Wednesday, March 04, 2009

The Rental Shortage

The Tyee has had an interesting series of articles on the housing market of late and the latest in their installment is The Path to New Rental Homes: One Broker's View by guest poster David Goodman. I encourage you to read the post as it highlights some of the technicalities surrounding building rental housing in the Vancouver area. Certainly it seems, on the surface, to be a bit of a quagmire.

First he starts off by setting the scene:

During my 26 years in apartment sales, I've heard on at least 50 separate occasions developers commenting that "even if the land is thrown in for free, we cannot make the numbers work on a new rental building." As a result, the Vancouver vacancy rates stands at 0.5 per cent, the age of the average purpose-build rental is 50 years plus, and local developers attempting to produce new rental housing are likely to lose money.
So developers cannot "make the numbers work"? Sounds reasonable. But I don't really get it. The vacancy rate is low, apparently signaling low supply. I would expect rents to increase to compensate for the low vacancy rate. I wonder why rental rates aren't increasing -- maybe the vacancy rate isn't as low as he is citing? He continues:

Things changed considerably in the early 1970s when the strata condominium was introduced to the market. This new concept provided buyers, including tenants, the opportunity to purchase and own their own suite rather than pay rent. Prices paid for condominiums were soon much higher than rental apartments. As a result, land quickly increased in value to reflect the fact that building condominiums was significantly more profitable than building rental apartments. Accordingly, except for very few special situations, the construction of purpose-built rental properties ceased. This situation has not changed much since the 1970s.
Ahh now we get to it. The reason purpose built apartments have not been built is because building condos is more profitable. It certainly seems that, given the horrid price to rent ratio in the city, any developer would be batshit crazy to build something with cash flows unlikely to cover debt repayments and other carrying costs (except with a large downpayment of course! haha).

Over many years, the developers of condominiums would assemble single-family lots in apartment-zoned areas or seek to rezone former industrial sites. Unfortunately, we have almost exhausted the conventional source of residential development land throughout the Lower Mainland. As a result, the cost of multi-family zoned land and the resulting new condominiums have increased much further in Vancouver compared to other parts of Canada. This is one reason why we have all heard of some prime Vancouver sites selling at over $200 per square foot gross buildable at the recent peak of the market.
The old faithful "running out of land" argument. Can we be so sure about this? Maybe it seems land supply is tight because there are so many projects under construction? The population didn't suddenly explode in the past 5 years and hit the buildable land brick wall. It is entirely possible what we are witnessing is underutilisation of existing housing and speculation. If we were truly land constrained wouldn't real rents be increasing as well? Strange how they are not.

I have learned to appreciate the important real estate concept known as "highest and best use" in considering the value of real estate.
Developers and value investors share this philosophy. But the difference is what "value" means. For the developer it's a very simple and short term calculation: build within one or two years and sell, pre-sold or on spec, to someone else, likely a speculator (in one form or another). This dude either occupies it, using the full brunt of his ownership premium, keeps it dark for a flip, or rents it out at a yield a developer wouldn't touch with a ten foot barge pole. Value investors, on the other hand, look at "highest and best use" more on what cash flow is possible. It may mean re-development but only because doing so generates higher rents to compensate for the construction costs and delay in occupancy. I have no clue the thought patterns of Mr. Goodman's current clients though I would expect, given they are the "dudes" buying the bags, it's not exclusively a value play.

Purpose-built rental housing is not being built because of more profitable alternatives to the developers, namely selling it to someone else to deal with. I laugh when I realise the rental vacancy stats Mr. Goodman cites don't include small time landlords to whom his developer acquaintances sell. I am sure regulation plays some part but give me a break -- even if we remove every shred of red tape surrounding rental units it still wouldn't make sense UNTIL THE RENTS CAN COVER THE THE CARRYING COSTS.

