Canadian January Jobs Report Suggests No Recession In Sight

General Kimberly Coutts 12 Feb

January Jobs Report Dispells Recession Fears
 

Today’s StatsCanada Labour Force Survey for January was a mixed bag and shows the dramatic effect of surging immigration. Canadian employment rose by a stronger-than-expected 37,300, but part-time jobs rose by 48,900, and in the public sector, the gain was huge. The employment rate fell a tick because population growth outpaced employment growth. The working-age population surged by 125,500 in a single month and is up by a remarkable 1 million adults year-over-year.

This ballooning of the working-age population is without precedent. In the past, it has never grown more than 500,000 in any year. Holy Cow, what are we doing?  Where will all of the people live, where will their kids go to school, where will the new hospitals be built, not to mention the transportation infrastructure on already crowded subways and roadways?
 

The unemployment rate fell a tick to 5.7%, the first such drop since December 2022. This reflected the 0.2 percentage point decline in the labour force participation love to 65.3%, as the number of people in the labour force held steady and the population rose.

Most of the new jobs were in the service sector, led by wholesale and retail trade, and finance, insurance, real estate, rental and leasing. There were declines in other sectors, especially in accommodation and food services.
 

In  January, average hourly wages were up 5.3% year-over-year, still way too high for the Bank of Canada. According to Statistics Canada, average hourly wages rose 5.9% to an average of $60.58 for employees with hourly wages in the top 25% of the wage distribution in January 2024, compared with an increase of 4.6% (to $17.64 per hour) for those with hourly wages in the bottom 25% of the wage distribution (not seasonally adjusted). Of course, the highest-paid workers earn a salary and are not paid by the hour.
Bottom Line

The next Bank of Canada announcement date is on March 6th. There is plenty of data yet to come out before then. But judging from what we already know, the economy is not in recession, and wages are still rising too rapidly. Housing markets are already beginning to heat up, and the US economy is running red hot. The strong US inevitably spills into Canada. This gives the BoC more time to ponder inflation. So far, there is no hurry for them to cut rates.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca

The Bank of Canada Holds Rates Steady And Expects Rate Cuts Later This Year

General Kimberly Coutts 24 Jan

The Bank of Canada Holds Rates Steady And Expects Rate Cuts Later This Year

Today, The Bank of Canada held the overnight rate at 5% for the fourth consecutive meeting but provided an outlook suggesting that monetary easing will begin by mid-year. The Bank forecasts a soft landing for the Canadian economy, with inflation falling to 2.5% by the end of this year. While some economists predict a recession, the Bank suggests that “growth will likely remain close to zero through the first quarter of 2024” and “strengthen gradually around the middle of 2024.” This would be a soft landing.

While inflation ended 2023 at 3.4%, owing mainly to high and sticky shelter costs, “the Bank expects inflation to remain close to 3% during the first half of this year before gradually easing, returning to the 2% target in 2025. While the slowdown in demand is reducing price pressures in a broader number of CPI components and corporate pricing behaviour continues to normalize, core measures of inflation are not showing sustained declines.”

The press release says that the “Governing Council wants to see further and sustained easing in core inflation and continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour.”  The Bank now believes the economy is in excess supply, inflation expectations and corporate pricing behaviour are moving in the right direction, and wage demands, at 5.4% year-over-year in the last reading–are still too high. Wages are a lagging indicator and with job vacancies returning to pre-pandemic levels, wage pressures are likely to dissipate as the year progresses.
 

Today, the tone was much more optimistic, suggesting that policymakers are increasingly confident interest rates are restrictive enough to bring inflation back to the 2% target. Still, Bank officials want to see more progress on core inflation before it begins to ease. It said, “The Bank’s preferred measures of core inflation have been around 3½-4%, with the October data coming in towards the lower end of this range.”

The central bank focuses on “the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour” and remains resolute in restoring price stability.

