriction appears to be clearly aimed at addressing student rentals within a limited area of the city; however, this restriction will be applied to every household within Waterloo. At the heart of our concern is that, while this may or may not be an effective means of addressing what the City views as “the student problem,” it will most assuredly be a constraint upon everyone else, and have a particularly dire impact on family rentals.

The fact that the bedroom limit remains in the revised proposal is particularly disconcerting considering that the Ontario Human Rights Commission (OHRC) also continues to cite this as a concern. We absolutely concur with its opinion, as there is no consideration given in the Class A, B, C, D, or E Licensing for the scenario where a family needing more than three bedrooms simply chooses to rent a property within the environs of the City of Waterloo.

Reviewing the previous 2 years worth of data within the KWAR MLS® System, there were over 130 residential properties leased within the City of Waterloo. While this is a fairly significant number of house rentals, we believe this represents only a fraction of the actual market because home rentals are often handled privately. Yet there is no consideration given for this type of housing within the RHLB, as some will have an ensuite (or in the Bylaws terms, “…bathroom shall not be for the exclusive use of any individual Tenant”) which excludes them from the Class C or D, it’s not owner occupied so it cannot be a Class B, for some the lease is greater than 18 months so it cannot be a Class E (and owners will not want their property to sit vacant for two years between rentals even if the term of the lease is less than 18 months), which leaves Class A, which restricts occupancy to three bedrooms.

Furthermore, as we illustrated in our written submission concerning the first draft of the proposed bylaw: In 2010, 27% of the Detached homes that sold in the City of Waterloo through the MLS® System of the KWAR had more than 3 bedrooms above grade. When you include the number of known bedrooms below grade, the number increases to 51%.  We cite these statistics because we believe they further illustrate the unreasonable nature of the 3 bedroom limit.

Providing housing opportunities

The KWAR shares the OHRC’s concerns, and furthermore believes that we must grow the supply of housing – including choices about design, cost and location. The KWAR believes in the fundamental principle of “Providing housing opportunities”. Everyone deserves a safe, decent and affordable range of housing near where they work, shop and play.

REALTORS® believe home ownership is the dream of most people in Ontario and should be encouraged. The Canada Mortgage and Housing Corporation (CMHC) tells us that newcomers tend to rent before they buy.

Should the City of Waterloo pass this bylaw with the current limitation on the number of bedrooms – families will be forced to look to communities with less restrictive barriers on the type of housing that can be rented.

Waterloo region benefits from a strong professional and educated workforce, and there are portions of this workforce who, by choice or out of necessity, are somewhat transitory. Many of these individuals accept short-term (one to five years) work assignments in the region (as professors, executives, etc) and may rent for the initial period or duration of their stay in our community. Likewise, others will go on sabbatical, or work abroad, and need to lease out their residence.

Protecting property owners

Another of our Quality Life principles is “Protecting property owners”, to preserve the investment people have made in their homes by protecting their ability to freely own, use, buy and sell real property.

As we understand it, after the proposed bylaw comes into effect, homeowners with homes containing more than three bedrooms will not be eligible to obtain a rental license that reflects the actual number of bedrooms in the home.

In theory, a five bedroom home will be able to be rented to a family of five with two parents sharing a room, one sibling in their own room, but two will have to share a room even though a fourth bedroom area is available. While next door, there could be a family of eight, each with individual bedrooms so long they actually own the home.

Concerns relating to the RHLB should not be placed at the feet of the landlord group, as this should be a concern for any Waterloo resident, particularly those who own a home with more than 3 bedrooms. Though they may not be looking to rent their property now, they (or a future purchaser) may want the option down the road. Not only does the RHLB seriously impact how a home can be used, it also clearly discriminates between owners, renters and large families.

Improving our community 

The City of Waterloo states that it wants to “reduce the impact of large rental units on neighbourhoods, which has been an objective of the City for the past 25 years.” 

Further, “the proposed rental program is aimed at ensuring rental properties within the city are maintained to an appropriate standard for the betterment of our community and the safety of those residing in them.”

We acknowledge this concern, however, would suggest that the greater catalyst for neighbourhood impact is proximity to post-secondary institutions. These institutions have a tremendous impact, almost all of it extremely positive, such that many municipalities would gladly assume the apparent burden the City feels they create.