It is laudable Mr. Goodman's suggests to streamline the ability to build purpose-built rental housing again but to think doing so will suddenly swing developers into the rental camp again is a bit too "rich" for me, at least until land values drop or rents increase to where it makes financial sense. I encourage him to keep priming the pump for such an eventuality.

34 comments:

JimTan said...

“even if we remove every shred of red tape surrounding rental units it still wouldn't make sense UNTIL THE RENTS CAN COVER THE THE CARRYING COSTS.”

It's simple Economics 101. The land is going to condo use because it's a free market. The rental building market is crippled by rent control and tenant protection. It has been steadily getting worse for twenty years because of the divergence of free market prices for condos and the low yields in rental buildings.

The evidence is obvious. The 0.5% vacancy rate and diminishing stock of rental buildings. Look at the low rents paid by long term renters in the West End.

On the other hand, condo owners can charge market rentals because it is easy to get rid of long term renters. You can reclaim the condo by moving into the condo, or sell off that individual unit. Owners of rental buildings can't do that.

The implication is that condo prices are a true reflection of the market, while rental prices are too low.

jesse said...

Hi jimtan, I have not seen evidence rent controls are in play. Rents have consistently been raised below the rent control limit.

BTW thanks for your encouraging me to directly contact Dr. Somerville last year. He was very approachable.

JimTan said...

“Rents have consistently been raised below the rent control limit.”

Jesse,

I'm impressed that you contacted Somerville. It's good to increase your network of professionals.

I haven't seen any evidence that rent increases are below permissible limits. Rent control limits rent increases to the rise in maintenance costs. Therefore, the building owner should increase rent by as much as legally permitted.

The situation is different for condo rentals. The rental is on a one-year contract. The renter would be willing to re-negotiate a higher rental if the market is hot. After all, the owner can always sell the condo and the renter has to relocate (inconvenience).

Look at the crumbling rental buildings at the low end of the market. The owners have no incentive to upgrade if long term renters are dragging down average yields. The owners are better off if the building is condemned and sold to developers.

There are many long term renters (fixed income, single mothers, public assistance) who are hanging on to cheap apartments for their dear lives. There isn't enough social housing for them.

I'm afraid that many old wood frame buildings are in this category. What's the economic live of a wood frame or pre-war concrete building?

patriotz said...

The situation is different for condo rentals. The rental is on a one-year contract.

That is nonsense. Rent controls do not distinguish between purpose built rentals and condos. No do condos necessarily have one kind of lease and purpose built rentals another.

And get this: the fact is that BC had no rent controls at all between 1983 and 2004 - a period of over 20 years - and next to no purpose built rentals were constructed over that period. What more proof do you need that rent controls have nothing to do with the lack of purpose built rentals? Its simply a matter of divergence between condo prices and rental yields. Developers realize much more present value by selling condos and offloading risk to "investors". Period.

mohican said...

If the developers could make more money renting out buildings to the unwashed masses than by selling them to the unwashed masses they would do so.

The slick marketing firms engaged by the developers have ensured that most people feel paying a mortgage is better than renting although that hasn't proven to be the best financial choice for many.

If we believe that the market is efficient over the long run, then it would be a good time to buy if developers start building purpose built rental projects because it would mean that financing and long term maintenance costs are lower than rent, which would mean that buying would be a good deal compared to renting.

What can you take away from this discussion?

If you are an investor, do what the developers are doing. If they are 'selling' then you should be selling. If they are buying/building rental property then you should be buying/building rental property.

condohype said...

I've lived in every imaginable Lower Mainland rental, from illegal basement suites to old purpose-built rental apartments to privately owned condos. Rent controls aren't an issue. By law, landlords are free to raise rents in line with the inflation rate plus two percent. Add to that, Vancouver's turnover rate is very high. Look at me: six addresses in 10 years. Every time a tenant moves out, the landlord can set a new price for the rent. Nothing in the law forces landlords to "carry over" old rates to new renters.

patriotz said...

If you are an investor, do what the developers are doing.

