Century 21 News
Volume 7, Issue 2
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DID YOU KNOW?
MLS Niagara Region Listing and Sales for all properties to January 31, 2011:
(Source MLS® Statistics Report, Niagara Association of REALTORS®)
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As of January 1, 2011 the suite meter provisions came into effect under the Residential Tenancies Act.
What is a suite meter?
A suite meter uses smart meter technology that measures and records the specific amount of electricity used within a rental unit. Landlords can install suite meters in each residential rental unit.
Why Suite Meters
According to the Ministry of Municipal Affairs and Housing, tenants can:
The Ministry further suggests that tenants can “reduce their energy consumption by 12 to 23 per cent.”
Offset of Rent: If a tenant agrees to pay for a unit’s electrical cost, then the landlord must reduce the rental cost by an offsetting amount.
The Catch: The landlord cannot terminate their obligation to supply heat if electricity is the primary heat source. The smart meter can only be used for the tenant to pay for electrical uses other than heat.
There are prescribed forms and a number of rules a landlord must follow for existing and prospective tenants.
Comment and Questions
The choice and cost to install suite meters in rental units belongs to the landlord. The choice of whether to take on the cost rests with the tenant, who may disagree, in spite of an equal reduction in rent and having an opportunity to control and reduce the cost.
Without the tenant’s agreement, the goal of tenants further contributing to Ontario’s efforts at conservation may be lost.
Conserving energy in cases where landlords pay the electricity cost in rental units may not be a primary goal for some tenants. Otherwise this plan would not have been devised. It applies, however, only to electricity uses other than heat, such as lighting and appliances.
So let’s say a tenant agrees to the suite meter proposal and pays the electricity cost for alternate uses. A Landlord must continue to pay for heating the unit as mentioned. What happens if a tenant misses paying the bill and the supplier threatens to discontinue supply? Can the supplier only turn off the electrical portion delivered for uses other than heat? If not, won’t the landlord have to pay and find another way of collecting from the tenant, more than likely through the Landlord and Tenant Board?
This is the second round of changes to mortgage rules since the spring of 2010. Though probably prudent, will it again cause some confusion among consumers as before?
This time the Government has announced 3 additional changes to mortgage rules for government insured mortgages. They are:
1. A reduction in the maximum amortization to 30 years from 35,
2. Lower refinancing on the value of a home to 85% from 90%.
3. Eliminating government-insured backing on lines of credit secured by homes.
Effective Dates for the Changes
The lowered maximum amortization and lowered refinancing rules (1 & 2 above) come into effect on March 18, 2011. The 3rd, elimination of government-backed insurance on lines on credit takes effect on April 18, 2011.
Why the Changes: The changes respond to concerns over Canadians’ personal level of debt, with much of it in mortgages. Statistics Canada says household debt climbed to a record 148% of disposable income in the third quarter last year. With current low interest rates, there’s anxiety that Canadians may be purchasing more home than may be affordable when interest rates rise.
Benefits mentioned by Finance Minister, Jim Flaherty:
1. Lowering the amortization will significantly reduce total interest payments, will build equity more quickly, and “help Canadians pay off their mortgages before they retire.”
2. Lowering refinancing “will promote saving through home ownership and limit the repackaging of consumer debt into mortgages guaranteed by taxpayers.”
3. Not insuring lines of credit will ensure that risks associated with borrowed funds “unrelated to house purchases are managed by the financial institutions and not borne by taxpayers.”
A minimum down payment to buy remains at 5%. But the lower 30-year amort will result in a small rise in monthly payments. Example: on a home price of $200,000 with 5% down and today’s average 5-year fixed rate of about 4%, a buyer’s payment will increase by about $66 per month not including CMHC insurance.
Does a Buyer Lose Leverage on Refinancing?
What happens on buying with 5% down and on expiry of the mortgage the buyer is above the 85% threshold for refinancing?
According to one mortgage agent, the buyer will be able to renew the mortgage with the existing lender.
This leaves the buyer no option to shop mortgage rates. Potentially the buyer is left at the mercy of the existing lender and the renewal rate it may charge. An attempt at negotiating might produce a lower rate. But a buyer may lack the leverage needed to achieve their lowest rate.
2010 Market Review
Market Overview for Single Family Homes
in Niagara to the end of 2010
Overall, the number of listings was up in all cities by 2.9%. Pelham/Fonthill listings are down by -4.7%.
Average sale price, overall, is up by 4.75%. All cities are in positive numbers for average price. See below.
Please note: Average sale price does not reflect the value of a home. This would require a market analysis of homes sold that compare to yours. As well, in certain areas of a city the average price may indicate a decline over the previous year.
(Source: MLS® Statistics Report, NAR)
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CENTURY 21 NEWSLETTER - FEBRUARY 2011 EDITION
- February 9, 2011
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