Foreign students face rental ripoffs

When Thancharin Wutt landed at Pearson International Airport on Aug. 19, two weeks before the start of college classes, she was, essentially, homeless.

It wasn’t for a lack of trying.

The 20-year-old from Thailand started house-hunting soon after she received her acceptance letter from Toronto’s George Brown College in May. She found seven one-bedroom units available to rent near her campus, just north of the Annex.

Securing one of those units would prove problematic.

Landlords and real estate agents told Wutt that because she was an international student she was considered a high-risk tenant as she didn’t have a guarantor in the country to pay her rent if she fell behind. It didn’t matter that Wutt could produce documents proving she had more than $50,000 in her bank account. Those documents were from Thailand, and the realtors told Wutt they couldn’t recognize them, Wutt said.

Entering Toronto’s red hot rental market, Wutt was competing on an uneven playing field with domestic students and working professionals who had credit and employment histories in Canada, lowering her chance of securing a unit.

One by one, each of seven realtors she contacted told Wutt that to allay landlords’ concerns — and even be considered as a potential tenant — she would need to pay an upfront deposit equivalent to six months’ rent.

This practice is illegal in Ontario. Under the province’s Residential Tenancies Act, the rent deposit a landlord may collect must not be more than one month’s rent or the rent for one rental period, whichever is less. The money must be applied to the last period of the tenancy.

But as Toronto’s rental housing sector continues to tighten, more landlords are employing the illegal tactic, often engaging in discriminatory practices and exploiting international students, who are unfamiliar with Ontario’s rental laws and for whom English is not their first language, housing experts and advocates say.

Meanwhile, the same experts warn that these rental deposit demands, largely targeting foreign nationals and quietly enabled by realtors, are harming both Toronto’s numerous post-secondary institutions and its reputation as a welcoming place for international students pursuing higher education.

“It’s very common,” Laurent Levesque, executive director of Unité de travail pour l’implantation de lodgement étudiant (UTILE), a Québec affordable student housing non-profit organization.

“International students, not only do they not know their rights or the law that protects tenants, but they also don’t have much leverage or ability to negotiate,” he said. “So they’re basically being extorted in some cases by landlords.”

Tim Hudak, CEO of the Ontario Real Estate Association, said its important for all parties — renters, landlords and realtors — to know their rights and responsibilities.

“Where the Residential Tenancies Act, 2006 applies, a landlord is breaking the rules by requiring more than one month’s worth of rent and prospective tenants should file a complaint with the Landlord and Tenant Board,” he said in a statement to the Star. “Even in instances where a prospective tenant is offering more than one month’s rent upfront, a landlord is legally not permitted to accept the offer as per the rules of RTA.”

Joseph Richer, registrar at the Real Estate Council of Ontario, which oversees and enforces all rules governing real estate professionals in the province, said realtors and salespeople must comply with all sections of the Real Estate and Business Brokers Act, including both the Residential Tenancies Act and the Commercial Tenancies Act.

“There is a shared responsibility between the landlord and the registrant. The only rent a property owner can request is the first and last month’s rent and a refundable key deposit,” said Richer in a statement to the Star. “Anyone with evidence that a RECO registrant is violating these rules should file a complaint with RECO.”

RECO said it receives, on average, fewer than 10 complaints of that nature each year, though it has increased slightly over the past two years.

Dania Majid, a staff lawyer with the Advocacy Centre for Tenants Ontario (ACTO), said, anecdotally, the practice of landlords requiring multiple rent payments upfront has gained traction this year, as the rental market heated up, leading to fewer vacancies.

In the second quarter of 2022, vacancies in purpose-built rentals hit 1.4 per cent, down from 5.1 per cent in the same period last year, according to an analysis from market research firm Urbanation.

“Vacancies are at a very low level, which means tenants are desperate and landlords have their pick of tenant,” she said. “There’s a huge power imbalance for tenants and they’re generally in a position where they’re forced to take it or leave it, because if they don’t comply with the demand, even if it is illegal, they might not get the unit.”

Hemashri Ramachandra Maheshkumar, a graduate student from India, said she was almost scammed by a landlord, whom she believes was targeting foreign students on Facebook.

Maheshkumar, like Wutt, arrived in Toronto earlier this summer without any permanent housing. While staying at an Airbnb, she joined several Facebook groups for off-campus student housing. When she reached out to a landlord of an available unit, the owner asked Maheshkumar to pay a $400 security deposit upfront — just to view the apartment.

