Ontario debates sharing tenant arrears data with credit agencies

Ontario is exploring a proposal to allow credit reporting agencies to access Landlord and Tenant Board (LTB) orders for renters with a history of missed payments.

The plan, part of the province’s new Cutting Red Tape, Building Ontario Act, is intended to streamline tenant screening and give landlords greater confidence in prospective renters. It includes collaborating with registered consumer reporting agencies like Equifax and TransUnion.

"Ontario is exploring the feasibility of arrangements with one or more registered consumer reporting agencies to facilitate access to Landlord and Tenant Board orders where tenants have a history of missed payments," the Ford government said in a statement.

Currently, credit reporting agencies like Equifax and TransUnion do not have automatic access to LTB orders, which detail tenant payment histories. Landlords can report arrears only if they are members of specific services or platforms, such as Rentcheck or FrontLobby. Even then, tenant consent is often required for information to be shared with credit bureaus.

The proposed measure would grant direct access to LTB orders for tenants with a history of arrears. Advocates said this would provide landlords with clearer insights into tenants' financial reliability, making it easier to avoid problematic renters.

Alex Solga, a former landlord, called the proposal “essential” for fair tenant selection.

"That would be the most important information a landlord could ask for," Solga said. He believes current rules make recovering unpaid rent nearly impossible, and bad tenants can easily move from one property to another.

"The process to get your money back is impossible,” he added. “You can go after them in small claims, but you're never getting a dime, especially if they owe you $18,000-$20,000."

The London Property Management Association echoed this sentiment, stating the measure would reduce risks for landlords while emphasizing the importance of privacy safeguards and accurate reporting.

While the initiative could provide landlords with more detailed credit histories, it raises concerns about tenant privacy and potential long-term consequences for low-income renters.

Tenant advocacy groups warned it could have far-reaching consequences for vulnerable renters. They said that including LTB orders in credit reports could unfairly penalize tenants, particularly those who fall behind on rent due to disputes over maintenance or unforeseen financial difficulties.

"If there's an appeal of an order, what happens to that initial referral to TransUnion or Equifax?" said Douglas Kwan, director of advocacy at the Advocacy Centre for Tenants Ontario, suggesting a two- to three-year delay for reporting. "We've seen many orders overturned by the court, in which the LTB was wrong in making their decision."

Reporting arrears prematurely could damage credit scores and create long-term barriers to housing, education, and financial opportunities, according to Kwan.

He also criticized the proposal for focusing solely on tenant arrears, noting it does not address debts landlords may owe tenants.

“This could undermine the LTB’s role as a neutral body,” Kwan added.

The Landlord and Tenant Board has faced criticism for inefficiencies and long wait times, with unresolved cases exceeding 53,000 in early 2023. While recent efforts have reduced average wait times to four to six months, stakeholders say more reforms are needed.

Most LTB cases involve rent arrears, but as Harry Fine, a former LTB adjudicator, pointed out, many do not end in eviction.

"If the tenant pays following the decision, the tenant stays. The province doesn't know who's evicted. [The province] only knows who's been ordered to pay," Fine explained.

Fine also noted that LTB decisions accessible through platforms like CanLII are often delayed or incomplete, making them less useful for tenant screening.

The potential change also underscored broader issues within the LTB itself. With over 53,000 unresolved cases as of early 2023, delays in resolving disputes continue to frustrate both landlords and tenants. Despite recent improvements, average wait times remain between four and six months.

Source: Canadian Mortgage Professional