By Moira Warburton and Denise Paglinawan
TORONTO (Reuters) - Landlords across Canada should brace for rent strikes in May unless the government steps in with rental subsidies for occupants as the outbreak of new coronavirus decimates wages, industry groups and tenants said on Monday.
Restrictions aimed at curbing the virus' spread has hit the restaurant and retail industries hard, making rent payment a flashpoint expense for both employers and employees.
A rent strike is gathering steam in Ontario, the country's most populous province. Keep Your Rent Toronto's private Facebook (NASDAQ:FB) group accrued over 5,000 members in less than two weeks, and its organizers said their platform has been used to send over 100,000 letters to landlords in Toronto, stating that they would not be paying rent.
Renters make up 32% of households in Canada, according to the 2016 census, and many businesses rent their brick-and-mortar locations.
CIBC economist Benjamin Tal estimates that about 70% of rent due in April was collected, based on preliminary information.
"The focus is now shifting to May and to provincial governments which, with the exception of British Columbia (BC), haven’t yet formalized any policy related to renters," Tal said in a research note.
Restaurant Canada, the national industry lobby group, estimates that 10% of restaurants have closed permanently across the country, and another 18% will close permanently within a month if current conditions continue.
"It's a carnage, (a) business bloodbath," said Daniel Lefebvre, a regional vice president of Restaurants Canada, noting many landlords were willing to negotiate in April, but that the goodwill may not continue. "If this was to last four or five months, we would need to get into other kinds of measures."
Ottawa is offering one-year interest free loans of up to C$40,000 ($28,347) for small businesses but has not yet proposed specific rent measures. Residential evictions in BC, Alberta and Ontario have been halted, and the premiers of Alberta and Ontario said they expect landlords to be understanding of the situation facing businesses and tenants.
The federal loan isn't enough for small businesses, said Sammy Piccolo, who owns eight coffee shops in B.C.'s Lower Mainland, noting that taking on more debt is not ideal.
"Everything should just be forgotten," Piccolo said. "Nobody should owe anybody anything until we get through this crisis."
Major landlords RioCan Real Estate Investment Trust (TO:REI_u) and Choice Properties Real Estate Investment Trust (TO:CHP_u), are offering 60 day rent deferrals, some automatic.
RioCan and Choice count grocery retailers like Loblaw Cos and movie chain Cineplex among their tenants.
Canadian Federation of Independent Businesses CEO Dan Kelly said that anything other than provincial and federal breaks on property taxes and rental subsidies will simply delay bankruptcies, not avoid them.
Canadian restaurateur Jen Agg, who owns five restaurants and bars in Toronto, said she would not be paying rent for her businesses.
"We have culled all unnecessary expenses, but the big one is inescapable: rent," she wrote in a Globe and Mail newspaper column. "How can I pay rent when I have no income?"