Bottom Line

This was a more upbeat Bank of Canada statement. There is a good chance that monetary tightening has done its job, and inflation will trend downward in the coming months. As we have seen, the road to 2% inflation is bumpy, but we are heading there probably sooner than the Bank expects. As predicted, they are staying the course for now, but multiple rate cuts are likely this year. The scheduled dates for announcing the policy rate are March 6, April 10, June 5 and July 24. The Bank of Canada will begin cutting the overnight rate somewhere in there.

For now, my bet is on the June meeting, but if I’m wrong, it will likely be sooner rather than later. Once they begin to take rates down, they will do so gradually, 25 basis points at a time, and over a series of meetings. We could well see rates fall by 100-to-150 bps this year. Risks to the outlook remain, as always.

I do not expect the overnight policy rate to fall as low as the pre-Covid level of 1.75% this cycle. Inflation averaged less than 2% in the five years before COVID-19, depressed by increasing globalization and technological advances. Those forces are now reversed.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca

Canadian Inflation Rises to 3.4% Y/Y In December

General Kimberly Coutts 16 Jan

A Bumpy Road To The Inflation Target

Canada’s headline inflation number for December ’23 moved up three bps to 3.4%, as expected, as gasoline prices didn’t fall as fast as a year ago. These so-called base effects were also evident in the earlier US inflation data for the same month.

Additional acceleration came from airfares, fuel oil, passenger vehicles and rent. Prices for food purchased from stores rose 4.7% yearly in December, matching the increase in November (+4.7%). Moderating the acceleration in the all-items CPI were lower prices for travel tours.

On a monthly basis, the CPI fell 0.3% in December after a 0.1% gain in November. Lower month-over-month price movements for travel tours (-18.2%) and gasoline (-4.4%) contributed to the monthly decline. The CPI rose 0.3% in December on a seasonally adjusted monthly basis.
 

Two key yearly inflation measures that are tracked closely by the Bank of Canada and filter out components with more volatile price fluctuations — the so-called trim and median core rates — increased, averaging 3.65%, from an upwardly revised 3.55% a month earlier. That’s faster than the 3.35% pace expected by economists. The trim rate rose due to the movements of rent and passenger vehicle prices.

Another important indicator, a three-month moving average of underlying price pressures, rose to an annualized pace of 3.63% in December from 2.94% in November, according to Bloomberg calculations. The Bank of Canada follows this metric closely because it reveals shorter-term inflation trends.

According to Bloomberg News, following the release of today’s CPI data, “the yield on two-year Canadian government bonds rose about four basis points to 3.857%…Traders in overnight swaps pushed back bets on when the Bank of Canada will start cutting rates to July, from as early as April before the release.”
 

Bottom Line

This is the last major data release before the Bank of Canada meets again on January 24th. I concur with the widely held view that the rate pause will continue at the next meeting despite evidence that the economy is slowing. Governor Tiff Macklem will err on the side of caution before beginning to cut overnight rates. The last reading on wages showed a 5.4% y/y rise, and yesterday’s housing release showed a bump in sales. Macklem and Co. will keep their powder dry until they see an all-clear signal that core inflation is sustainably below 3%.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca

A look back at 2023 and what’s ahead for 2024!

General Kimberly Coutts 10 Jan

As 2023 draws to an end and a new year begins, let’s look back on Canada’s economic landscape and ahead to what the economists foresee in 2024.

The past year demonstrated Canada’s economic resilience through robust job growth and increased investments at the beginning of the year. However, by year’s end, the current high-interest rates had contributed to a slowdown in business and consumer activities, leading to forecasts of weaker growth in the first half of 2024. Despite this, economists anticipate the economy to begin to rebound in the latter part of 2024.

