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Ah, the ever-lovin’ harmonized sales tax and all of the harmony it purports to spread.
No Harmony for Property Managers
Harmony is in particularly short supply in the property management field these days, as those professionals charged with overseeing large-scale physical interests struggle to understand this new layer of complication the government has seen fit to impose on their lives.
There are some who say that no segment of the population will feel the effects of the HST more acutely than landlords. Not only are they now paying 8% more to heat their properties (and some 85% of landlords include heat in their rent), they will be charged HST on a slew of other necessities of life, including: utilities, repairs, legal services, garbage disposal, snow removal, cleaning services, landscaping, accounting and property management.
Protecting the Tenants – Not the Property Managers
More than that, the Ontario government has seen to it that these folks are not in a position to recoup the money from their tenants. In a move largely speculated to be motivated by a desire to avoid widespread unrest among tenants, Premier Dalton McGuinty has chosen to exempt people living in rental housing—at least for the short term—from the HST’s sting.
Those folks holding the mortgage documents for those properties, meanwhile, will absorb the true effects of this adjustment to overall housing costs.
The Burden to the Property Owner
It’s a ridiculous move, this, not only for the way it unfairly burdens property owners, but for the inevitable roosting in which these chickens will eventually come home to engage. The HST will catch up with rents eventually, and drive them up too.
In the meantime, property managers will wrestle with how to fold the 8% sales tax increase, along with the hike to the heating fuel bill itself and the anticipated 2% inflation, into their lives. The provincial landlords’ association says the HST, once the dust has cleared, will amount to a 5% increase in the overall costs of operating a rental building; the potential for the occasional HST-inspired saving notwithstanding.
Restricted Increase for Rental Rates
More than that, landlords in this province are restricted with regards to how much they can increase their rental rates. The government has put a 0.7% cap on this, the most onerous since rent regulation was introduced to Ontario. Landlords cannot exercise this increase until next year.
And to make matters worse, the McGuinty Liberals canceled the provision for landlords to raise rents more than guidelines dictate in the face of extraordinary costs, calling it a “loophole”.
Property managers are going to be juggling price hikes on a number of fronts, as the rest of us are. Only thing is, they can’t make compensations for it elsewhere, while the rest of us can.
What a quagmire.
To my mind, this new tax is an affront to property managers in this province since it blends the 8% PST with the 5% GST. It puts an unfair limitation on how much their business can earn—and it is a business, after all.
Before this HST nonsense overwhelms you entirely, let 360 Visibility step in with its comprehensive property management software solutions to tightly manage your expenses, leases, invoices, assets, documents, reporting, maintenance schedules and—yes, the ever-lovin’ HST.
Tags: HST, Property Management
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