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
Can we build enough housing for everyone?
The media keeps reiterating there is a housing crisis and the only way out is to build more houses. Every region of our country has experienced growth in development and we still dont have enough housing.
Maybe the issue is not enough houses but are there other solutions?.
One solution is what type of housing are we building?
I have lived in the Greater Vancouver area for over 30 years and have seen tremendous growth in the development of housing throughout the area. The majority of the housing built in the Vancouver area has been with townhouses and condo towers development due to the restriction in the land space available. These properties are smaller spaces than single family homes compared to other areas of the country where the development is suburban areas with single family homes. The argument I hear is we have the land so why should we not build single family homes?. Just because the land is there should we use it all for housing.
All areas are losing valuable land for growing food to develop housing.
The housing issue has many factors and developing only one or two styles of properties in an area limits people’s choice, whenever consumer choice is limited costs are increased. The development of suburban areas where people need a vehicle to get to work, school or shopping also increases the cost of living. All regions need to have a better mix of single family homes, duplexes, townhouses, condos and purpose built rental apartments to facilitate the needs of all the people needed to make an economy work effectively.
People grow up in an area with their families then want to move out of the home to live on their own and start their own life. In many areas of the country this means they need to move far away as housing in that area is only one type mostly family homes and they need a smaller property to start out in. When children move out of the family home they should have an option to rent or buy a product that is in close proximity to where they lived with their family. In addition, on the other end of life if elderly parents want to move closer to family it would be helpfull to have different types of housing in all areas. In both of these situations having family closer can help families support each other when needed.
Another question asked in recent years is, are we using the current housing correctly?.
Governments have changed laws to add empty homes taxes, speculation taxes and limiting short term rentals to ensure housing is used for people to live in and not for other uses, which I think are all good things. There are a few areas the government could help with the cost of housing.
One area I would like to see the government consider changing is people who are unable to afford their homes and want to continue living there. I am talking specifically about reverse or CHIP mortgages. The basic concept of these programs are for people over 55 a financial institution will loan you money based on the equity in your home to allow you to stay in the home you have lived in for a long time.
The reality of these programs are, “financial institutions are lending people money to stay in a home they are unable to afford”. If you are unable to afford the home, should you borrow money to live there? Part of the problem with this program is related to the first issue here which is the development of various types of housing. When areas are limited by the types of housing owners residents are forced to move from an area they like and are familiar with living in. They choose to borrow funds to stay in a house that is too large for them or build a basement suite to rent to help afford the property. Both of these situations lead to potential financial issues for the homeowner and housing potentially not be used to its full potential. If these owner’s moved, a family who needs that much space would use the full property and the homeowner would have a smaller home in the same area with no debt and not being forced to be a landlord. In many areas there are limited options for homes and a senior or elderly person who wants to stay in the same area they have lived in for many years struggle to find suitable places to live. If the seniors could sell their property and move five minutes down the road to a smaller place and keep the family, friends and support network around them as they had before.
Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com