In 2023, the inflation rate began at 5.9% and gradually decreased to 3.1% by November (pending December’s data). While the Bank of Canada doesn’t anticipate inflation reaching its 2% target until late 2025, it aims for comfort within the 3% – 2.5% range. The evident impact of the Bank of Canada’s rate hikes has resulted in prospective buyers feeling priced out of the market, impacting consumer confidence and leading to a ‘wait-and-see’ approach throughout 2023. Concurrently, the Bank of Canada’s strategic rate adjustments have effectively moderated the housing market’s pace, contributing to a gradual slowdown without significantly affecting property values in most parts of the country.

In 2023, Canadians also came to terms with the reality that rock-bottom interest rates are a thing of the past, and these new normal rates are now a permanent fixture. While we will see some modest decreases in rates in the coming year, many Canadians will no longer be able to delay their entry into the housing market in hopes of further rate drops.

Now, let’s focus on what lies ahead in 2024:

There are emerging signs indicating the tangible effects of the Bank of Canada’s (BOC) rate hikes are beginning to take root. Coupled with the anticipation of inflation dropping below 3%, we are finally witnessing movement in rates. Anticipated rate cuts from both the Bank of Canada and the US Federal Reserve have triggered a positive response in bond markets. This has resulted in lowered fixed rates, especially the 5-year rates, with some Insured rates dropping as much as 1%, fostering competition among lenders. As they gear up for the spring market, this competition benefits borrowers, especially first-time home buyers who have less than a 20% down payment.

There’s a glimmer of hope on the horizon for Floating Rate holders (Variable or Adjustable). Most economists and markets are predicting a potential 100 – 150 bps rate cut to the current policy rate in 2024. However, the transition won’t happen abruptly; the Bank of Canada (BoC) is likely to proceed cautiously, implementing gradual decreases while monitoring inflation and the economy. This will benefit Adjustable Rate holders with reduced mortgage payments and Variable Rate holders seeing a shift towards principal repayment.

With housing affordability and supply shortages pressing all levels of government, there will be a continued push for new construction developments aimed at bolstering the housing supply. Though this issue isn’t something that will be swiftly resolved within a year or even a few, it remains at the forefront of all levels of government, underscoring the ongoing necessity of addressing the housing shortage.

What this all means for you, the consumer:

It’s estimated that about $251 billion in mortgages will come up for renewal in 2024, with another $352 billion worth in 2025. As a result, many Canadians will soon face a significant increase in their monthly mortgage payment—a major expense—and will have to adjust their spending. With that said, many lenders are going to be competing for your business. Working with professionals like myself, with access to multiple lenders, is essential, allowing for better rates and products. It will also be important to get ahead of your renewal so you can adjust the family budget for a certain increase in your monthly mortgage payment.

For those dealing with high-interest debt, now is an opportune time to consider refinancing for debt consolidation, especially with declining rates, providing a chance to manage debt effectively. Consider this the “reset button” that can get you back on track and increase your monthly cash flow.

Finally, as there’s a growing anticipation that the period of interest rate hikes might be coming to an end, this prospect will rekindle buyer interest in the market. With the expected decrease in fixed and variable rates, increased purchasing power could spur more demand in the housing market, causing an uptick in values. Choosing a variable rate or a short-term fixed rate now enables you to buy before the surge in demand while also positioning yourself to secure a potentially lower rate in the near future rather than waiting for rates to drop significantly.

While uncertainties remain, it’s crucial for those planning mortgage transactions in 2024 to review their needs sooner rather than later. Together, we can determine the best course of action that suits your family’s budget and needs.

I’m here to assist whenever you’re ready.
Questions on your mortgage, or want to compare your mortgage to what is currently available? Please email me.

Inflation Held Steady In November

General Kimberly Coutts 20 Dec

 

Today’s inflation report was stronger than expected, unchanged from October’s 3.1% pace. While some had forecast a sub-3% reading, the November CPI data posted a welcome slowdown in food and shelter prices. Increases in recreation and clothing offset this–both are discretionary purchases. Cellular services and fuel oil prices declined on a year-over-year basis.

