Canada's New Renters' Bill of Rights: What It Means for You

No matter your feelings, the Canadian government is moving forward with a new Renters' Bill of Rights. Whether you're a renter or a landlord, this policy will impact you. Let's break down what this means and the potential effects.

What Renters Can Expect

If you're a renter, this might seem like a fantastic opportunity to improve your credit score simply by paying rent on time. Historically, rent payments haven't been a standard part of credit reporting. Now, this is changing.

"Paying your rent on time could give your credit score a boost, which is great news for anyone looking to build or improve their credit."

What Landlords Need to Know

As a landlord, you might have mixed feelings. On one hand, this provides a new way to evaluate potential tenants. On the other hand, it adds another layer of responsibility and paperwork.

The Benefits for Landlords

1. Better Tenant Screening: Landlords can see if potential tenants have a history of making timely rent payments.
2. Credit Reporting: Landlords can contribute to a tenant's credit history, which could incentivize timely payments.

The Challenges

• Increased Workload: Small landlords, in particular, may find the additional monthly reporting burdensome.
• Data Legitimization: Equifax has yet to confirm how they will handle and display this data, adding uncertainty.

The Big Picture

This policy is a significant shift in how rent payments are handled in Canada. However, it's not without its challenges. Reporting rent is a complex process, and with thousands of landlords across the country, it's a massive undertaking.

Historical Context

Mortgages only started being widely reported on credit bureaus about 15 years ago, and even now, not all lenders report. With the number of landlords far exceeding mortgage lenders, implementing this policy will take time and effort.

Potential Pitfalls

• Accuracy of Data: Ensuring that all rent payments are reported accurately and fairly is crucial.
• Impact on Renters: While this policy aims to help renters, it could negatively impact those who are late on payments.

The Future of Renting in Canada

Prime Minister Trudeau has pitched this as a revolutionary change, especially for young people with thin credit histories. But will it really have the intended effect?

For Renters

• Positive Impact: Renters who pay on time may see a credit score boost.
• Negative Impact: Those who struggle to pay rent on time might face harsher scrutiny.

For Landlords

• Enhanced Screening: Landlords will have more information about potential tenants.
• Increased Burden: More paperwork and administrative duties could deter some from becoming landlords.

For Lenders

Lenders might view this as a way to better assess potential borrowers. However, there's a risk that younger renters who make mistakes could find it harder to qualify for mortgages.

This Renters' Bill of Rights is a step towards more comprehensive credit reporting in Canada. It aims to help renters build credit and provide landlords with better screening tools. However, the implementation will be challenging, and its overall impact remains to be seen.