Rental Replacement

Redevelopment and intensification of an existing rental building is rarely without controversy. For residents, the loss of a home they may have lived in for decades is irreplaceable. Rental housing stock is incredibly important for the City to protect to ensure long-term housing affordability. As the City continues to receive new applications, this resource is to assist existing tenants in navigating this stressful process.

Who's Responsible for What?

Municipal

Rental Housing Demolition and Conversion Control by-law

Provincial

s.111, City of Toronto Act (2006)

s.99.1, Municipal Act (2001)

Federal

The City recognizes that protecting the existing rental housing stock was incredibly important to ensure renting was an attainable housing option for residents, especially seniors, students and families.

Unfortunately, the City cannot refuse a development application on the basis of hardship to existing tenants under provincial rules and public policy. While there are tenant protections under the Residential Tenancies Act, the City felt they were inappropriate to deal with the magnitude of rental housing stock under threat in Toronto. As such, protections were codified in the City’s Official Plan under our Housing policies (3.2.1.5 and 3.2.1.6):

5. Significant new development on sites containing six or more rental units, where existing rental units will be kept in the new development:

a. will secure as rental housing, the existing rental housing units which have affordable rents and mid-range rents; and

b. should secure needed improvements and renovations to the existing rental housing to extend the life of the building(s) that are to remain and to improve amenities, without pass-through costs to tenants...

6. New development that would have the effect of removing all or a part of a private building or related group of buildings, and would result in the loss of six or more rental housing units will not be approved unless:

a. all of the rental housing units have rents that exceed mid-range rents at the time of application, or

b. in cases where planning approvals other than site plan are sought, the following are secured:

i. at least the same number, size and type of rental housing units are replaced and maintained with rents similar to those in effect at the time the redevelopment application is made;

ii. for a period of at least 10 years, rents for replacement units will be the rent at first occupancy increased annually by not more than the Provincial Rent Increase Guideline or a similar guideline as Council may approve from time to time; and

iii. an acceptable tenant relocation and assistance plan addressing the right to return to occupy one of the replacement units at similar rents, the provision of alternative accommodation at similar rents, and other assistance to lessen hardship

The net effect is to try and ensure that when the building is completed, the previous rental units are functionally “replaced” in the new building, and with a tenant relocation and assistance plan available to help existing tenants financially while they choose whether or not to return to the new building.

Learning that you may lose your home is very stressful. Tenants may have a large number of questions about what will happen to them this period. This section will attempt to briefly explain this process.

IMPORTANT: If you want compensation, wait until you get a Notice to Vacate

You are under no obligation to leave until you get a Notice to Vacate from your landlord. Your landlord/building owner may try to encourage you to move out of your unit ahead of receiving a Notice to Vacate, including financial compensation. These offers are not illegal, but moving before receiving a Notice to Vacate will likely disqualify you from most compensation under a Tenant Assistance and Relocation Plan. So consider whether accepting an alternative option is worth it for you.

Continue to Pay Your Rent and Communicate with your Landlord

It is important that you remain in good standing with your landlord; the City cannot protect tenants under a Tenant Relocation and Assistance Plan who are forced out of the building. During that period, your landlord is still required to communicate with you, maintain your unit, and address property standards issues. If you have unaddressed issues, please contact RentSafeTO by calling 3-1-1 or visiting their website.

Wait for the City’s Process to Conclude

Between the City receiving an application and issuing a building permit for demolition, there are many steps that developers need to take before they can issue a Notice to Vacate. There will be a public community consultation that the City will hold, as well as a meeting just with tenants in order to explain the Tenant Assistance and Relocation Plan for their building. You are strongly encouraged to attend both. It can potentially take years before a Notice to Vacate is issued; please contact the City or my office if you would like an update on any redevelopment.

Wait for your Notice to Vacate to arrive

Once you receive this notice, you will have six months to move out. Make sure your landlord has your current contact information so you can receive updates on the development's progress.

Choose whether to return

Once the building is complete, you will have the option to pick a replacement rental unit based on the seniority of your previous tenancy. These units will be similar in size, and depending on availability, you can choose to move to a larger (e.g., 2-bedroom to 3-bedroom) or smaller (e.g., 2-bedroom to 1-bedroom) unit, with an associated increase or decrease in rent.