The CPI rose 0.1% from October to November, the same growth rate as in October. The steady pace of annual inflation resulted from the base effects in the energy sector. Gasoline prices fell to a lesser extent month over month in November (-3.5%) than in October (-6.4%). Base effects will also inflate next month’s year-over-year data as well.
 

Core prices aligned with the headline figures, as the Bank of Canada’s favourite core measures came in at roughly 3.5%. Even excluding food and energy, the core rose 3.5% y/y. The core data were more favourable at three-month trends, posting at about 2.5%.
 

Bottom Line

Today’s CPI data show why Governor Tiff Macklem is cautious about rate cuts, but judging from the past three months, core inflation is on a downward trend.

In a speech on Friday, Bank of Canada Governor Tiff Macklem said inflation could get “close” to the bank’s 2% target by late next year, though he also said it was “still too early to consider cutting our policy rate.”

The economy is slowing, labour markets have eased, and price pressures are slowing. The road to 2% inflation will be bumpy, but it remains likely that monetary tightening has peaked, and rate cuts will begin by the middle of next year.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca

Housing Markets Prepare For A 2024 Rebound

General Kimberly Coutts 18 Dec

 

Before we get into the details of the November housing market data released this morning by the Canadian Real Estate Association (CREA), big positive news for housing occurred yesterday. The US Federal Reserve gave its clearest signal yet that its historic policy tightening campaign is over by projecting more aggressive interest-rate cuts in 2024. This ignited one of the biggest post-meeting rallies in bonds and stocks in recent memory. Global shares spiked higher. Short-term Treasuries posted their best day since March, while world currencies surged against the US dollar and corporate bonds rallied. Canadian markets followed suit. If anything, Canada is far more interest-sensitive than the US, and our economy is far weaker.

As the charts below show, monthly mortgage payments relative to after-tax income are far higher in Canada than in the US, even more so given the tax deductibility of mortgage interest and property taxes south of the border. The US economy grew by a whopping 5.2% in the third quarter compared to a decline of 1.1% in Canada.  Therefore, the Bank of Canada will likely cut interest rates sooner and more aggressively than in the US, improving housing affordability.
 

The CREA data for November showed a bottoming housing market. Home sales recorded over Canadian MLS® Systems edged down by 0.9% from October to November 2023, the smallest decline since July.
 

New Listings

Sellers move to the sidelines as well. The number of newly listed homes fell 1.8% month-over-month in November. This followed a 2.2% decline in October.

With new listings down by more than sales in November, the national sales-to-new listings ratio tightened slightly to 49.8% compared to 49.4% in October. It was the first time this measure has increased since April. The long-term average for the national sales-to-new listings ratio is 55.1%.

There were 4.2 months of inventory nationally at the end of November 2023, up only slightly from 4.1 months at the end of October. As such, this measure also looks to be stabilizing and is still almost a full month below its long-term average of nearly five months of inventory.

The second chart below shows that we are definitely in a buyers’ market.
 

Home Prices

The Aggregate Composite MLS® Home Price Index (HPI) declined by 1.1% month-over-month in November 2023, reflecting softer market conditions since the end of the summer. Prices often react with a slight lag, so it will be interesting to see if month-over-month declines get smaller or stop getting larger in December in response to a stabilizing demand-supply balance.

While price declines remain mainly an Ontario phenomenon, home prices are now softening in the Fraser Valley, Winnipeg, and Halifax. Elsewhere in Canada, prices are mostly holding firm or, in some cases (Alberta, Saskatchewan, New Brunswick, Price Edward Island, Newfoundland and Labrador), continuing to climb. The Aggregate Composite MLS® HPI was up 0.6% on a year-over-year basis.
 

