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Minimum Income Criteria

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Those seeking rental housing who are in receipt of public assistance, as well as other Code-identified individuals with low incomes, have been particularly affected by the application of minimum income criteria. Many landlords apply a standard guideline that a tenant applicant should be spending no more than 25-35 percent of his or her income on rent. Those who fall short of this ratio are rejected. While this is rationalized as a necessary means of assessing an applicant’s ability to pay the rent, its use results in the denial of access to rental units to members of disadvantaged groups protected by the Code who frequently have lower incomes. There is no evidence that individuals from disadvantaged or low income groups, when spending more of their income on housing than a rent-to-income ratio would allow, are more likely to default on rent payments.

Research indicates that approximately one-third of Ontarians pay in excess of 30 percent of their household incomes in rent.[210] Overwhelmingly, these persons pay their rent in full and on time. There is no evidence that social assistance recipients default on their rent more often than others, or that they are less responsible with their money.[211] In fact, a 1997 report by the Quebec Human Rights Commission shows that 78 percent of defaulting tenants had a job at the time they failed to pay the rent.[212] The Quebec report concluded that a tenant selection criterion used by landlords based on a rent-to-income ratio leads to systemic discrimination for individuals with low income on the ground of “social condition”.[213]

In Ontario, the use of rent-to-income ratios and minimum income requirements was considered in the case of Kearney v. Bramalea.[214] The case involved three landlords, two of whom used rent-to-income ratios, and a third who applied a minimum income cut-off of $22,000 per annum. The Board of Inquiry ruled that rent-to-income ratios and minimum income criteria breach the Code, whether used alone or in conjunction with other criteria or requirements. The Board found that the evidence showed that these practices had a disparate impact on groups protected under the Code and that these policies were not bona fide as they had no value in predicting whether a tenant would default. On appeal, the Ontario Superior Court upheld the Board’s finding that the landlord’s use of rent-to-income ratios/minimum income criteria as the sole basis for refusing applications constituted indirect discrimination against the complainant on a ground prohibited by the Code. [215]

The Code was subsequently amended by the addition of section 21(3), which permits landlords to use, in the manner prescribed by the Code and regulations, income information, credit checks, credit references, rental history, guarantees or other similar business practices for selecting prospective tenants. With respect to the use of income information, Regulation 290/98 under the Code permits landlords to request income information from a prospective tenant only if the landlord also requests credit references, rental history, and credit checks, and to consider income information only together with all the other information that the landlord obtained. The Regulation specifically reaffirms that none of these assessment tools may be used in an arbitrary manner to screen out prospective tenants based on Code grounds. The criteria must be used in a bona fide and non-discriminatory fashion. Where income information, credit checks, credit references, rental history, or guarantees are being applied in a fashion that creates systemic barriers for persons identified by a Code ground, the landlord will be required to show that this is a bona fide requirement – that is, that the criteria could not be applied in a non-discriminatory fashion without creating undue hardship for the landlord.

The Commission has been informed that there are continuing issues with the use of income information by landlords, and that landlords are misinterpreting or misapplying the provisions of the Code and Reg. 290/98 and continuing to apply rent-to-income ratios. For example, requirements that tenants produce co-signors and guarantors may create systemic barriers. The Commission has been informed that it is the practice of many landlords to automatically require low-income applicants (particularly those in receipt of social assistance) to provide a co-signor or guarantor. Often the landlords will place restrictive rent-to-income ratios on the co-signors. This is a major barrier for many individuals protected by the Code, as few have access to a co-signor or guarantor, particularly not one that can meet the requested rent-to-income ratios. While the use of co-signors or guarantors may be appropriate where a tenant has poor references or a history of default, requiring co-signors or guarantors merely because an applicant is in receipt of social assistance, for example, may be a violation of the Code. It is the Commission’s position that when landlords consider income information, they must do so in a bona fide effort to validly assess potential tenants.

The Board of Inquiry in Vander Schaaf v. M.R. Property Management Ltd. [216] considered the use of rent-to-income ratios in the context of the new regulation. While the Board did not find a causal connection between the denial of the application and the use of rent-to-income ratios in this instance, it did make a number of comments with respect to this issue. The Board stated that the phrase “income information” is broad enough to encompass information about the amount, source and steadiness of a potential tenant’s income. It further stated that permitting landlords to obtain “income information” does not permit them to apply rent-to-income ratios. The Board of Inquiry in Sinclair v. Morris A. Hunter Investments Ltd.[217] found that based on its previous decisions, the Code and the regulation, it could issue a cease and desist order requiring the landlord in that case to stop using rent-to-income ratios. The Board strongly cautioned all landlords against the continued use of rent-to-income ratios as they have been found to be discriminatory in their application to such a wide range of potential tenants.

[210] J.D. Hulchanski, How Households Obtain Resources to Meet their Needs: The Shifting Mix of Cash and Non-Cash Sources (Toronto: University of Toronto, 1994) at 34-35; M. Ornstein, Income and Rent: Equality Seeing Groups and Access to Rental Accommodation Restricted by Income Criteria (Toronto: York University, 1994) at 63.
[211] J. Stapleton, Report on Social Assistance Programs in Ontario (April 1994) at 8.
[212] Commission des droits de la personne, Pauvreté et droit au logement en toute égalité : une approche systémique (Québec, avril 1997) at 50.
[213] The Quebec report further states that:

  • Housing should not be seen as a good like any other because it fills a basic human need for shelter;
  • Landlords are obligated to provide appropriate housing to individuals who can demonstrate their ability to fulfill the obligations of a lease without discrimination based on source of income or rent-to-income ratio measures; and
  • The presence of risk does not justify a systemic refusal to rent to individuals on social assistance.

[214] Kearney v. Bramalea Ltd. (No. 2)(1998), 34 C.H.R.R. D/1 (Ont. Bd. Inq.).
[215] (2001), 39 C.H.R.R. D/111 (Ont. Sup. Ct.).
[216]Vander Schaaf v. M.R. Property Management Ltd., supra note 141.

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