London landlord seeks 3% rent increase to cover new parking garage

Some tenants of a London apartment building aren't happy the building's owner plans to raise their rent by three percent above the legally allowable increase to help pay for a new parking garage. 

Some tenants at Huntington Towers, a 10-storey building at 645 William St. in the Woodfield neighbourhood, began receiving notices this week informing them of the increase. 

The notices say if the increase is approved by the Landlord and Tenant Board (LTB), rents will go up by three per cent in 2024 and 2025 in addition to the maximum annual increase approved by province, which is 2.5 per cent for 2023. 

"The new rent reflected in the notice represents a total increase of 5.5 per cent to your monthly rental charge," reads a statement sent to tenants by TerraCorp. Management Inc., which owns the building. 

Cathy Hull has lived in the building for two and a half years, and says the extra cost will be a hit at a time when so many other expenses are increasing. The building's parking garage was rebuilt last year.

"I'm not super thrilled," Hull told CBC News. "It wasn't a renovation we requested. We were just notified it was going to happen."

Some tenants approached by CBC News for comment said they'd prefer not to speak on the record, for fear it will make living in the building difficult for them. 

A tenant who's been in the building since 2018 and pays just under $1,200 for a one-bedroom apartment says she'll have to pay an extra $66 a month if the increase is approved. 

CBC News reached out to TerraCorp. for comment but did not receive a reply. 

Above-guideline increases

The building owner is applying for what's known as an above-guideline increase (AGI). Ontario's Residential Tenancy Act allows landlords to apply to add an extra three per cent per year through AGIs to help cover the cost of capital expenses, such as major repairs and renovations. 

Before it can take effect, the landlord has to get the increase approved at the Landlord and Tenant Board, an Ontario tribunal that rules on landlord-tenant disputes and is notoriously burdened by long delays for decisions.

Some tenant advocacy groups say the number of AGIs applications is increasing. Meanwhile, last fall, CBC News reported the LTB is putting a priority on AGI applications over other hearing types, a move that's been criticized as benefiting landlords over tenants and large landlords over smaller ones. 

How it works

Harry Fine is a former LTB member, paralegal and educator who deals with Landlord Tenant Board issues.

He said AGI applications have strict rules, with a complicated formula to spread the entire capital cost among all the tenants over the asset's lifespan.

Fine said buildings owned by large companies often file AGI applications. 

"Some of them will do them every year because every year they put in a new boiler or change the roof or do work on the elevator or redo the lobby, anything that is a potential benefit to the tenants," he said. 

Fine said the landlord can file to have the asset cost applied to tenant rents as soon as the AGI is submitted. Tenants can choose not to pay the portion of the rent that covers the AGI but if they don't pay the increased amount, they could get hit with a big bill if it's approved. If the board turns down the application or grants less of an increase than applied for, tenants can get money back. 

Fine recommends tenants pay the full increase so they're not hit with a hefty bill down the road. 

He said a considerable complication is that it can take up to three years for an AGI application to get a ruling at the LTB. By that time, some tenants who've helped pay for the new asset have moved on. 

At the LTB, tenants can question the cost of the expenditure but an argument that "I can't afford the increase" generally won't carry water, Fine said. 

"There are defences, but if the landlord has filed the application honestly and correctly, then the application is going to get granted," he said. 

Meanwhile, tenants like Hull question why the building owner can't cover what she sees as regular maintenance cost with existing rents.

"The parking garage does seem like it should be the responsibility of the apartment building and not the tenants shouldering the cost of that," she said.