When homeowners decide to rent out a suite in their house, or investors choose to rent out the investment condo, they are often required to obtain a business licence.

But it’s a requirement that often gets sidelined, particularly in a housing market where mom-and-pop investors are increasingly scooping up properties to use as rental units. A lot of landlords won’t even know it’s required.

Almost half of condos built between 2016 and 2020 were investor owned in BC, according to Statistics Canada data released in March. In Toronto, more than half of condos from that period were used as investment properties, at 55.2%. If we go back in time, only one quarter of condos built before 2000 in Toronto were investor condos. And in Vancouver, only 27% of condos built in that period were used as rental investments.

While most municipalities require licences to operate short-term rentals such as Airbnb, some require licences for long-term rental as well. Others are still debating the question of licensing landlords, which could help regulate an industry that is still largely unregulated in the way that restaurants and daycares are regulated.

For several years, London, Ontario has required that small landlords jump through hoops to ensure their rentals are up to code and licensed. Hamilton has followed suit with a pilot program that is underway in some wards. Burnaby, BC, requires a house rental business licence. The city of Vancouver requires that all landlords take out a long-term rental business licence, but according to a city spokesperson, they don’t keep track of compliance.

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“If the City discovers a unit isn’t licensed, our property use inspectors will work with the owner to come into compliance,” said the city, in an email comment.

Vancouver resident Mie Takahashi is calling for better regulation after renting several apartments in Vancouver for the last 11 years, after emigrating from Japan. She said she finds the rental situation in Vancouver “insane,” because of the lack of good rental housing at a reasonable rent. She has found substandard secondary rental units, mostly in people’s houses, that are being offered to renters who have no other options. When she realized that her landlords are supposed to have licenses, she decided to press the issue.

Takahashi wrote a letter to the BC Residential Tenancy Branch asking that landlords be required to show their business licences as part of the rental application process, and to declare that they’ve at least watched a tutorial video on how to be a landlord.

“In my long years of renting a suite from different landlords, I have never seen a licence mentioned or displayed, as guided in the City of Vancouver’s website… Renters in desperate need for a place dare not ask these questions to their potential landlord… we need our government to use tools to enforce the regulations and help us,” she wrote. She got a response that they’d look into it.

She and her husband have lived in five rental apartments in Vancouver. Some places had mold and lacked light. Other landlords didn’t appear to have read or understood the landlord-tenancy agreement, says the English language teacher.

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“Our former landlady set the water temperature of the water heater at around 35 degrees [Celsius]. That’s bath water, even in wintertime,” she says of one experience.

As the increase in investor-run rental housing grows, so too does the need for better regulation. Tenants’ rights group Acorn Canada has long lobbied for a landlord registry. Scotland, known in housing advocate circles for its progressive housing policies, has a landlord register, which requires private landlords to fulfill that standards are met. Toronto has a RentSafe program that is a registration for all landlords with buildings that have 10 or more units. Programs pay for themselves through fees, although there is concern that the extra cost will be passed along to renters.

Jim Dunn, who is the Senator William McMaster Chair in Urban Health Equity at McMaster University, has said that a licensing program would offer better data on how, exactly, renters are living -- key information for housing research.

“I’m really interested in the characteristics of the rent charged, the utilities included, and other amenities, because we just don’t know. We are in an unaffordability crisis and we are flying blind. The census comes out every five years and it’s two years out of date by the time we get it. We’ve talked to a number of municipalities about their potential plans for rental licensing and very few have thought about it as collecting data for housing affordability,” Dunn said.

David Hutniak is chief executive officer of LandlordBC, which represents landlords and educates them on the Residential Tenancy Act. It is not a regulatory body. He said not all municipalities require licences, but there are a number that do require some sort of registration.

His organization doesn’t have statistics on compliance; however, part of their job is to encourage landlords to operate professionally and offer a safe and healthy rental home.

“In our education programming we speak to this issue with our members.  In terms of the broader universe of basement suite and secondary market landlords, do they know that they require business licenses? Probably not. Is this robustly enforced by the city?  Not to my knowledge, until, I suppose, there are citizen-generated complaints.”

As to why it’s not enforced, he says that it’s likely “they want every unit of rental we can generate.”

In other words, more red tape is probably the last thing that landlords want now that they are also facing caps on the rents they can charge, strict rules about evicting a tenant and compensation required, as well as a lengthy arbitration process for when things do go wrong. Landlords can also end up in court with large legal bills even if they win the case against them.

“It’s incumbent upon individual landlords to become familiar with bylaws specific to where they are operating and comply accordingly,” said Hutniak. “We can’t compel them to license their secondary suites, if that’s a requirement, but like I said, we raise the issue and encourage them to do so if required in their municipality.”  

As for Takahashi and her husband, they finally found a secure and affordable basement suite to rent, at $1,300 a month. However, generally, renters in Vancouver live with uncertainty, so there are never guarantees.

“We as renters, we just live in fear of what will happen to us because it’s hard to find the next one. So we just stay quiet, and try to be nice,” she says.