Bottom Line

The Bank of Canada policymakers will meet again on January 24th. While it will likely be several months before the Bank begins to cut the policy rate, market-driven interest rates have fallen sharply. Fixed mortgage rates have also come down but more moderately. I expect to start easing monetary policy in the spring, taking the overnight rate down by roughly 100 bps by yearend 2024. Housing activity will strengthen in 2024 and 2025, although the economy will be burdened by a substantial rise in monthly mortgage payments as many renewals or refinancings rise, peaking in 2026.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca

Bank of Canada hold prime rate for 3rd consecutive meeting.

General Kimberly Coutts 6 Dec

As we expected the Bank of Canada has held it’s overnight lending rate steady at 5% (this is the rate that the B of C utilizes to lend money to other banks).  What this means is that the Bank of Canada Prime stays at 7.2%, which is what affects us consumers.  It has been the third pause in a row which I’m sure we are all collectively very happy about.  Especially for those of us that have Variable Rate Mortgages, Home Equity Lines of Credit or any other sources of debt that are attached to the Prime Lending Rate.

The expectation by economists, is that the B of C will begin cutting the overnight rate sometime in 2024 and as early as April.  Over the last couple of weeks, conversations around variable rate options are coming back given this insight.

If you are up for renewal in the next 6 months and have questions of which direction to go in, please set up a Strategy Call to discuss.  It’s not always best to sign the first offering from the lender and I’m happy to review options.  Over the last few weeks, we’ve seen a steady stream of emails from lenders reducing their 3, 4 & 5 yr fixed rates.

I’m fortunate enough to receive economist commentaries so for those of you that want a bit more in-depth analysis, the below comments are from James Orlando, TD CFA, Director & Senior Economist

Slowing economy keeps the Bank of Canada on hold in December

  • The Bank of Canada maintained the overnight rate at 5.0%, while stating that it will continue with Quantitative Tightening (QT).
  • The Bank highlighted the slowing in economic momentum stating, “economic growth stalled through the middle quarters of 2023 (and that) higher interest rates are clearly restraining spending”. The Bank also noted that the labour market has cooled, as “job creation has been slower than labour force growth, job vacancies have declined further, and the unemployment rate has risen modestly.”
  • On the improvement in inflation, it stated that “the slowdown in the economy is reducing inflationary pressures in a broadening range of goods and services prices”. It did hedge this by stating that “shelter price inflation has picked up, reflecting faster growth in rent and other housing costs along with the continued contribution from elevated mortgage interest costs.”
  • On the future path of policy, the Bank “is still concerned about risks to the outlook for inflation” and maintained the statement that it “remains prepared to raise the policy rate further if needed”.

Key Implications

  • A hold today was the only option for the BoC. Given the economic backdrop, the BoC has likely gained greater confidence that its policy stance is sufficiently restrictive. There has been obvious weakness emanating from the housing market for a while now, but more recently, consumer spending has slowed alongside a further cooling in the labour market. But with inflation still above 3%, we get why the BoC isn’t ready to declare victory. Instead, the BoC seems like it is preparing to sit on the sidelines for the next couple of months while maintaining its cautious rhetoric.
  • Markets don’t think the BoC will be able to get too comfortable. The next move is clearly a cut, with odds pointing to the first move in April. We agree. The next few months are going to be challenging given our expectation that the unemployment rate will continue to rise, which will hit consumer spending and bring inflation down along with it. No wonder the Canada 2- and 10-year yields have fallen approximately 90 basis points over the last two months.

Mark your calendars as the scheduled dates for the interest rate announcements for 2024 are as follows:

  • Wednesday, January 24*
  • Wednesday, March 6
  • Wednesday, April 10*
  • Wednesday, June 5
  • Wednesday, July 24*
  • Wednesday, September 4
  • Wednesday, October 23*
  • Wednesday, December 11

The Table Is Set For Rate Cuts In 2024

General Kimberly Coutts 30 Nov

The Table Is Set For Rate Cuts In 2024
 

The Canadian economy weakened far more than expected in the third quarter, down 1.1% annually. However, the Q2 figures were revised up significantly from a 0.2% decline to a rise of 1.4%. Such are the vagaries of economic data. The Canadian economy is contracting despite the positive impetus of rapid population growth. Household consumer spending flatlined, and the savings rate rose, confirming that the central bank’s aggressive interest-rate hikes are doing their job to slow economic activity.

