Instances of landlords offering cash for tenants to vacate a unit have risen in Toronto, according to real estate professionals in the city.
Real estate experts say the practice is still relatively uncommon, but they have been seeing it more frequently in Canada’s biggest city as landlords face financial pressures such as higher interest rates.
Natalie Costello, founder of Natalie Costello Real Estate, told BNN Bloomberg that the practice of cash offerings for apartment keys has been on the rise. Last year, she started personally helping three clients through the process.
“Unfortunately (it’s) not an urban legend, this is a very real thing that we are seeing more predominantly over the last little while,” Costello said. “I’ve spent over a decade in this industry and we heard whispers of it before, now it has become more prevalent.”
WHAT ARE ‘CASH FOR KEYS’ OFFERS?
Bob Aaron, a Toronto real estate lawyer, told BNNBloomberg.ca that as Ontario has been under rent control regulations for decades, sometimes a landlords want to sell a unit or raise rent beyond what the current tenant pays.
Landlords have three options in that case, Aaron explained: they can legitimately move into the unit themselves, do an extensive renovation or buy a tenant out.
“Colloquially that’s known as cash for keys,” he said.
“It becomes something of a dance. A tenant will ask for a very high amount, the landlord will offer a very low amount and then they have to come to some conclusion or the tenant just remains there.”
WHERE DO THEY HAPPEN?
While there is not a “dramatic amount of these cases,” Daniel Vyner, principal broker at DV Capital, said cash for keys offers appear to be increasing, mostly from real estate investors looking to sell their properties.
“The analogy ‘cash for keys,’ I’ve heard about that for many years, but it was really 2023 where I started firsthand hearing and seeing these situations,” Vyner told BNNBloomberg.ca in an interview.
The Toronto broker said cash-for-keys offers happen most often in rent-controlled condos due to cash-flow issues when tenants’ monthly rent payments “are insufficient” to cover the cash-flow expectations of a real estate investor, he said.
Those scenarios have become more frequent over the past year, Vyner said, as investors have had their finances squeezed by higher interest rates.
Delays at the tribunal that handles landlord-tenant disputes in Ontario may also be contributing.
Aaron noted that if a landlord wants to move into a unit, tenants are entitled to ask for hearing at the Landlord and Tenant Board – but it can take between six months to a year for a case to be heard, depending on what jurisdiction the property is in, he said.
RANGE OF PAYMENT AMOUNTS
Costello said she has seen a broad range of “cash for keys” offers.
“I’ve seen and heard anywhere from $10,000 to $30,000, so (it) just depends on the situation and it also seems to depend on the amount of rent that they’re paying,” she said.
Vyner said the most common payment amount he has heard of totals about six months of the tenant’s rent, but he has heard of offers amounting to a year’s worth of rent.
“It depends on the severity of the situation (and) the vulnerability of the owner,” he said.
Aaron said he has seen low monetary offers, around $2,000, and instances where a tenant asks for as much as $25,000.
“When landlords ask me, ‘How much should I pay,’ I tell them to do a risk-benefit analysis,” Aaron said.
“What percentage of the sale price is the tenant asking for? Is it one per cent, two per cent, 10 per cent? And what is the landlord’s downside risk if the tenant stays there?”
HOW COMMON ARE OFFERS?
Aaron said that he has seen three instances of cash for key offers over the “last couple of years.”
However, he noted that some cases “may never get to a lawyer,” as people may only seek legal advice if negotiations are ineffective.
Vyner said he directly or indirectly heard about “cash for keys” offers about once a week throughout most of 2023.
Offers of this type could become more common, he added, as mortgages are renewed at higher interest rates in the coming years, “which would further erode profitability if the current monthly lease isn’t increasing.”
TENANT RIGHTS
In cases like this, Aaron said Ontario law is clear that “the tenant is entitled to stay” in the unit paying the same rent, unless they are in default, come to an agreement with the landlord, or if the landlord moves in or does extensive renovations.
“A tenant is entitled to stay forever. There’s a 2.5 per cent annual increase, so they’ll have to pay that,” he said.
Aaron said that even if the tenant receives an offer, it may not offset a potential rent increase from moving.
“I can understand that tenants don’t want to move because no matter how much money they get from a landlord, whether it’s $1,000 or $10,000 or more it’s not a windfall. They’re going to have to turn around and pay market rent on an equivalent unit,” he said.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