It is our understanding, through meeting with Councillors and staff, that there appears to be a shift in student housing supportive of the City’s Nodes and Corridors plan. This is confirmed in both Item #5 and #6 on page 8 of the RHLB report, where it states that there are 15 apartment developments totaling over 2000 units (more than 6000 bedrooms) currently in the Site Plan Review Committee Process, and several other potential apartment developments currently being discussed with the city, that could add 480 apartment units (2,300 bedrooms).

The KWAR supports the City’s efforts of meeting demand through a market-driven approach that fosters a wide range of housing choices at all price levels.

Additionally, with the increased enforcement the RHLB provides, we believe that the City will have the tools it needs to enforce these standards, which makes the three bedroom limit unnecessary.

Protecting economic vitality

A vibrant economy creates jobs, expands the tax base and revitalizes communities.

If the proposed bylaw is enacted, some of the City’s “keystone” companies, who have executives and employees with families in a global workforce, will be restricted to populating a maximum of 3 bedrooms regardless of the actual number of residents in the home, or more likely, excluded from living in Waterloo proper.

Cost & Fairness

While the entire tax base is supposed to benefit from the RHLB, it is the landlords and homeowners who are carrying the brunt of its cost.

As is stated in page 24 of the RHLB Report “the creation of the RHLB will require a “significant investment of staff and financial resources.”

The city estimates that it will need to hire five new full time positions and one contracted position.

–          One program administrator

–          Three property standards enforcement officers

–          One fire prevention officer

–          One full and one part-time planning position

–          One part time program administrator

Under the new program, the city is supposed to be able to better enforce its program because of the widened scope. If this is the case, then perhaps the requirements for additional staff could be adjusted.

The current fee structure which ranges from approx $400 to $764 for new licenses depending on the class of license and number of bedrooms, and annual renewals ranging from approx $200 to $400 is steep.

(This is on top of other expenses that the landlord will incur – such as the approx  $470 for the ESA, Criminal Record Check, and Heating, Ventilating and AC inspection which will be required at application, and the renewals on same, every 5 years ranging from $120-$210)

For the homeowner simply trying to supplement monthly expenses, or rent out their residence while out of the country, this creates a disproportional burden. These are not businesses in the truest sense, but rather individuals sometimes leveraging their final asset to maintain their independence, and are most vulnerable to increases of any kind.

Their only option will be to increase rents proportionate to their costs, which is what every landlord must eventually do in order to make this revenue neutral for them, and these costs will continue to be passed down the chain until it hits the final link, which are the renters. Unfortunately these individuals will be the ones bearing the full cost of this program, and many will not have the means to adjust their income to meet the added expense.                

Public Consultation

While the city has held three open public consultation sessions since it first tabled its draft bylaw, it is our strong belief that the average homeowner has no idea how this bylaw has the potential to impact the use of their property and investment they have made in their home.

On page 8 of the RHLB Report it says that “during the public consultation sessions, staff heard from a large number of people who wanted the bedroom limits removed; this was particularly the case with existing Lodging House license holders.”

It goes on to say that “the revised draft bylaw proposes to grandfather licensed lodging houses as they exist today, therefore, many of the concerns should be addressed.”

Understandably, landlords have been very engaged on this matter from the outset, because of how it is going to impact them directly and in the very immediate future. However, for this same reason, landlords have been, in our estimation, over-represented in the consultation process.

We are deeply concerned that the majority of Waterloo’s residents have assumed that this bylaw is about addressing the “student housing problem”, and are uninformed regarding its broader implications.

Summary

The KWAR believes this version of the RHLB is a vast improvement over the initial draft, and commends the City for the process to date. We continue to have serious concerns relating to the bedroom limit and the impact on the affordability of this program to those who may be least able to absorb the increased costs.

While we can appreciate the desire to use the RHLB as an opportunity to further address the City’s concerns with the impact of large rental units on neighbourhoods (particularly around the Universities), we would respectfully suggest these are separate and distinct issues, and that combining them can only result in a bylaw that does not address either particularly well.

Sincerely, 

George Patton, President

For more information please refer to: www.kwar.ca/waterloo-residential-rental-housing-bylaw