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