“You can view it anytime once you fill the form and secured it by paying the refundable security deposit for you to have your receipt with the electronic code to access the mailbox,” wrote the landlord in a message to Maheshkumar. The owner said the security deposit was needed because they did not live in the area and could not accompany potential tenants to the apartment for tours. The landlord has since deleted the Facebook profile and is unreachable for comment.

Certain that her $400 would not be returned, Maheshkumar didn’t fall for the potential scam. “A couple of my friends who moved to the U.S. told me to be very, very aware of these people,” she said.

However, she feels other international students, desperate for housing and perhaps unaware of local rental laws, could easily fall for the trap.

For Wutt, some of the rental deposit requests for a single-room apartment amounted to $12,000.

“Would you be able to give (a) deposit of three month(s) now and three month once (you) land here?” reads a text from a realtor Wutt shared with the Star. “I talk(ed) to other realtor but he said he can (only) look into it if you can do it. Please let me know asap,” the text continued.

“Just to be clear, most landlords would want first and last months rent and then the extra four months,” reads another text exchange from another realtor.

Unwilling to agree to the rental deposit requests, Wutt turned down each unit. When she stepped onto her flight to Canada, Wutt didn’t have a place to call home. She ended up crashing at a friend’s house in North York, while desperately continuing her search for housing before the school year began.

“It was so hard for me to get a room, I was really stressed out and I didn’t have anywhere to stay,” she said. “It feels like no one cares about us (international students). So, unless we can pay that six months’ rent upfront, we can’t get a room,” she said.

It was only when Wutt found a roommate — a Canadian student with a parent in the country who could act as a guarantor — that she was able to find a unit that didn’t require an exorbitant rental deposit.

“The only reason I got this room is because my roommate is Canadian,” said Wutt.

Majid, the tenant rights lawyer with ACTO, believes Wutt’s experience is a “textbook” case of discrimination.

Under the Ontario Human Rights Commission’s policy on human rights and rental housing, prospective tenants cannot be refused an apartment based on factors such as their race, citizenship, place of origin or age. Although a landlord may ask for a tenant’s rental history, credit references and credit checks, “a lack of rental or credit history should not be viewed negatively,” the commission states on its website.

Majid said she’s seen many cases of international students, especially newcomers, who have been discriminated against by landlords. She’s heard of students with an accent or a non-Caucasian name being told by landlords over the phone that a unit is no longer available, only to have a white friend call the next day and find the unit is still, in fact, available for viewing.

Some settlement agencies for newcomers have resorted to employing white, male staff members to call landlords and realtors to schedule apartment viewings due to this bias, Majid said.

“When racialized clients make that phone call, especially if they have an accent from a country in the Global South, they may not even get to the viewing stage,” she said.

Nemoy Lewis, an assistant professor at Toronto Metropolitan University’s school of urban and regional planning, said according to his research, renters who are Black or South Asian face the most discrimination in the market. Often, racialized renters will successfully proceed through the application phase up until landlords ask for photo identification, which is when applicants from certain demographic backgrounds will be declined, he said.

“I’ve seen that myself, firsthand,” said Lewis, who is Black. “When I presented my documents, presented income, everything was great. But once I was requested for my ID, the deal just fell apart.”

Lewis fears the discrimination in the rental market and lack of affordable student housing will impact Toronto’s reputation as a centre for higher education, particularly among groups of working-class foreign students who may not otherwise have the means to afford more expensive housing options in the city.

“We’ve been trying to encourage and attract more international students to the country and yet we don’t have a whole lot of affordable housing options to support them,” he said.

After her experience looking for housing and seeing the lack of affordable rental units in the city, Maheshkumar said there are days she regrets moving to Canada.

“I can’t tell you how much I wanted to go back,” said Maheshkumar, who now lives in a basement unit in Scarborough and commutes 90 minutes each way to Humber College.

Lewis believes the onus is on both governments and post-secondary institutions to build more dedicated student housing. But ultimately, there needs to be more protections and enforced laws that prevent illegal behaviour from landlords and realtors, he said.

“We need to revisit some of the rules and oversights that govern the rental process to ensure there’s greater transparency, and that we’re discouraging these discriminatory practices and penalizing those who engage in it.”

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