Debunking the myth that property tax increases hurt renters

This week at council, a few councillors said they were against property tax increases because they hurt renters.

As a six year renter, who’s rent has always gone up by the maximum legal amount (besides covid pauses), this is a myth that hurts the vast majority of renters. Rent increases cost way more than property tax increases on average, and the city having more revenue helps provide more essential services that help low income folks.

I’ll break down what councillors said, debunk the myth using my own apartment and its rent and property tax increase, and then outline how tax increase can help renters.

Disclaimer: I am sure there are specific or cherry picked examples of property tax increases leading to huge rent increases, this article speaks to my experience and how it generally works.

What councillors said

Stéphanie Plante (speaking to city staff):  There’s this idea that renters aren’t affected by property tax increases. I hear that sometimes when I’m out in the community but I guess what you’re confirming is that a property tax increase, regardless of the percentage, will trickle down to renters?

(city staff answered by saying that it all depends on the specifics).

Marty Carr: “I’ve continually expressed my concerns on the regressive nature of property tax increases and the impact they have on our most disadvantaged residents… 

Property tax increases hurt our renters, because that big property tax increase is one of only three reasons that a landlord can apply to the LTB for an above guideline rent increase…”

Carr’s speech was particularly frustrating, especially how she referenced students and people on ODSP. I’d highly recommend watching her talk at around 1 hour and 16 minutes in here.

Debunking the myth with math

Our rent on a 1+den built almost 70 years ago in Centretown is $1990.92. Yes that is incredibly expensive, but it’s better than pretty much all my friends nearby.

Because rent is charged monthly and property tax is usually viewed as yearly, there’s a huge discrepancies in the cost and increases.

The tax information on the building we rent in.

The municipal tax on the 60 unit building we live in is $110,891.59 per year, up 3.02% from the year before. Based on that we can roughly estimate the property tax on our unit to be $1,848.19 per year, or $154.02 per month.

A few crazy stats based on this:

• I’ll pay an extra $582 in rent increase this year for my unit. My landlord will pay $54 in property tax increase. The property tax increase is less than 10% of my rent increase.

• A 1% extra municipal tax increase would cost my landlord $1.50 per month on my unit. Meanwhile a 1% rent increase would get them an extra $19.42 per month. The numbers aren’t even in the same ballpark.

• The yearly municipal taxes were increased on my building last year by $3251.66. Using my rent increase of $582 x 60 units, that’s an estimated rent increase of $34,920 last year in my building. My building netted an estimated approx. $32,000 in rent increases over property tax increases.

How more municipal funding can help renters

Ottawa’s Origin Destination Study shows that low income residents are way more likely to rely on transit.

Low income residents are more likely to rent. Low income residents are also more likely to rely on transit to get around, with less than 50% of the lowest income category relying on personal vehicles on a daily basis. Bad transit can lead to people being forced to buy a car, or needing to buy a 2nd vehicle, this will cost exponentially more than any property tax increase or rent increase on an apartment.

Many of our most affordable services are city run. City run fitness centres are considerably more affordable, with a one year adult membership starting at $285, with gyms like Goodlife typically charging at least $700 a year. 

More city funding can also help our most vulnerable. That’s not only the right thing to do, it can make life considerably more enjoyable for everyone. Walking in Centretown right now can be sad and stressful at times, and quality of life for everyone nearby would be improved if more homeless people were helped and given a safe place to stay.

This doesn’t even get into the possibility of using city funds to increase funding for affordable housing, which would help renters considerably.

Councillors who say that property tax increases will hurt renters are either misinformed or acting in bad faith. Please help educate residents and city staff by sharing this article with a friend (or even with your councillor).