Statistics Canada also released preliminary data suggesting that GDP grew 0.2% in October, boosted by residential construction and increased oil and gas extraction and retail trade, after the better-than-expected 0.1% expansion in September.

The economic contraction was broadly based. Household spending hasn’t been this weak since 2009, except during the pandemic lockdowns. In addition, business investment was particularly feeble, down 14.4% for business equipment and -7.7% for nonresidential construction. Exports also declined 5.1% over the same period.  Investment in residential construction rose 8.3% annualized, the first increase since the beginning of 2022.
 

Job vacancy data, also released today, posted another decline, confirming that the economy has weakened and excess demand has been eliminated. On a per capita basis, Canada’s economy has contracted for the second consecutive quarter.

Tomorrow, Statistics Canada will release the labour market report for November.
 

Bottom Line

Today’s release is welcome news for the Bank of Canada. Tiff Macklem said last week that the Bank’s interest rate hikes were doing their job to return inflation to its 2% target. The Governing Council meets once again on December 6th. We expect a more dovish press release suggesting that the policy rate has likely peaked. Market-driven interest rates have fallen sharply since early October, taking fixed mortgage rates down significantly (see chart below).

Traders in overnight swaps are betting the Bank of Canada will loosen monetary policy as early as April 2024, little changed from before the release. I expect that the Bank of Canada will gradually cut interest rates beginning in the second quarter of next year, taking the overnight rate down 200 basis points to 3.0% by year’s end.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

Canadian Inflation Dips to 3.8% Keeping BoC On The Sidelines.

General Kimberly Coutts 18 Oct

Published by Sherry Cooper October 17, 2023

Canadian Inflation Dips to 3.8% Keeping BoC On The Sidelines.

good news on the inflation front suggests policy rates have peaked

Today’s inflation report for September was considerably better than expected, ending the three-month rise in inflation. Not only did the headline inflation rate fall, but so did the core measures of inflation on a year-over-year basis and a three-month moving average basis. This, in combination with the weak Business Outlook Survey released yesterday, suggests that the overnight policy rate at 5% may be the peak in rates. While I do not expect the Bank to begin cutting rates until the middle of next year, the worst of the tightening cycle may well be over.

Offsetting the deceleration in the all-items CPI was a year-over-year increase in gasoline prices, which rose faster in September (+7.5%) compared with August (+0.8%) due to a base-year effect. Excluding gasoline, the CPI rose 3.7% in September, following a 4.1% increase in August. Looking ahead to the October inflation report, the base effect for headline CPI is favourable, as CPI surged in October 2022. Gasoline prices are down about 7% so far this month. Given the war in the Middle East, however, there is no guarantee that this will hold, but if it does, the October headline CPI could move into the low-3% range.

On a monthly basis, the CPI fell 0.1% in September after a 0.4% gain in August. The monthly slowdown was mainly driven by lower month-over-month prices for gasoline (-1.3%) in September. Goods inflation fell 0.3% from a month earlier, the first time since December 2022, and grew 3.6% from a year ago versus 3.7% in August. Services inflation was unchanged from August, the first time it hasn’t grown on a monthly basis since November 2021, while the rate slowed to 3.9% on a yearly basis, from 4.3% in August.

Yesterday’s Survey of Consumer Expectations showed that perceptions of current inflation remain well above actual inflation.  One reason is the very visible level of grocery and gasoline prices. As the chart below shows, food inflation–though still elevated–decelerated to 5.9% last month, and CPI excluding food and energy fell to a cycle-low 2.8%. Large monthly gains in September 2022, when grocery prices increased at the fastest pace in 41 years, fell out of the 12-month movements and put downward pressure on the indexes.