Funny people can't figure this out. If Li Ka-Shing et al thought that condos were really a good investment, they'd be keeping them themselves, not trying to sell them to you.

JimTan said...

“If you are an investor, do what the developers are doing. If they are 'selling' then you should be selling. If they are buying/building rental property then you should be buying/building rental property.”

Excellent, Mohican! Then, you won't be buying till they build rental properties. I'll hold you to your word on this. Don't forget!

JimTan said...

“By law, landlords are free to raise rents in line with the inflation rate plus two percent.”

I was of course referring to long term tenants that drag down the average rentals. Landlords are only allowed to raise rents 2% plus cost increases. So, a ten-year tenant enjoys a significant discount on his rent if RE prices rise at 5% over inflation.

IN fact, the only growth segment has been the rental buildings for international students. They pay a premium price for downtown locations, and they are transients. No problem with rent control and turnover,

It's true that owners cash in their properties at the peak of the cycle. That's a logical thing to do. The rent control regime encourages divestment because rents lag far behind prices.

There are long term holders like pension funds. They may continue to hold because they are carrying their investments at book value less depreciation. But, the trend is clear. Rental buildings are an endangered species unless rents rise a lot.

The interesting development during a RE crash is this. Unsold buildings are turned into rental buildings. It remains to be seen whether any Vancouver projects are turned into rentals. What would it mean if RE prices bottom and there are no new rental buildings?

patriotz said...

Hey Jim, could you explain something for us?

Alberta has no rent controls. Yet over the past decade, there have been virtually no purpose-built rentals constructed in Calgary, and in fact a lot of purpose-built rentals have been converted to condos.

How come? What was stopping the owners from raising the rents to meet the rising RE prices?

We're waiting.

jesse said...

jimtan, if you have evidence to support rents being continuously raised at the rent control limit, post it here.

Strataman said...

"The implication is that condo prices are a true reflection of the market, while rental prices are too low." I agree except the average income makes the condo rental market un affordable for the majority. Lets say we agree that all condo owners with a two bedroom want $2000.00 / mnth. What does it matter if they can't find renters as is evidenced by the massive amount of VACANT two bedrooms as well as overpriced one bedrooms available immediately.(Check Craiglist) It is the RENTERS income that determines rent NOT what a place may or may not be worth. That is an irrelevant figure. If you believe it has something to do with reality then you have to understand that minimum wages will have to rise to $15.00 which means your maintenance fees will likewise rise by the same percentage. If rent controls were banned tomorrow it would do little good as if the renter cannot afford the rent your unit will be empty.

mohican said...

Jimtan - I think you should do some fact checking.

BTW - I already own my own personal residence and I have a method for determining how much is a fair price to pay. I did not overpay and I am content. In terms of rental investment real estate, I would suggest people follow what the developers do as an ultra simple approach. As soon as I hear that a developer is actually building a purpose built rental building I may do some research to look at the viability of taking on a couple of rental properties myself.

jesse said...

"As soon as I hear that a developer is actually building a purpose built rental building I may do some research to look at the viability of taking on a couple of rental properties myself."

Careful there, mohican. It's already happening!!! I'd qualify your statement requiring a competent developer building purpose built rentals as the original intent. LOL

strataman, there is nothing to say that a condo is sized for a particular number of people. In some cities people will densify out of necessity. The real reason rents have been flat and people have been able to live in larger spaces is because supply has met demand, despite perpetual claims to the contrary.

mohican said...

jesse - if I see a shovel in the ground on that project in the next five years I would be amazed!

That was a cozy PR move by Wall to sidestep criticism. I doubt there is any real work going on to look at building a rental project.

patriotz said...

It is the RENTERS income that determines rent NOT what a place may or may not be worth.

Careful with the language there, "what a place may be worth" means different things to different people - especially us. Better is "market price of the property".

JimTan said...

“If rent controls were banned tomorrow it would do little good as if the renter cannot afford the rent your unit will be empty.”

