The Rural Voice, 1999-01, Page 50Agrilaw
Property tax rent reduction regulations are now law
By Paul Cappa
The Province has enacted
regulations under the provisions of
the Tenant
Protection Act
(TPA) which
detail the
manner in
which property
tax decreases
for residential
rental
properties will
be passed on to
tenants. The
regulations are
designed to
grant an
automatic rent
reduction to
tenants in circumstances where the
landlord has experienced a property
tax reduction for its residential rental
property that is subject to the TPA.
Summary of "Prescribed Rules"
• The expression "municipal
property tax" refers to the tax bill
received by a landlord and includes
the education tax component of the
bill but does not include certain
levies and penalties.
• To determine whether property
taxes for the rented residential
premises are reduced, in all cases the
landlord must compare the 1997 tax
charges with the 1998 tax charges.
• If property taxes drop by 2.5 per
cent or more, the residential tenants
at the property will be entitled to
notification by the municipality of a
rent reduction in "residential
complexes" of seven or more units. in
residential complexes of less than
seven units, it is not mandatory for
municipalities to issue rent reduction
notices to tenants. Some
municipalities may send them and
others may not. Landlords must
reduce the rent where there is tax
reduction of more than 2.49 per cent,
failing which the landlord will be
liable to penalties under the TPA.
• The reduction the tenant will
receive will be from the rent that they
are actually paying (i.e.: not from the
"maximum rent").
Law gluing
automatic
rent reductions
now in place
46 THE RURAL VOICE
• Where property taxes decrease
by more than 2.49 per cent, the
amount of the rent reduction is
calculated by taking the percentage
reduction in residential property taxes
between 1997 and 1998 and
multiplying the percentage reduction
by 20 per cent.
• Landlords must pass on rent
reductions to their tenants beginning
with the first rent payment in January
of 1999 in accordance with the
formula described above.
• Landlords taking rent increases
to be effective January 1, 1999 who
have experienced a property tax
reduction of more than 2.49 per cent
should be aware of the reduction in
their income that will occur
beginning in January.
Application to vary rent reduction
Landlords have a limited right to
seek a variation of the reduction to be
given. If taxes were, for example,
only 10 per cent of the total rent
payable, rather than the 20 per cent
figure that the province uses in
calculating the percentage reduction,
the tenants would be receiving a
windfall and the landlord would
experience a financial loss. In such
cases, the landlord has a right under
Section 137 of the TPA to apply for
an Order to vary the amount of rent
reduction. The deadline for filing
a variation application is
March 31, 1999.
Plan now
All landlords of
rented residential
premises that are
regulated by the
TPA should begin
planning now for
implementation of
tax reductions. The
first step is to
determine whether
or not your
1998
residential
property
taxes have
exceeds the threshold of 2.49 per
cent, then your tenants may receive
municipal notices between October 1
and December 15. Once you have
determined the tenants' rents are
going to be reduced, you should
decide what steps you are going to
take to ensure that you share fully in
the benefits of these legislative
provisions, while preserving a good
relationship with your tenants.0
Agrilaw is a syndicated column
produced by the full service London
law firm of Cohen Highley Vogel and
Dawson. Paul Cappa, a consultant
in the firm, practises in the area of
land use planning, municipal law and
rent controls. Agrilaw is intended to
provide information to farmers on
subjects of interest and importance.
The opinions expressed are not
intended as legal advice. Before
acting on any information contained
in Agrilaw, readers should obtain
legal advice with respect to their own
particular circumstances.
itoulgOAt *OW
decreased from 1997 and if
so, the amount of the
reduction. If the reduction