The City of Toronto sends notices each year to landlords and tenants of rental residential properties that have property tax reductions of more than 2.49% from one year to the next. In accordance with the provincial Residential Tenancies Act, tenants in these properties can reduce their rents on December 31. The notices explain how to calculate the automatic rent reduction.
The Act requires that municipalities send out the notices of rent reductions to landlords and tenants of rental multi-residential buildings of seven or more units. Toronto City Council has directed that notices also be sent to small rental residential buildings.
Notices to landlords of 4,817 properties eligible for the rent reductions are to be mailed on September 10, 2012.
Notices will be mailed to tenants living in some 135,130 units of these properties by December 15, 2012. More information will be posted on this page in December for tenants.
Notices sent to landlords indicate the percentage by which all tenants in the building are entitled to reduce their rents. For example, if it is a 1.65% rent reduction and the current monthly rent is $800, the exact dollar amount of the new rent is calculated like this:
The monthly rent reduction: $800 x 0.0165 = $13.20
The new monthly rent : $800 - $13.20 = $786.80
Note that the amount of the rent reduction is NOT the same as the amount of the property tax decrease. The provincial legislation says that property taxes make up about 20% of the rental charge in multi-residential buildings. The rent reduction is equal to 20% of the percentage tax decrease. For example, for a 5% decrease in property taxes, tenants could reduce their rent by 1% (20% x 5% = 1%).
For residential buildings with six or fewer units, the legislation puts property taxes at about 15% of the rental charge. Using the same example of 5% tax decrease, the rent reduction for the tenant would be 0.75% (15% x 5% = 0.75%).
Rules about automatic rent reductions due to property tax decreases do not apply to certain types of rental residential properties. Examples include social housing, non-profit housing projects, non-profit co-operatives, vacation homes and housing owned by educational institutions. Rental properties that became occupied after November 1, 1991 are also exempt. Tenants living in any of these properties are not eligible for a rent reduction if the property tax decreases and should not receive a notice from the City. Also, if a tenant lives in a privately owned rental apartment or home which is subsidized by any level of government, the tenant is not eligible for a rent reduction, nor should the tenant receive a City notice.
Please note: There are other exemptions. See the Residential Tenancies Act or contact the Landlord and Tenant Board for information about the complete list of exemptions.
Landlords and tenants may call 311 if they have questions about their notices. Multilingual assistance is available through this service.
For information about the calculation rules, exemptions, or making an application to change the percentage of the automatic rent reduction, please call the Landlord and Tenant Board at 416-645-8080, or visit www.ltb.gov.on.ca/.