Strataman,

I have highlighted the Tyee articles because they were written by thoughtful and intelligent people. The point is that it's not about greedy landlords and deadbeat tenants. The housing system in BC is dysfunctional.

The province doesn't build enough social housing. So, it compensates with rent control. But, rent control and tenant protection works against the low income in the long run. Rental stock decline in number and quality.

At the same time, residents in prime social housing refuse to move out. There are 137 units at the Roundhouse Co-op (Marinaside). Residents pay 30% of their income to live next to the millionaires. But, there is a long waiting list of the really needy.

In the West End, long term tenants are being evicted with difficulty. They were paying a fraction of the market price for living in a prime neighbourhood. These crumbling rental buildings affect the rental properties around them. The neighbourhood will benefit if these old rental buildings are replaced by new efficient rental buildings.

But, it won't happen as long as it is difficult to evict tenants and rents lag behind prices by several years.

The proper solution is to have a rational housing strategy. Social housing should be built for the needy. Residents of social housing with jobs should be encouraged to move into private housing. Rent controls should be removed so that the free market can provide rental properties in less expensive areas.

Rents need to rise in prime areas so that the buildings are upgraded. Those who can't pay the market prices shouldn't be living there. Yes, wages will rise in prime areas. Is that so bad? Will it kill you to pay 25 cents more for your latte? Shouldn't people be paid a 'fair' wage?

“BTW - I already own my own personal residence and I have a method for determining how much is a fair price to pay.”

Mohican,

Why didn't you sell your residence like the other bears. Surely there is an opportunity cost. It's better to invest in corporate bonds and rent instead of owning? In any case, you say prices are going to collapse. Why didn't you sell your home like Freako and save $$$ in the collapse? After all, you are so sure that the market price must drop to an acceptable investment yield.

You have been so forthright in dissing other people. Why don't you explain this contradiction?

jesse said...

"Rents need to rise in prime areas so that the buildings are upgraded."

They don't "need" to rise. They "could" rise but another possibility is lower prices. You seem so convinced of higher rents being a certainty and I eagerly await data supporting your contention.

Strataman said...

Jim Tan "Rents need to rise in prime areas so that the buildings are upgraded." From that perspective you would say that service workers (your local chef, plumber etc) should live some where cheaper for instance Surrey? Okay so they do that and save $400 a month then as normal couples are two they pay $400.00 a month for transit. Net gain = nil. They can't afford to work in VANCOUVER so if they are a service worker they will work AND live in Surrey. Then as is already happening Vancouver Owner / Residents will pay twice the value for the same service and complain? In your scenario even well off renters would eventually be at a disadvantage as they paid twice th cost for unskilled or semi skilled service as their cohorts in Surrey. This results in a dead city. A majority of my highly skilled technicians live in Coquitlam/ Port Moody, you as a land lord pay for them to sit in traffic jambs for two hours each way, a landlord in Port Coquitlam has service in 30 minutes, you have service in 3 hours at three times the price for EXACTLY the same thing. Do you ALWAYS want to pay double triple for the slowest (double / triple service)? I find that strange.! :-) And I experience it EVERY day as Owners lament how much I charge to service their elite West-End Properties. It is also strange that you indicate they should be well to do to live in PRIME areas how come many of them can't afford us? :-) How come a lot of them live with malfunctioning broken down buildings cause they can't find anybody to fill our shoes and phone us constantly begging for a break? Maybe they should be thinking they (the renter service people) can't afford to live here and neither can I!! :-) That is current reality! I have fun with this; I have paper rich people that have no air conditioning and gas fireplaces that don't work, when I visit them I find NOTHING works including their toilets because as owners they have NO MONEY IN THE CASH FORM and WE deal strictly in cash or credit card! (Many many credit cards reject when we claim BEFORE we touch anything). We normally take it for granted that the typical downtown West End OWNER is broke.

patriotz said...

