While the pool of renters is getting bigger thanks to the tighter mortgage rules, so is the number of ‘rogue’ tenants leaving landlords out of pocket.
There are reportedly 4.5 million rental units in Canada, with annual rental income now valued at $63 billion. It’s a big money business but some landlords are having to fight hard to get their cash. In 2012 alone, there were over 70,000 Landlord Tenant Tribunal hearings in Toronto in 2012.
“There are many hard luck and horror stories with tenants. Without a form of protection, there is no such thing as guaranteed rental income,” says Steven Solomon, president of the new industry player, RentShield Protection Canada Corporation.
He says Canadian landlords are following in the footsteps of their U.K. counterparts and taking preventative measures to protect themselves against loss of rental income.
“Over 60 per cent of landlords in the U.K. now have rental guarantees in place, with a similar high rate in Europe,” he says. “Many investors, particularly mom and pop landlords, depend on the monthly cash-flow and cannot afford to lose out on one or two months of rental income.”
Solomon says their new product – the Landlord Rental Guarantee program – is a direct response to investor needs. “If a renter does not pay, we do. It’s as simple as that. We also secure collections and evictions for delinquent tenants while our resource center offers warranty programs for appliances and has links to specialized insurance brokers.”
The estimated cost associated with the eviction of a defaulting tenant based on $15,000 annual rent can range anywhere from $2,500 to as much as $6,000 depending on the time taken to secure the eviction.
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