Should Landlords Be Licensed?

25 May 2016

Toronto is considering an experiment that would give landlords and apartment buildings restaurant-style grades.

Last week, a Toronto City Council committee voted unanimously to endorse a new licensing regime for landlords. The proposal would institute a system for grading landlords of buildings of a certain size for conditions such as mold, bedbugs, working elevators, water cleanliness, and working air conditioning. If the full council proceeds with the idea, landlords will be subject to licensing and, potentially, grades that they will be required to post in building lobbies—the same way restaurants do in some cities.While some of the details have yet to be determined, the bill would require landlords of rental buildings of three or more stories or 10 or more units to pay a licensing fee of $12 to $15 per unit, per year. The fees would defray the roughly $3.5 million cost for executing annual audits. The program would call for detailed building management plans from landlords; currently, inspections typically follow complaints. The Association of Community Organizations for Reform Now (ACORN) supports landlord licensing, while the Greater Toronto Apartment Association opposes it.
Toronto Mayor John Tory has expressed some doubts about whether licensing landlords is necessary or workable. But to some extent, that question has already been answered. Rentlogic, a Canadian company that uses open data to provide a better rental market for prospective tenants, has built a tool, LandlordWatch, that ranks the worst landlords in Toronto, based on the number of investigations into the condition of their buildings and resulting violations.
Screenshot showcasing the Toronto buildings with the most investigations. (LandlordWatch)
The LandlordWatch tool features two tabs: one window that shows the most offensive buildings (i.e., the buildings that have earned the most building inspections) and another window that shows the landlords that have earned the most violations. There’s a certain self-selecting bias built into the tool, since building inspections are the result of 3-1-1 calls, meaning that residents must be both informed about their rights and empowered to exercise them for inspections and violations to appear in the data. (These data go back to 2014.)Yale Fox, founder and CEO for Rentlogic, says that the problem with the 3-1-1 system is that it addresses building problems after they happen. “It’s a reactive approach,” he says. “You wouldn’t want your airplane to be inspected only if there’s a complaint.”
LandlordWatch’s list of Toronto’s 100 worst landlords shows that a minority of them have racked up the most violations in the city. For example, the top five worst landlords have just slightly fewer violations (1,075) than the bottom 50 worst landlords combined (1,188, according to data provided by Rentlogic). These data don’t account for the number of buildings that a landlord operates, which skews the data somewhat. Toronto Community Housing, for example, is the largest social-housing provider in Canada; it has by far the most violations (452 from 2014–2016), but it also operates some 2,100 buildings.The top-heavy list of violations might seem to back up the argument that the city should save its resources and just focus on the few bad apples. Then again, among the board of directors for both the Greater Toronto Apartment Association and the Federation of Rental-Housing Providers of Ontario are companies that make the LandlordWatch worst 100 list, including CapREIT (#28), Morguard (#41), and Timbercreek (#65 in 2014). So when the GTAA argues that Toronto should focus on bad landlords, it’s unclear whether they are counting their own members. (The GTAA did not respond to a request for comment.)“It shouldn’t matter how big of a landlord you are,” Fox says. “Violations are violations. If we weighted [violations] based on portfolio size, it would basically give some of the biggest landlords a pass.”Potentially even more useful, from a public-service perspective, is the list of investigations by building address. A prospective tenant could use the tool to find out how many investigations a particular property has earned in recent months. The apartment building at 104–105 West Lodge Ave., to pick one from the list, saw a spike of 85 investigations in March—well over the typical monthly figure for this building. (A representative from WynnGroup Residential who answered a call about this building declined to talk about the inspections and hung up the phone.)

Fox says that Rentlogic built out LandlordWatch: Toronto quickly in order to show what building and landlord ratings could do for renters in advance of the public debate over landlord licensing. As-is, given some limitations to the availability of public data on violations and inspections and some additional features that Rentlogic intends to build, it is an incomplete tool. But even in its current form, LandlordWatch showcases how hard this information is for most renters to find, and what a difference it makes to put the data front and center—and why a grade for a landlord and for a building is an idea that serves renters’ interests.