You can choose not to return, although any compensation will then end. You do not need to make a decision until you are notified by the developer that a replacement unit is nearing occupancy.

The City has a standard Tenant Assistance and Relocation Plan that it asks applicants to adhere to in order to provide some certainty and consistency to tenants across the City. Please note that these benefits only apply to tenants in buildings that would lose six or more rental units, and may only be provided to residents who moved into a building prior to a development application before the City. The City will hold a meeting with building tenants to ensure these benefits are properly communicated.

Tenants must receive a Notice to Vacate in order to obtain these benefits.

Notice to Move Out

Under City requirements, tenants are to be provided six months Notice to Vacate by their landlord to move out of their unit before demolition can begin.

Rental Compensation

Tenants will receive compensation equal to three months’ rent when the Notice to Vacate is provided. An additional four months’ compensation is to be provided for Special Needs Tenants, including seniors or those experiencing significant health conditions.

Rent Gap Payment

A developer will be required to provide a lump sum payment to tenants to help bridge the increase in rent between when they move out and when they return. This payment is based on a tenant’s current rent compared to the average market rent for a private rental apartment unit in the area (as determined by the Canada Mortgage and Housing Corporation), multiplied by the number of months until they can return to the new building.

This rent gap payment is considered compensation, and is therefore not taxable, and will not impact Ontario Disability Support Program (ODSP) eligibility.

Moving Compensation

Tenants will receive a lump sum of money, depending on the size of their unit, to assist with moving related costs from the building, as well as a lump sum to move back to the building.

Leasing Assistance

A leasing agent will be made available during the six-month Notice to Vacate period to help tenants find rental housing.

Right to Return at Similar Rent

Should they wish, tenants will be able to return to the new building post-construction. Rents for returning tenants will be similar to those paid before the Notice to Vacate, equal to the previous rent plus any additional provincial rent guideline increases between moving out and moving back. Upon return, future rent increases would also be limited to the provincial rent increase guideline.

Frequently Asked Questions

How are rent gap payments issued?

When you move out, you will receive a cheque for a lump sum equal to 36 months of rent gap payments. Should construction exceed 36 months, any future rent gap payments will be mailed to your address on file.

Rent gap payments cannot be issued via wire transfer or Interact e-transfer as the City of Toronto requires physical cheques.

Are rent gap payments and other compensation taxable?

No.

Will returning tenants have to pay condo fees in the new building?

No.

How does unit assignment in the new building work if we exercise our right to return?

Units are assigned based on seniority and choice. The developer will give you six months' notice before the building is ready for occupancy. You will rank your floorplan preferences for the same unit type (i.e. studio, one bedroom, two bedroom, three bedroom), which will be incorporated into a unit offered to you three months before occupancy. If you accept the offer, you will be required to sign a formal lease for the new unit. Once the building receives its occupancy permit from the City, you will be able to schedule a visit to view the unit.

How is the seniority list determined?

Your seniority ranking will be stated in your N13 Notice and is based on your unit type and your original move-in date (your first move-in date if you have had multiple continuous tenancies within the same building). If you moved in on the same date as another unit, it is based on who signed a lease first. If you find that the date is incorrect on your form, you will have 35 days from receiving the Notice to Eligible Tenants to dispute that date and request a correction. The landlord will issue the final seniority list 15 days after that (50 days total from when the Notices were delivered).

If we waive our right to return, can we later choose to return after all?

No.

Can we exercise our right to return and then at the last minute, after the new building is ready for occupancy, suddenly decide to not move back into the new building after all?

Yes, even if you indicate in your Tenant Intention Form that you would like to exercise your right to return, you can refuse a replacement unit up until you sign a formal lease for the replacement unit.

How can we afford to return to the future building?

Every tenant has the legal Right to Return, which means you can return to a unit of the same type as the one you are currently leasing at a similar size and rent (only increased by the Provincial annual guidelines). Returning tenants will have access to all amenities provided in the new building.