4 days ago
Competition Bureau issues warning on rental price fixing
Canada's federal competition watchdog has sent a warning on price collusion to landlords and property managers, provoking both condemnation and questions about how price-fixing might arise.
'The Competition Bureau is aware that some landlords and property managers may be engaging with their competitors, including through discussion groups on social media. While some discussions between competitors may be justified, others could be illegal,' warned the bulletin from the Competition Bureau of Canada issued on June 25. It noted that some agreements to fix prices are criminal offences with the potential for prison sentences.
While the agency doesn't comment on the specifics of investigations, it was able to share that tips and other information it has received make it clear that potentially illegal conspiring is happening on online messaging services such as WhatsApp, Signal and Snapchat.
'These are very private groups of people, that's the modus operandi. If there are very secretive price-fixing agreements, these actors try to mask their dealings,' said Pierre-Yves Guay, deputy commissioner of the cartels directorate for the Bureau. 'I can tell you we are looking very seriously into certain markets in Canada. The warning is to make sure people understand this is high risk. Eventually, we will detect it.'
Mr. Guay couldn't recall a time when the Bureau has filed criminal charges over a rental pricing scheme, though it has brought cases and prosecutions in the real estate space around everything from digital services access by The Toronto Regional Real Estate Board to price-fixing among condominium renovation companies.
Growing number of renters are waiting for home prices to decline further before buying, report says
Some in the industry said they found the warning baffling, saying they've never seen attempts to illegally fix rental prices.
'We don't participate in any industry pricing discussions or forums, and frankly, we have no need to,' said Nathan Levinson, founder and chief executive officer of Royal York Property Management, which manages more than 25,000 rental units in the Toronto region and beyond. He said that his company provides pricing data to clients, who set the asking rents themselves. 'What we do provide is powerful proprietary software and data tools: These tools help pull all the data from MLS listings, internal rental history, and thousands of private listings not publicly available. These tools allow landlords to make smart pricing decisions based on real-time market evidence, so they don't overprice and sit vacant, or underprice and leave money on the table.'
Data tools that use artificially intelligence algorithms to compare private rental data from competitors to build pricing models for clients have become a source of anti-competitive prosecutions in the United States. Mr. Guay said Canada's regulators are closely monitoring the U.S. Department of Justice's case against RealPage Inc. and several landlord co-defendants.
Smelling a bargain, investors look to bulk-buy leftover GTA condos
In Canada, tenant advocates say they haven't seen much of the kind of price-fixing chat room collusion the Bureau referenced, but online forums of small landlords sharing industry tips is all too familiar.
'During COVID – during the eviction moratorium and rent freezes – we started hearing from tenants and other clinics about landlords going onto these chats about how to break the law and circumvent the law, for example illegally locking tenants out,' said Dania Majid, staff lawyer for Advocacy Centre for Tenants Ontario (ACTO) and director of its tenant duty counsel program that provides free legal advice to tenants at Ontario's Landlord Tenant Board. 'It doesn't surprise us. We know investors have conversations among one another: Landlords counselling how to charge illegal fees – cleaning fees and security fees, and others not contemplated under the Act – this type of bad advice is a type of collusion.'
Many in the industry believe price-fixing is most likely to take root or be most effective outside of the biggest cities with the most rental stock.
'I think in the Canadian context this applies much more to the landlords and property managers of high-rise buildings especially outside of large urban centres' where they hold a greater share of the rental market units in a given area. said Brandon Sage, real estate investment adviser at LandLord Property & Rental Management Inc. 'In Toronto, most rentals … hundreds of thousands of condos and multiplexes … [are] owned by almost as many landlords.'
Mr. Guay concurred: 'If you have landlords or property managers that have a lot of market power … the more power you have and the more likely you'll be able to make it stick,' he said.
This engaged expat couple seeks a starter home in Toronto under $950,000 – with room to grow
While the general rental picture across Canada has been one of falling rental rates, there are places that perform above expectations.
According to asking rents in Toronto for one-bedroom apartments fell 0.7 per cent from April to May, but were down 7 per cent year over year; two-bedroom units bumped up a bit in May (0.3 per cent) but were down by 10.7 per cent from the same period in 2024. Meanwhile, in nearby Ajax, Ont., asking rents saw robust growth in the same period with one-bedrooms rising 3.4 per cent month over month and leaping up 7.8 per cent year over year.
'From a Toronto lens, it is hard to believe that there are enough willing participants with enough units to truly have an impact on the market,' said Ben Myers, president of Bullpen Research and Consulting Inc. 'Rental developers face immense competition from the 'shadow' inventory of rental supply, hundreds of thousands of individual investors, which would be very difficult to imagine them collectively colluding on anything.'
Another factor that could inhibit the ability of landlords attempting to collude on a rent-fixing scheme are the other participants in the transaction: the tenants.
'Tenants are very well educated; there's so much information and resources for them. From what I've seen if you're not competitively priced, tenants are so good at jumping to the building next door,' said Sabine Ghali, managing director of Buttonwood Property Management.
