Residential Tenancy Laws.
The BC Provincial government has announced plans to amend the Residential Tenancy Act to help protect tenants. We wanted to try to explain why they are making these suggested changes.
These changes include amendments restricting rent increase when a minor is added to the home, providing tenants a longer period to dispute an eviction notice and increasing the time an owner must occupy the rental property after an eviction for personal use.
These changes are “targeted” to protect tenants from bad landlords. Governments have in the past and will in the future change laws when the general public has concerns over how they are being treated. Many government changes are reactionary to actions landlords are doing at that time and how they are perceived to be manipulating current legislation.
The proposed change of restricting landlords from increasing the rent simply due to a child being born is due to many landlords seeking options to increase the rent outside of the tenancy agreement. Why are landlords adding an increase in the rent when a newborn child is born”. The landlord’s argument is that more people creates more wear and tear on the property. A new born child is not going to add very much wear and tear, so is this really necessary. This is being brought forward due to some landlords increasing the rent by a significant amount. If the increase was reasonable, tenants may not care about it. Cartref Properties advises landlords not to increase the rent based on a child entering the property.
Why has the government proposed a change of increasing the length of time from six months to one year for personal use occupancy?. Many landlords have evicted tenants for personal use with the full intention of re-renting the property after six months or sooner if they can find a reasonable reason. An eviction for personal use is intended to remove the rental unit off the market. This change is a reaction to many landlords trying to manipulate the tenancy laws and re-rent their property at an increased price while the economy is pushing rents higher. Currently there is an over supply of products and I am sure we will see less of these evictions in the next two years. Cartref Properties won’t work with a landlord who wants to evict a tenant under three conditions and re-rent the property in the less than required time frame.
Providing a tenant a longer time to challenge an eviction slows the process down as some landlords try to use the quick times to evict a tenant. It appears this increase is going to be related specifically to the personal use evictions or two month notice as that is the eviction that currently has a 15 day requirement to dispute the notice. There may be a time when a landlord tries intentionally to send a tenant a notice knowing they are not going to be able to dispute this notice due to being on vacation or some other reason. If the eviction is legitimate it should not be an issue for a landlord if they dispute in 15 or 30 days. For these evictions the government needs to speed up the hearing as it impacts many people outside of the tenancy including purchasers and or family members who are expecting to move into the property. A better solution here would have been to extend it to a three month notice for personal use, still with one month’s free rent. That would give the tenant longer to find a place and time to dispute the notice and have a hearing.
What are other areas the government could target in the future. Cartref Properties has experienced many landlords removing parking stalls and storage lockers from the tenancy agreement and renting these for an additional cost to the tenants. This provides the landlord the option of increasing the cost of these to any amount as they are outside the agreement. Although this provides landlords with potentially more revenue in good times when tenants have less choice of rental properties, it creates a dilemma during the tenancy. The parking stall and locker are not part of the agreement and the tenants may do things to the stall and locker which you have no right to evict them for as it is not part of the tenancy agreement. This potentially means more headaches and a need to pursue correcting these actions through other legal means including the Civil Resolution Tribunal. Creating an agreement that creates animosity between a landlord and a tenant often leads to a negative experience for both parties. It also leads to tenants leaving when the market changes and they are able to find lower rent that includes these amenities with their tenancy.
If the tenant chooses not to rent the locker or parking now the landlord needs to put more effort into renting that stall or locker to another person. In a stata corporation that must be someone residing at the building and this creates another relationship for the landlord to manage. This relationship would also be outside the tenancy agreement and require other forms of legal recourse if there was a dispute between the two parties.
As a landlord it is important to understand the laws, and that they can change at any time during your tenancy agreements. Cartref Properties have found that when landlords and tenants both follow the laws, the experience is a positive one for both parties.
Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
What kind of housing are we building?
The lower mainland is always considered an expensive place to live and governments are saying they need to build “affordable housing” . The question is what does that mean. More and more condo buildings and rental apartment buildings being built in the lower mainland are advertised with all these great amenities including fitness rooms, recreation rooms and other common area spaces. Is that the best place to build these facilities?
If we are building the amenities inside the buildings and limiting their use to occupants in that building is this the best way to serve the community?. Many of these in building fitness rooms and amenity spaces are not used to capacity or even close to capacity. The other effect these amenity rooms have is municipalities are nto building community centres or parks for the local area based on the amount of people now in that location. Is this creating a more segregated population of people who only interact with other people who live in their building?. With the increase of people working from home and the buildings having these facilities, people no longer have a third place to meet and socialize with other people in their community. Housing was not designed for people to spend all their time in that location and not interact with others in the community. The less we interact with each other the less understanding and tolerance we develop for each other.
My request to the local governments is don’t approve developments with all these amenities. They take up valuable space that could be used for more units in buildings which will make housing more affordable and won’t create segregated communities. Instead, require developers to contribute to building community centres and outdoor spaces all people in the community can utilize which builds a better community in the long run. Everytime one of these developments are approved people who live in buildings without these services are being denied community resources.
Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
Rental Market Condition
Governments are often late to the table to make changes when an issue is negatively affecting the market. The Federal Government raised the interest rates slowing the housing sales market. The provincial government has made multiple changes in an attempt to add more rental products to the housing market with the expectation this will reduce the rental prices. They recently introduced a new tax, which is a “Flipping Tax”. The flipping tax is a 20% tax on the gain in the value of the property sold in less than two years of ownership, and takes effect January 2025.
