Many people, perhaps inspired by the books and seminars of financial guru Robert Kiyosaki, are attracted to real properties as an investment. But dealing with tenants and city hall can be a source of aggravation, as highlighted by the current furor over unpaid water bills in Ontario.
Some landlords include the water bill in the rent. Others charge it directly to their tenants to provide an incentive to use water economically. Whenever a delinquency in payments arises, many landlords in Ontario are finding that their municipality has recently transferred responsibility for collection from the water utility to them. They have to retrieve the money themselves or have it added to their tax bill.
Kayla Andrade of Cambridge, Ont. knows the aggravation only too well. She is a young mother of two children, and a landlord with tenants whose delinquent accounts have driven up her taxes. “Just because I am called a landlord does not mean I am rich—I am just getting by,” she says.
Numerous other landlords in Ontario are finding themselves in similar straits, and a groundswell of protest seems to be building. Andrade, in fact, is circulating a petition that calls on the Ontario Government to end the transfer of water bills to landlords.
Compared to water utilities, small-scale landlords like Andrade have less recourse for collecting unpaid water services, says Rachelle Berube, owner of a property management firm and blogger at Landlord Rescue. A utility can ask for deposits in advance, engage collection agencies, cut off service and sue the tenant. “The landlord has to wait until the tenant moves out and then take them to small claims court at their own expense,” adds Berube. “And small claims can take a year to get your money back.”
“You’re at risk from the tenants, and the laws are heavily pro-tenant,” she continues. “This is why there is little decent affordable rental housing—it’s just too damn risky.”
It might be supposed that landlords can recoup their losses by raising rents on tenants in other units, or on future occupants of the unit in arrears. But this makes their accommodations less competitive on the market, which can result in longer vacancies and a failure to break even.
Many local taxpayers may prefer that landlords be held responsible in order to avoid having the water bills put on their tax rolls. However, by making the ownership of rental properties even more uneconomical, the stock of affordable rental housing will be at risk of shrinking further. And this could lead to greater spending by local governments in the areas of social housing and related services.
Conservation issues may come into play, as well. Passing the tab to someone less able to collect on overdue payments could mean that the problem of unpaid water usage and over-consumption will grow steadily larger over the years to come—not a socially desirable outcome, it would seem.