Municipal Tax Reductions and Tenancies
Landlord’s may be required to rebate tenants if municipal tax reductions in excess of 2.49%....
Under the Residential Tenancy Act – section 131(1) it states that any significant tax decreases in a residential complex must be passed on to the tenants in the form of a rent reduction.
The procedures for obtaining a rent reduction vary with the size of the residential complex in which the rental unit exists. For larger residential complexes (7 or more rental units), the Residential Tenancy Act (RTA) imposes a duty on the local municipality to give both landlord and tenants notices of the municipal tax and charge reduction and of the corresponding rent reduction. RTA act s. 131 (3)(4)
For smaller residential complexes the burden of implementing the rent reduction falls on the landlord (who will receive their property tax bill directly).
Either party may apply to the Board for a variance of the rent reduction amount set out in the municipal notice, or as determined by the landlord.
Tenants may also apply to the RTA Board for a rent reduction “due to a reduction or discontinuance in services or facilities provided in respect of the rental unit of the residential complex.” RTA s. 130(1)(2)
Services and facilities as outlined in section 2 of the RTA include:
- furniture, appliances and furnishings
- parking and related facilities
- laundry facilities
- elevator facilities
- common recreational facilities
- garbage facilities and related services
- cleaning and maintenance services
- storage facilities
- intercom systems
- cable television facilities
- heating facilities and services
- air-conditioning facilities
- utilities (heat, electricity and water) and related services
- security services and facilities.
In order to apply under section 130, an application must be made within a year after a reduction or discontinuance in a service or facility (s. 130(5))
Tenants and landlords may agree to increase or decrease any of the list of “services, facilities, privileges, accommodation or thing” thereby triggering a rent increase or decrease as the case may be. Capital expenditures may also trigger changes to one’s rent.
Landlords and tenants who agree to a rent increase, can do so, up to three per cent above-guidelines if the landlord has carried out – or promises to carry out – a “specified capital expenditure in exchange for the rent increase” or the landlord has provided or undertakes to provide a new or additional service in exchange for the rent increase.” RTA s. 120 (1), 121 (1)(3).
Such an agreement comes into effect after six days has passed since they were agreed upon (usually in writing). The tenant may repudiate (cancel) the agreement “by giving written notice to the landlord” to that effect in the first five days after signing. (RTA s. 121(4).
Although a decrease in municipal taxes may lead to a reduction of rent, a number of variables need to be considered before the reduction is realized.
Changes to services, facilities, privileges and accommodations may affect the rent reduction and may in fact lead to an increase, depending on the circumstance.
It becomes important for any tenant to educate themselves about rent control increase allowances, municipal tax levies from year to year and what capital expenditures may be in store for their rental unit or building. Once these are identified, it will assist tenants in determining the right of a landlord to alter monthly rent amounts.
For more information and assistance please contact the Elliot Lake Legal Clinic at 461-3935 or access our information at www.northshorelegal.ca
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