Standard Terms of a Tenancy Agreement.
All tenancy agreements in BC must have some specific terms. They include items like landlords and tenants names, address of the property, date the tenancy starts, what services and facilities are included in the tenancy. Services include utilities which would include heat and hydro.
During a tenancy it is prohibited for a landlord to terminate or restrict “services” if the service is essential to the tenants use of the rental property. One of the most common mistakes landlords renting out their basement suite missunderstand about this is “restricting” a service is often done without understanding it is being done.
In BC it is a requirement that tenants have control of the heating system in their rental unit. What this means is the tenant needs to have the ability to control the heat without asking someone else living at the property to adjust the temperature. In many basement suites landlords have the heating controls in the upper level of the property which “restricts” the lower level’s ability to control the temperature in their unit. This is inadvertently “restricting” a tenant’s rights required if the tenancy agreement indicated heating is included. A simple adjustment of adding a different type of heating source to the lower level can provide the tenant the option to control their heating.
We hear this often when renting to people who are trying to move into a condo from a basement suite. They indicate it is often cold and they don’t understand why they are not receiving the heat that the agreement indicated was included in the tenancy agreement. Another aspect of this which is misunderstood is if the upper and lower levels are rented to two different parties it is illegal to make the upper tenants pay the entire bill of the utilities and ask them to collect a portion from the lower tenants. The two parties don’t have a contract between them and therefore the upper level tenants have no ability to collect from the other party. When the upper and lower levels are rented to different parties a landlord should keep the utilities in their name and charge each tenant a percentage of the utilities. This percentage needs to be outlined in the tenancy agreement to ensure both parties understand their responsibilities.
It is important for landlords to understand their obligations when renting their property. If their property is not meeting the requirements of the Residential Tenancy Act a tenant has the right to file a claim with the RTB to request the services be corrected or rent be reduced.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
Insurance for Your Strata Lot:
When you are renting your condo or townhouse in a strata corporation, do you need insurance? Yes.
When a property is located in a strata corporation and is rented there should be three insurance policies involved. The strata corporation, owners and tenants should all have insurance. The strata corporation will have insurance for the building and for original furnishings of the unit which they are required to insure. A strata must ensure the items inside the strata lot but only above the strata corporations deductible amount. If there is damage to your unit from outside the unit and the costs are below the deductible then the cost of repairs falls on the owner. This includes the walls, ceilings, flooring and appliances in the unit. When damage is below the deductible this is where the owner’s insurance policy would be engaged. If the roof leaks causing damage to your unit that is below the deductible amount, the strata would be responsible for repairing the roof, not the inside of your unit. An owner could repair this on their own or engage their insurance policy to have the issue repaired. We compare this to the rock hitting your windshield on the road. You know it came from the truck driving the other way, but your car insurance pays to repair your windshield.
Tenants insurance would cover items including their belongings inside the unit in the event of damage to the unit.
All three policies strata, owner and tenants insurance can include costs to relocate the resident in the event the unit is uninhabitable after a flood or fire.
Owner and Tenant insurance also can include coverage to pay the strata deductibles in the event damage to other strata lots or common property originates from your unit. We recommend you bring the strata deductibles page to your insurance provider to ensure they can provide the proper coverage needed. If you don’t have a copy of your deductibles contact your strata company and request a copy. It is provided each year in the AGM package and when the insurance is renewed. When your strata policy is renewed you should review it to see if the deductibles have changed from the previous year and if they have, review this with your insurance provider to ensure you’re covered at the new levels.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
Taxes, Taxes and More taxes
A recent court case in Ontario shed some light on the need to understand the taxes your rental property is subject to.
A landlord in Ontario who had rented their property as a long term rental elected to change it to short term rental. This type of rental often brings in larger monthly revenues, when the economy is good and people are travelling. The landlord elected to sell the property after it had been operating as a short term rental. What the landlord failed to understand and the courts upheld is that the short term rental changed the use of the property to a commercial enterprise meaning the sale of the property was subject to HST. When selling a residential property that is lived in by a long term renter it is considered a “home” and is not subject to the HST tax. In this case the amount of tax charged to the owner is higher than the amount of revenue the owner earned while renting the property as a short term and long term rental.
