London

Less than a year after tenants moved into this new building, landlord seeks 7% rent hike

Tenants at one of London, Ont.'s newest rental buildings say they're shocked to be hit with seven per cent rent increases mere months after moving it, all because buildings constructed after 2018 are exempt from rent control guidelines.

Buildings constructed after 2018 are exempt from rent increase guidelines

One Richmond Row, located at 517 Richmond St. in London, Ont., is a 32-storey, 175-unit apartment building with a modern design. (Andrew Lupton/CBC)

As a longtime supporter of downtown London, Ont., Chris Callaghan was excited to be among the first tenants to collect his keys and move into the brand new One Richmond Row building in June. 

Old Oak Properties' 32-storey, 175-unit apartment building near the corner of Richmond and Dufferin has an eye-catching, ultra-modern design and overlooks St. Peter's Basilica. To Callaghan, the building offered Toronto-style downtown living in a city that has struggled to build density in its core. 

"The building itself was unique to London," said the 54-year-old. "The fact that it was going up in the downtown, I was proud to see that the city was turning a corner and we're going to be part of a transformational project, one that helps to enhance the downtown and bring people downtown to live. I felt like I was part of a project where I became a downtown pioneer." 

Less than a year into his tenancy, Callaghan — and a number of his neighbours — are less than elated. 

Early this year, tenants began to receive notices stating the landlords' intention to increase rents by about seven per cent. 

Residents of One Richmond Row say they were attracted by the idea of living in a new downtown building with modern design. However, tenants say they've been dealing with challenging security issues, including non-residents getting into the lobby where packages have been stolen. (Andrew Lupton/CBC)

When he signed his lease, Callaghan's rent for a two-bedroom apartment was $2,185 including utilities, a storage locker and free parking for one year. The increase will mean Callaghan must find an extra $160 a month starting June 1, when his lease turns over.

Callaghan is active on the building's Facebook group and believes every tenant received an increase notice. 

Increase came 'out of left field'

Callaghan feels it's unfair for the building's owner to ask tenants for such a steep increase only months after they signed a lease. 

"I really feel that I was preyed upon," he said. "I negotiated in good faith a lease amount and a few months later, I receive a notice that they're not going to honour that amount and that they're increasing it by seven per cent. This came out of left field." 

Callaghan said he's been unable to get the building owners to respond to his questions about why tenants are being hit with an increase now. 

CBC News reached out to Old Oak Properties for comment on Friday, but also did not receive a response. 

Lilya Volkova owns a tattoo business on Dundas Street West and in March last year moved into One Richmond Row with her partner.

Because it was built after 2018, One Richmond Row is not subject to rent control. Tenants who moved in early last year have received notice of a seven per cent rent increase. (Andrew Lupton/CBC)

She said the landlord originally asked for a 1.2 increase in December or January through the building's tenant web portal, an increase she says she could have lived with. But like Callaghan, that increase was upped to seven per cent in February, which she feels is unfair to apply to brand new tenants, some who moved in before the building was fully finished.

"It's just such an extortionate amount with not much warning," she said. "It's pretty shocking."

No rent control on new builds

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. 

When the province scrapped rent controls on all newly constructed buildings in 2018, the Ford government justified the move as a way to add more housing stock by creating an incentive for developers to build. 

Terrance Kernaghan, NDP member of provincial parliament for London North Centre, said his office has been fielding complaints from One Richmond Row tenants

He said exempting new buildings from rent control guidelines is bad policy, one that creates a loophole that leaves tenants at the mercy of landlords. 

"I think it would be helpful if, when tenants signed their initial lease, they were told their rent could go up," said Kernaghan. "They have to worry about what comes next year and the year after that. People only have so much to spend on housing."

While the notices are only an indication of the landlord's intention to raise rent, Kernaghan said tenants who choose to fight the increase at a Landlord and Tenant Board hearing — as Callaghan plans to do — are likely to lose.

"The legislation isn't on their side," he said.

Meanwhile, some tenants at One Richmond Row said the rental increase isn't the only challenge they're facing.

CBC News spoke with four tenants who said the building has security problems, including non-tenants who regularly enter the lobby and frequent thefts of delivered packages. 

Vehicle break-ins in the building's parking lot have become so bad, the building owner added fencing and a security gate. 

Callaghan believes the issues facing tenants at One Richmond Row may be a sign of the challenges renters could face at other downtown buildings now under construction in London's downtown core.

"London may still be in for a much harder time than we believe, actually creating a vibrant downtown core."

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