Ontario Commercial Rent Reform
New Renter’s Rights for Business Owners.
Why Commercial Rent Reform?
Canadian businesses create thriving main streets – but what happens when the rent goes up by 30% or more? It’s time for a fairer main street economy for both commercial tenants and landlords. We have 3 big ideas to help boost Canada’s main street economy.
Big Idea 1:
Standardized Leases provide the basics for an agreement between a commercial tenant and landlord – while maintaining custom elements.
A simplified structure helps both parties understand their responsibilities and obligations – while offering a document to build amendments and detailed elements of an agreement.
Standard leases will also give New Canadians a better foundation to understand the agreements they’re signing when starting a brick and mortar business.
Big Idea 2:
Dispute Resolution Tools
Currently, the only way to resolve an issue is taking a Landlord to court. If that’s because of a leaking sewage system, this months-long process won’t matter, the damage has already been done.
Dispute Resolution Tools like a Commercial Landlord-Tenant Board will help reduce lawyer fees and shorten Commercial Tenant-Landlord resolution times.
Ontario’s courts are clogged – adding more tools for dispute resolution will help businesses and landlords avoid this worst-case scenario more often – and allow both to focus on doing business.
Big Idea 3:
Rent Increase Caps
There is no limit to how much a tenant’s commercial rent can increase in Ontario when their lease is up – Landlords can dictate any sized increases to rent.
In Toronto between 2021-2023, commercial retail rent went up almost 20%. Even without pandemic-related debt, that’s an unsustainable increase for almost any brick and mortar enterprise to handle.
Businesses are shutting down because of 20, 50, or even 100%+ rent increases. in Ontario Keeping local businesses thriving on Main Streets depends on a fair process for rent negotiations.
Rent is a Top Expense for Businesses
“Their rent went up by 50% so they just shut down” is a phrase shared about many restaurants in Ontario. In London, Ontario, that’s exactly what happened to Marinos. 2023 would have been their 30th anniversary – instead of paying a 55% increase, without notice, they closed their doors.
A sensible Commercial Rent Cap would ensure that both Tenants and Landlords are able to agree on reasonable rent increases that benefit both businesses. Losing a London institution like Marino’s was completely preventable. However, without regulation, unscrupulous landlords are able to increase rent by any amount they desire, even if it negatively impacts the surrounding community.
Dramatic rent increases are the norm for small businesses
In June 2022, the BWA learned of S.P.A.C.E. Dance Studio on the Danforth in Toronto. The owner Linette told us her rent would be going up 35%.
Linette’s story is common. We’ve heard stories (and seen the receipts) of rent going up 50, 100 – and even in one case 200% from one lease term to the next. Businesses take on every cost in a lease, from rent to utilities and property tax – there’s no reason for commercial rent to increase in Ontario by this amount ever.
In Linette’s case, her rent increase came at the same time as a persistent sewage leak in her basement. Her only recourse would be to sue her landlord, an action costing thousands of dollars and potentially hundreds of hours. A Commercial Tenants Board would give businesses and landlords much faster resolution than Ontario’s clogged court system.
Businesses worry about having to move or permanently close
BWA Member OxiCP is a successful industrial cleaning manufacturer located in Guelph. Even with their success, they worry about the end of their current lease. It renews in 2024 and at that time they’ve been told to expect their rent to double.
“Doubling our rent is another $200,000 per year and we already operate on thin margins.” Says David Stone, Founder of OxiCP. “I’d much rather spend that money on employee training or higher wages. At this point it feels like our Landlord has more control over our business than we do.”
Standardized Leases would help businesses like OxiCP negotiate better terms, in good faith, with their landlords. Currently there are no regulations surrounding Commercial Leases, meaning Landlords control every aspect of these agreements that can be worth millions of dollars. Leveling the playing field will give businesses and landlords a greater opportunity to build toward long-term success together.