In the West End, long term tenants are being evicted with difficulty. They were paying a fraction of the market price for living in a prime neighbourhood.

A "fraction" you say? Evidence please. You are long on talk and short on numbers.

Rent controls should be removed so that the free market can provide rental properties in less expensive areas.

One more time Jim - can you explain to us why no such rentals have been built in Calgary? Or in the many, many US jurisdictions that have no rent controls?

I will also add that resorting to personal insults and false claims about other posters' personal residences is very very lame. The name of this blog is "Housing Analysis". If you can't come up with any, there are other forums that better suit your style.

mohican said...

good thoughts patriotz

jimtan - I'll reply to your inquiry and then it is on to the next post. My wife and I sold our 800 sq ft condo for $200k in Aug 07 as we outgrew that space with the addition of mohican junior, the location wasn't working for us anymore, and we felt the market was way overdone.

We rented for a year since we couldn't find anything we could afford / wanted to afford / met our criteria of being cheaper than rent. We gave up and didn't look anymore.

Last summer we discovered that we would be having another addition to the family (any day now) and realized we would need to move our rental accomodation. We started looking for bigger rentals, found a few we liked and for a lark checked out similar places on the MLS. We discovered that a developer in one of the townhouse complexes had just drastically reduced the prices of the remaining units. It had hope of meeting our criteria of being cheaper than rent so we made a lowball offer, negotiated a deal for ourselves and now we live in a very nice 2000 sq ft townhouse that we paid $285k for. My neighbour paid $50k more than me.

When making the deal, there were several factors that came into play. The main factor was that, even counting opportunity cost, we pay less in interest, fees, taxes, and maintenance than it would cost us to rent an equivalent unit. Secondly, we didn't want to move again with small children - it is a pain.

All that said, we enjoy where we live, are content with the price we paid, and we have a very reasonable lifestyle in which we are not burdened by overwhelming mortgage debt. We have the plan of paying off our mortgage over the next 5-7 years so that when the market is really bottomed out we can take advantage of it fully by either looking at rental properties, upgrading our home, or both.

jesse said...

The reason I like this blog is it is data driven. Anecdotal stories and opinions have their place but are not by themselves the grounds of an acceptable argument around here.

JimTan said...

Well, I appreciate Mohican's anecdote. It goes to show that intangibles do matter. People are willing to buy at 10%-20% discount even if they think that a bigger price fall is inevitable. Bird in hand ...

Anecdotes are a valuable form of intelligence if they are a true gauge of INTENTION. Historical charts are so boring if they are mere extrapolations.

“This results in a dead city. A majority of my highly skilled technicians live in Coquitlam/ Port Moody, you as a land lord pay for them to sit in traffic jambs for two hours each way, a landlord in Port Coquitlam has service in 30 minutes, you have service in 3 hours at three times the price for EXACTLY the same thing.”

What's the difference if they already live in Port Moody and Coquitlam? All I am saying is that they shouldn't live in the West End because of rent control. Perhaps, they could live in Burnaby if there are more rental apartments there? Then, they would sit in traffic jams for just an hour!

“I will also add that resorting to personal insults and false claims about other posters' personal residences is very very lame.”

Huh! I guess you missed all the insults showered on this forum on commentators and analysts. BTW, I wanted Mohican to clarify his personal RE dealings. Does he walk the talk? I'm sure that Mohican has no objection to honesty and transparency.

jesse said...

"Anecdotes are a valuable form of intelligence if they are a true gauge of INTENTION. Historical charts are so boring if they are mere extrapolations."

An Anecdote is a DATUM. It is only a gauge if it can be verified as generally accurate compared to a statistically significant sample of other anecdotes or data. They are therefore not proof and only really add some sense of humanity to otherwise impersonal statistics.

Arwen said...

I have also been a renter in Vancouver in a number of homes. For many years, I'd get a rent increase once every 3 years or so in any long term lease. Things have changed since about 2003.

The Residential Tenancy Act applies to anyone renting. Condo or not. Just to be clear.

