Will changes to B.C.’s Rental Tenancy Act provide some relief to renters, in this extremely tight housing market?
That is certainly the goal of the proposed legislation to end the fixed term lease ‘loophole’ to prevent high rent increases at the end of residential leases.
Hannah Goodwin, a local property manager with Dynamic Property Management, says most of their clients (property owners) prefer fixed term. “But they also want long-term tenants.” Goodwin concedes some tenants get anxious towards the end of their lease and want to renew as soon as they can. “At the end of a lease it either defaults to month to month or they sign a new lease and the rent goes up, or there’s an order to vacate. Most landlords though keep rent increases within inflation or a little above [about two percent].”
Goodwin says most residential leases in Squamish are for a year, or actually sometimes less. However, she has seen a rise in tenants seeking 18 months or two-year leases on renewal.
“The problem was a lot of people came to town buying income property, and the rental rates they expected were not achievable. You can always put something on Craigslist, that doesn’t mean you’ll get what you’re asking. The average income in Squamish just doesn’t support some of the rates people are asking.”
Another local property manager, Danielle Dobson, with Century 21, concurs that Lower Mainland property investors have had very unrealistic expectations about the Squamish rental market.
The bought condo apartments with the expectation they could rent them at rates that paid their mortgage and left them cash positive.
“Some of these investors were seeking rents $800-900 above what the market would support,” said Dobson. “I actually had one lady, not a client, she just wanted my advice, ask why her two bedroom apartment that was, maybe, 1000 square feet, wouldn’t rent at $2,800 a month. I told her because it should be at most $2,200, and really $2,000. But she didn’t listen, and it sat vacant. Now it’s down to $2,500, but it still won’t rent at that rate.”
As for the proposed changes to the Rental Tenancy Act, Dobson says she doubts it will have any effect on rents. “In 15 years as a property manager, I can think of two times we issued an order to vacate, and that was for non-payment of rent. We always advise tenants two months before the end of their lease that their rent is going up, they either leave or we roll over the lease. But increases are at most inflation plus two percent.
“I do think the rules on how rent increases are made should be changed, but this isn’t the way to do it.”
Mayor Patricia Heintzman though is optimistic the proposed rule change would be beneficial to renters.
“I think this will help. I’ve heard a lot of stories about renovictions, and it can be tough for people, they need some assurances they’ll have a place to rent.”
The mayor added at the root of the problem, at least for Squamish, is the lack of purpose-built rental housing. She noted the District of Squamish, working in conjunction with BC Housing, are well into the planning stages for two rental housing projects, one behind Buckley Ave, the other in Valleycliffe.
In the meantime, she says, “Time will tell how effective this [rule change] is. It’s well intended, and in markets like ours, people are vulnerable to large rent increases. They can’t absorb a $300-500 rent increase, so hopefully, this establishes a little more fairness in the rental market.”
She added that the District encourages new housing development, “But we want people buying housing to live in.”
The rental market though has already reacted to market forces, according to Dobson and Goodwin.
“People investing in some of the newer buildings still think they can get a $2,000 rental rate for a one bedroom, but the rental market, while still tight, is not as silly as it was.
“More units are available now, not loads, but we usually have a few rentals. Before (two to three years ago) we’d post a listing and get 14 to 15 inquiries immediately. Now we have a few rental listings available,” said Goodwin.
Dobson says she is seeing the same trend. “The market is improving [for renters]. We have quite a few more places available over last year.”
Though, she notes, “It’s really hard to say where the rental market is going. September was crazy busy, October a little less, and now not so much. It will probably pick up in February, but last year was busier at this time, which was actually unusual. We have 10 places available, but only one under $2,000.”
In end, says Dobson, places are still overpriced, “Owners would rather let them sit empty than try and rent them for less. They don’t see the big picture, a renter is still paying the bulk of their mortgage, even if the rent doesn’t cover all of it. Why not do that at least? If not to just help out a family.”