Prices for durable goods rose at a slower pace year over year in September (+0.4%) compared with August (+1.4%). The purchase of new passenger vehicles index contributed the most to the slowdown, rising 1.7% year over year in September, following a 3.1% gain in August. The deceleration in the price of new passenger vehicles was partly attributable to improved inventory levels compared with a year ago.

Additionally, furniture prices (-4.6%) and household appliances (-2.3%) continued to decline year-over-year in September, contributing to the slowdown in durable goods. Consumers paid less on a year-over-year basis for air transportation (-21.1 %) in September, coinciding with a gradual increase in airline flights over the previous 12 months.

Other measures of core inflation followed by the Bank of Canada also decelerated.

Bottom Line

According to Bloomberg News calculations, “A three-month moving average of underlying price pressures that Governor Tiff Macklem has flagged as key to policymakers’ thinking fell to an annualized pace of 3.67%, from 4.29% a month earlier.”  While this is still well above the Bank’s 2% target, the global economy is slowing, the Canadian and US economies are slowing, and with any luck at all, the Bank of Canada might see inflation move to within its target range next year. However, the central bank will be cautious, refraining from rate cuts until the middle of next year. The full impact of rate hikes has yet to be felt. The next move by the Bank of Canada could be a rate cut, but not until next year.

Please Note: The source of this article is from SherryCooper.com/category/articles/

So, you need a tenant.

General Kimberly Coutts 18 Oct

So, you need a tenant.

If you have a basement suite or rental property and you are currently looking for a tenant, there are some things to know! Whether this is your first tenant or you have other rental properties, it is a good idea to familiarize yourself with the specifics to ensure a harmonious tenancy.

As always, your responsibility as the landlord is to keep your rental properties in good condition and ensure they meet health, safety, and housing standards. However, as a landlord, you also have additional responsibilities around the rental agreement and tenant regulations.

Tenancy Agreement

Landlords are required to prepare a written agreement for every tenancy. Bear in mind, if this agreement is not prepared the standard terms for your province will still apply, especially if a security deposit is paid. This agreement should clearly outline the following:

  • Who the agreement is between
  • The length of the tenancy
  • Rent amount and due date
  • Required deposits (if any)
  • Pet restrictions (if any)
  • Additional terms (smoking or non-smoking, etc)

The tenancy agreement should also outline if there is the ability to add a roommate, and whether or not utilities, parking, storage, laundry, etc. are included.

Deposits

Typically, a security or damage deposit is requested by the landlord to establish tenancy and cover any unexpected issues that may arise. The deposit can be no more than half of the first month’s rent.

If you are charging a pet deposit fee, note that guide or service pets are exempt from any damage deposits. In addition, you cannot charge fees beyond the pet damage deposit.

Move In

To ensure the move-in goes smoothly, tenants and landlords should schedule a move-in time that works for everyone. At the beginning of the tenancy, you may also consider an inspection before the new tenant has moved in to ensure everyone is on the same page and the condition of the unit is clear in regard to any potential damages or fixes needed.

As a landlord, you are also responsible for changing the locks (at your cost) should the new tenant request it.

Additional Considerations

As a landlord, you will want to assess the suitability of any new tenant before signing the agreement. There are a few things you can do to ensure a smooth process and the right choice of tenant:

  • Ask for proof of identity
  • Thoroughly check all references
  • Contact previous landlords to ask about rental and payment history
  • Conduct a credit check to confirm income and financial suitability
  • Get the names of all persons to be living in the rental unit

Once you have reviewed the above, you will be in a good position to determine if the potential tenant is a good fit for the rental space.

However, keep in mind that you cannot refuse to rent to a tenant based on any discriminatory aspects such as race, gender, sexual orientation, religion, etc. In addition, you cannot refuse to rent to individuals on income assistance.

While it can seem like a lot, with the proper preparation and understanding of tenant laws and regulations in your area, you can ensure a smooth and successful rental process!

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