As to the west end renters being evicted with difficulty, I think you're confusing the sales pitch with the reality, JimTan!

I know those buildings under contention and have lived in one of them, and I know their rents, and a number of the renters. I've been in the West End a long time.

My mom was evicted out of Jervis, and happily went, so that "substantial upgrades" could happen - the floor was without foundation and deeply warped, there was black mold in the plaster, the place needed rewiring and replumbing - no hot water in the bathroom, everything wired through the central light; these upgrades did not happen. My stepdad knows the guy doing the work, went in to look. They dealt with the mold - they are professionals - but other than that? Surface upgrades. Because actually fixing what ails the place is beyond the reach of people who bought at the top of the market. After that building sat for YEARS on the commercial market, b/c it was expensive given its needs.

Now it's attempting re-rental at prices the market ISN'T bearing, the units sitting open -- and in the meantime, a community has been disrupted.

This is stupid to do - that building already had a problem with drugs, and now it's being rented at drug dealer prices, and cornerstone tenants who did things like take care of the place, keep their eyes and ears open, and help the neighbours out are moved.
Because, seriously: the current rents essentially work only for those making over 80K, and these are old buildings have many, many quirks. My old suite is sitting open at $2800-, and it used to ROAST in the summer so that we had to spend most of the time out or suffer heatstroke. Buh.

These "new" landlords aren't really clear on how this works - and how much good long term tenants are worth.

Having done work in rental property management, I'll tell you - it's gold.

Arwen said...

... And out of curiosity, I went back to craigslist to check out the jervis place -- the open suites are finally dropping in price, substantially.

patriotz said...

Huh! I guess you missed all the insults showered on this forum on commentators and analysts.

Criticisms of "analysis" presented by "experts" in the public media are not "insults". When these people serve up BS, we call it as BS. That is what this forum is for.

We do not engage in ad hominem attacks on these people. I have never read any reference - either factual or imagined - to the personal residences of Pastrick, Somerville, etc. on this forum.

That sort of talk is limited to you.

JimTan said...

“Because, seriously: the current rents essentially work only for those making over 80K, and these are old buildings have many, many quirks.”

Arwen,

There we are! Finally, the tenants had to be evicted because the building needed critical repairs. Did they leave voluntarily because there was mold etc? That old building now needs to be replaced because a bare-wall repair is uneconomical.

Why is the rent so high for an old-timer building? It's because the old designs are no longer economical at current land values. See Mohican's comments on 'densification premium'. The owners need to replace the old walk-ups (old use) with higher density housing (new use).

It's always best to let the free market sort it all out. Developers would gradually replace the old-timers if the tenant protection weren't so unreasonable. Over time, redevelopment would produce more (albeit smaller) modern suites and at a lower rent. That is, the market delivers what the customers want.

JimTan said...

“And get this: the fact is that BC had no rent controls at all between 1983 and 2004 - a period of over 20 years - and next to no purpose built rentals were constructed over that period.”

Patriotz,

This is nonsense. Rent control has existed for many years. I know of one building on Drake St run by Concert Properties from the mid-1990s. Recently, several buildings have been converted for international students. There will be rental buildings when the price is right and there is heavy tenant turnover. There will be more rental buildings when the price is unregulated.

Here are some choice 'criticisms' from the forum: My questions are no less astute.

1) Please tell me how you each earn a paycheque? Do you feel how you earn your money helps you have an unbiased opinion on real estate matters?

2) What makes you a real estate expert? What are your qualifications?

3) Why should the Sun's readers heed your advice? Do you actually have any advice? What is in it for our readers? What's in it for you?

ValueMonkey said...

Some background on BC rent control...

B.C. rent control ban benefits landlords (http://www.ontariotenants.ca/articles/1990/gm-90a10.phtml)

It says here that rent controls were taken away in 1983. Rents increased by 80%. Supply decreased as apartments were replaced with condos.