All of these changes are having an effect on the rental market and the biggest one is the soon to be ban on short term rentals in BC. The deadline is May 1st which means after May 1st properties currently being rented as short term rentals will be prohibited. We expected many of these products to come to the market though it appears to be a larger number than anticipated. We have seen a significant increase in the number of furnished rental properties on the market seeking long term tenants indicating they were short term products before. This combined with the slower sales, a number of developments which recently completed where owners may have elected to sell the product but are turning to rent since the sales market is not giving them what they anticipated has increased the rental stock significantly.
This has created a market where tenants have time to search for the best option for them. We are seeing more and more prospective tenants indicating they have not given notice, their unit is not being sold, they are not in a hurry to move, they are just looking for a better option than they currently have. This is putting downward pressure on the rental prices. At this time it is unknown if there are more short term rentals who are still renting until the May deadline and will then enter the market or if they will convert to the selling market. We anticipate some current advertised rentals and future products will move to the selling market if they are unable to find a suitable tenant in a reasonable time frame. Many rentals are owned by “small individual landlords” and may not be able sustain a long term vacancy.
It will take longer to find the right fit.
These factors are going to increase the vacancy rate to a much higher level than what is normal for Vancouver and the surrounding area. We think eventually more of the short term landlords will convert to selling, or it will cause other landlords to sell taking product out of the rental market. We are unsure how long this will take to adjust the market though we anticipate it will be through the summer and into the fall now before we see changes. It is these times where it is more important to be diligent when selecting a tenant
Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
What price can I get for my rental property?
We are asked this question often and our standard answer is what the market will pay for it.
Many owners who seek out our services advise they need a specific rental amount for the rental to make a profit and won’t rent below that amount. This is a difficult process for a landlord, or their agent to manage.
The market will dictate the amount of rent a tenant is willing to pay for the rental property. During covid, sales increased and a number of rental properties were removed from the rental market in BC which increased the rental rates to higher levels. To combat the market the Provincial and Federal Governments have made some changes which are affecting the rental market. The increased interest rates have slowed the sales market, meaning more products are reducing the selling prices of newly completed developments and owners are bringing those products to the rental market instead of selling upon completion. The Provincial Government introduced a ban on short term rentals which takes effect May 1st, 2024. A number of properties have entered the selling market and the long term rental market.
What effects are these situations having on the rental market?.
The increase in the number of rental properties has created a market where there is more supply than there is product. We are seeing more properties being vacant after a tenant moves out and taking multiple months to find the right tenant for the property. This is causing downward pressure on the rates for rental properties. When a landlord indicates they need a specific price they are limiting themselves to the number of tenants who can afford the property. Anytime you put a restriction on the property you are limiting potential rental prospects.
What many landlords fail to understand is that if you are demanding a rental amount of $3000 per month and you won’t rent it for $2900, it will take 30 months to make up that $100 difference in rent. Landlords fear the option of putting a tenant in the property who stays for many years and they are not able to move them out of the property. Most tenants stay in properties less than five years. The Residential Tenancy Act also allows for annual rent increases and tenants don’t like to move if they don’t need to, so small increases annually could bring that to $3000 in a few years. Owning an investment rental property should be a long term perspective not an annual financial evaluation. If you look at the annual costs of owning and managing a rental property most of the time they are not positive.
Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
How much deposit can you collect?
In British Columbia the Residential Tenancy Act and the Regulations outline Landlords responsibilities for landlords and Tenants. When renting a property landlords are permitted to collect a Security and Pet Deposit when renting their property. The tenancy act restricts the amount of security and pet deposit landlords can collect.
A security deposit can only equal half of the total of the first month’s rent. This amount can’t be amended during the tenancy even when the rent is increased. Landlords often try and request tenants increase the deposit amount when they increase the rent. In some cases we have seen advertised properties listing the security deposit at one full month’s rent, which is a violation of the Residential Tenancy Act.
Another important factor to understand about the security deposit is that it doesn’t belong to the Landlord. They hold it in the event it needs to be used. We have seen some landlords say they used the security deposit to complete repairs during the tenancy caused by the tenants. The security deposit can only be used by the landolrd at the end of the tenancy when agreed upon by both parties. Both the landlord and tenant must agree that a portion of all of the deposit can be given to the landlord to pay for damage to the property or other factors including unpaid rent or utilities.
For pet deposits the maximum amount is the same as the security deposit, half of one month’s rent. The difference with the pet deposit is this can be collected during a tenancy if a pet is added later. If the tenant has lived at the property for two years and the rent has increased during that time then the deposit amount collected, a landlord is permitted to request the amount be the equivalent of 50% of the current rental amount not the amount at the start of the tenancy. If a tenant adds a pet during a tenancy it is important to perform a new condition inspection report to understand the differences between when the pet arrived and when the tenant vacates the property.
As with the security deposits Pet deposits are funds owed to the tenant at the end of the tenancy if there is determined not to be any damage caused by the tenants pet. These funds do not belong to the landlord to use for repairs at the property during the tenancy. A landlord is not permitted to keep any funds from the security or pet deposit without either permission from the tenant or an order from the residential tenancy branch. If both parties are in a disagreement at the end of the tenancy as to how much should be kept for damages then the landlord must file a claim with the tenancy branch to keep any portion of the deposits.
Landlords are also required to pay the tenant the interest earned on the deposits during the time the tenant occupied the rental property. If the landlord files a claim with the RTB, a hearing will be held and the landlord holds all the funds until the hearing is heard and an arbitrator determines an amount to be kept or returned to the tenant.
Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com