When being a landlord, understanding the taxes one must pay is very important to understanding if you are able to make a profit on your rental property. We recommend you speak with a tax professional when owning a rental property.
One of the most common missed taxes is the non resident tax. When an owner lives out of the country they are required to submit to the government no resident taxes. As an agent for the landlord we are required to submit this before we give any funds to the owner. We use the NR4 method which is 25% of the gross rent sent to the government upon collection of the rent.
If you are not sure what taxes you are required to pay for your rental property we recommend that you speak witha tax accountant to ensure you are making the proper contributions.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
BC Election Results
The provincial Election has finally completed and the NDP government has remained in office although with many fewer seats. What does this mean to managing your rental? Absolutely nothing.
The governments are always changing Locally, Provincially and Federally. If you are a landlord and are looking for the government to change the laws in your favour to make your business more profitable it might not be the right business for you. All governments change the laws to fit the current conditions of what the general population is requesting. Good businesses adjust and adapt to the market. They don’t wait for the government to change so the laws are favourable to them. If they do that then when the government changes again and changes the laws back to being unfavourable, which often happens, they will be in the same place they are now.
There are many changes that have affected the rental market, some are implemented by Federal governments and some by Provincial governments.
The NDP changed the strata act to allow all strata corporations to have rentals in them which was intended to increase the supply in the market during a time when the market was tight for rental properties. They also restricted short term rentals for the same intended reason to create more housing supply. These are two issues that have helped add more products to the market.
The bank of Canada increased interest rates, not a provincial government initiative to stem the tide of inflation. This eventually slowed the house selling market which was the largest factor affecting rental prices increases.
We don’t know what the, or any government will do in their term in office as they often are reacting to the current market conditions.
How do you protect yourself as a landlord?. Understanding the laws affecting renting and managing your rental property is important. If you are unsure what laws affect your property and how to manage a rental property you may be better off hiring a licensed property manager.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
What Housing Crisis?
Met with a friend for lunch yesterday and we were discussing the housing market, in particular the rental market. After I explained the current market conditions, he said so why do they keep saying we have a housing crisis?
I replied that’s a great question?
What has changed the market conditions. Since 2021 when we were renting properties the majority of people who came to our viewings, were indicating the reason the were moving was due to the property they live in has been sold or is being sold. What this means is they “need” to move. In late 2022 and early 2023 we started to hear more people communicate to us that they were “just looking”? The unit they were in was not up for sale and therefore they were not in a need to move. This one simple issue changes the market conditions quickly.
When potential renters are not in need of moving they have the option to say no to the property and take their time to look for the best value. The majority of people who are attending our viewing today are “looking” to move to a better property then they are in now. Better means different things to each person. Many people who are looking for a larger place than they currently reside at may be the same size and or close to their current rent. They may be looking to improve on the quality of the property they live in at the moment. Moving to a newer building that has better amenities than where they are now. Many employers are pushing for more time in the office and some people are looking to move closer to their work. With the adjustment in prices this allows them to move closer and the same and or similar prices.
What does this mean to the current rental market?. Currently there is an over supply of product meaning there are more units for rent then there are people looking. More supply than demand. This is causing the rental prices to decrease on a monthly basis.
For landlords this means you neeed to be more diligent when selecting your tenants. Landlords don’t like their property to be vacant and in situations like this will often rush into the first person who applies for their property. We have met potential tenants on a Saturday who advised us on Sunday they looked at another place after seeing ours and have signed with the other location. We find it hard for the landlord to do the proper due diligence on the tenant in a short period of time and on the weekend and in the future this may turn into a negative tenancy due to rushing the tenant selection process. After a tenant moves into your property it can be difficult to have that person removed from your property.
Landlords need to ensure their property is clean, items are repaired and in working condition. Sometimes a slow down in the market is a good time to take the unit off the market and renovate the unit, or upgrade the appliances to make it more attractive to potential renters.
Eventually the market will shift again and there will be less product and more demand creating a more stable market. Patient is a virtue, especially as a landlord.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com