Rent control: a case study of British Columbia (http://www.walterblock.com/publications/rent_control_british_columbia.pdf)

It says here in 1994 the NDP amended the Residential Tenancy Act to bring back rent control.

Renting in British Columbia (http://www.cmhc-schl.gc.ca/en/co/reho/yogureho/fash/fash_002.cfm)

It says here in 2008 rent increases were capped at 3.8%.

My Anecdote
I've rented in BC for 20 years and I've never had a landlord raise the rent on me.

Value Monkey

JimTan said...

“Some background on BC rent control...”

We have proof that rent controls do hold rentals down. The fact that rentals rose 80% after 1983 imply that rentals were far below market rent because of the long years of post-war rent control.

The fact that apartments continue to be converted to condos means that the rentals had not risen far enough to justify renting.

The transition from rent control to control-free was problematic. I would argue that the transition was very traumatic because of the long years of rent control. A free market would change gradually over time.

In 1994, the NDP reimposed rent control. Did it solve the problem? No, rental apartments did not surge. Rent control is a band aid, not a solution.

It didn't matter so much during the slow years of the 1990s and the leaky condo disaster. But, low rentals did matter when RE prices surged after 2001.

“A spokesman for landlords said the current rental crisis does not prove that the rental market has failed, but only that municipalities must move to allow greater building densities so that it will be economically viable again to build rental housing.”

There may be the crux of the matter. You don't have a free market as long as there are restrictions imposed by NIMBY. You did see housing stock surge in the downtown area after they encouraged densification there.

A housing solution must be approached on a systemic basic, including mass transit. You can see success stories in some Asian cities where governments have imposed urban design.

Rent control is not a long term option, even in socialist countries. Unless you like crumbling buildings and faulty plumbing.

Value Monkey saves that “I've never had a landlord raise the rent on me.” This makes no sense to me.

JimTan said...

In 1993, they published this report to justify the imposition of rent control.

http://www.ontariotenants.ca/research/rentcontrols-th-sum.phtml

See this right-wing pdf about the NDP government in 1994

http://www.walterblock.com/publications/rent_control_british_columbia.pdf

“However, in May of 1994 an interesting occurrence took place. The
New Democratic Party amended the Residential Tenancy Act so as to
bring back rent control de facto, but not de jure. Controlling the prices
charged for rental accommodation is a policy fervently desired by this
government-but due to the political unpopularity of this measure, it
did not feel free to do so explicitly.
The new provisions: 1. took away landlord’s rights to unilaterally raise
rents; 2. allowed tenants to change the locks on their rental units if they
suspect the landlord of entering without permission; 3. enabled tenants
to appeal proposed rent increases for a 90 day period, during which time
they cannot be evicted; 4. increased fines which can be imposed on landlords
for tenant harassment to $5,000; 5. gave tenants the right to make
their own repairs if they cannot reach landlords after “two reasonable
attempts” (1994 amendments to the B.C. Residential Tenancy Act. p. 4)
and then deduct these costs from their rents.”

Yet, the vacancy rate is still minuscule ten years later. Rental stock continues to decrease. Landlord-tenant conflict increases when RE prices surge. The government allows an annual increase of no more than 2% plus COL (since 2004). But, aging buildings aren't being DEPRECIATED as they near the end of their useful life. Why should a landlord rebuild a rental building?

jesse said...

Jimtan,

from your link:

"The major conclusion of the study was that there appears to be no convincing evidence that rent regulations, as they existed in various provinces in Canada from the early 1970s through to the early 1990s, had significant effects on rents, on the construction of rental units, or on vacancy rates."

Thanks for posting the links.

ValueMonkey said...

JimTan said ...
Value Monkey saves that “I've never had a landlord raise the rent on me.” This makes no sense to me.

Its an anecdote so it doesn't have to make sense. My best guess is that the landlords I've chosen would rather keep a decent tenant than up the rent.

I thought you liked anecdotes JimTan. :-)