Hat-tip to reader Mike for pointing out the telling exchanges in the comments section of ‘Renters rally to protect rights against unfair evictions’, Vancouver Sun, 7 May 2011.
The article deals with the plight of tenants facing ‘renovictions’, “a tactic in which landlords attempt to kick out renters under the guise of renovating the suites before substantially raising the rents.”
The comments reveal much about landlord investment mentality. And MikeD5 produces excellent retorts:
anon873211976 7 May 6:40pm - “This is crazy….Remember your a “RENTER” your not an “OWNER”. There should be a simple rule of a maximum of 6 months notice of eviction, regardless of the reason. There, now throw all the rest of the eviction paper work in the garbage….Its no wonder investors wont build new rental buildings, their simply too much trouble…”
anon309334271 7 May 7:01pm – “This idea of entitlement that seems to be sweeping across the current generation. Renters are NOT owners. I believe that an owner should be allowed to do whatever they want to with their property, as long as they do not violate the lease agreement.”
NEXTLINK 7 May 11:25pm – “At one time I had the opportunity to rent my home out… The tenants were a nightmare! The first check was good…. after that it was constant “running after them for the rent” I have no pity …. The tenants didn’t risk their savings to buy a home… they didn’t spend weeks if not months making my home livable.”
anon873211976 7 May 11:49pm – “All renters do not deserve the excessive rights the governments have handed to them on a silver platter.
Any owner of any type of building with with renters, should have complete control over his or hers substantial investment.
Having the government regulate the rules, is simply manipulation of the economy, and makes everything more expensive for owners and renters. [see CMHC -ed.]The most difficult thing for any building owner is to find “good, quality, responsible customers”
And renters can move any time they like….. and not have too pay rent, this is so one sided and flaky, i am amazed the courts even recognize the these one sided, so called regulations..”
anon801396618 8 May 12:18am – “I’m always amused when all these “Left” wingers (NDP & federal Liberals) cry because they want to rent in one of the world’s most sought after cities (Kits & dt Vancouver) BUT they want rents at 1970′s levels. If you want to live here, pay the freight baby ! These same “Lefty’s” are the first to invite the world to move to Vancouver, AND the first to scream when demand causes rents to increase. Grow a brain people.”
taxslave 8 May 11:22am – “Renters have right and landlords have bills. That is why there is so little rental housing available.”
realitbites 8 May 12:30pm – “I have seen first hand what happens when a landlord tries to be a nice guy and tries to fix up his suites without evictions: the tenants b1tch and moan about paint fumes and inconvenience, and some of them bail out on rent leaving the landlord screwed. So all you can really do is sit back and watch your suites slowly get trashed because renters want it both ways. Sorry folks, if you want to be secure, get an f’ing mortgage like the rest of us and shut the f up.”
anon498382070 8 may 1:20pm – “Maybe a little math will help. A building sells for say, $250,000 per suite. Rentals cost more to finance than owner-occupied homes, conservatively assume 6%. Principal & interest cost on $250,000 amortised over 35 years is $1,414 per month.
That’s 40% more than what the Brattens pay for rent. The landlord also has property taxes, management costs, repair & maintenance costs, periodic replacement of roofs, carpets, stoves, fridges, insurance & vacancy/credit loss.
Landlord are not a public service. We aren’t a small segment of society cursed with the obligation to provide subsidized housing to tenants. Landlords deserve a return on their investment.
I value the business of my tenants and strive to provide them good quality accommodation. But I don’t want to subsidize them.”
[Maybe a little math would help: The sales price of the suite is 2-3 times over fair value. Try the figures with a sales price of $100K and you'll see the rent makes sense. -ed.]
MikeD5 8 May 1:46pm – “If you can’t get the yields, than why do you stay in the business? There are a million other alternative investments.
Lots of landlords in this city accept low yields because they are speculating on property values. Fine than, but tenants aren’t going to pay for those increased values.
Also, vacancies are now 2% in Vancouver and 7% out in the Fraser Valley. There are actually far more apartments available than a few years ago, so even if the marker was totally unrestricted you wouldn’t get the yields you desire.
If you don’t like it, sell and invest in something else. If you like the property appreciation, deal with the low yields and shut up.”
[Brilliantly put. 'Mike', is that you? -ed.]
anon498382070 8 May 2:25pm -
“2 BR suite, theatre district NYC – $5,500 per month $Cnd
2 BR flat, London England – $6,847 per month $Cnd
550 sqft flat in Tokyo – 1BR, $2,641 per month $Cnd
Kitsilano 1 BR suite, new rent $1,075 $Cnd. Sounds like a deal to live in one of the most expensive areas, of one of the most expensive cities in the world. What are they complaining about?”
[ROTFLMAO regarding comparing Kits with those sites. 'Expensive' in price, not value, right? Market rents come closest to reflecting the actual value of a domicile. -ed.]
anon498382070 8 may 2:41pm – “There is a world of difference between low yield & negative yield. A negative yield is called a subsidy. If renters as a group need subsidy, by what logic does it fall to one small segment of society, landlords, to provide it?”
phreek11 8 May 3:05pm – “BC is already a HORRIBLE place to be a landlord, which is why so many foreign investors buy property and leave it vacant for many years and just rely on increase in value, rather than monthly income.”
TM7 8 may 5:05pm – “I have over the years seen so many landlords taken advantage of due to the Landlord Tenancy Act. Renters have all the rights, landlords have none. The ironic part of that is the fact that the person who owns the home, paid for the home, pays the taxes on the home, pays for all the repairs on the home, has zero rights.”
MikeD5 8 May 5:14pm – “When a unit vacates, a landlord can charge any rent they want for a new tenant. Despite that, even when they can charge any rent they want, rents are way way way below any kind of decent investment yield. This has NOTHING to do with rent controls or subsidizing tenants.
The facts are the prices of real estate are extremely out-of-line with fundamentals. You buy these days and you’re only buying to speculate. Anyone who buys Vancouver real estate for yield is totally out of their mind, and this has nothing to do with tenants.”
[Yes, this clearly is 'Mike'. -ed.]
anon498382070 9 May 1:23am – “MikeD you are wrong, this has everything to do with subsidizing tenants. Contrary to your view that real estate values are overpriced, when property changes hands between willing sellers & willing buyers – That establishes the value.
You’re saying that one who chooses to buy their accommodation must pay all costs associated with its occupancy, but a renter ought to pay only a fraction of the real costs that ownership of the property presents to the landlord. There’s no logic in that. If you want to live in a million dollar property, you’ll have to pay the costs associated with acquiring & operating million dollar properties – whether you own it or rent it. Renting should cost more because the landlord deserves a return on his investment & risk.
Can you think of any other business wherein you’d think it reasonable that the business sell it’s product at less than the cost of acquiring the product?
Why should landlords be singled out to provide subsidy to tenants?”
MikeD5 9 May 2:49am – “”landlord deserves a return on his investment & risk.”
That, my friend, is entitlement in a nutshell.
Million dollar houses are offered for rent for under $2500/month all the time in Vancouver. Check Craigslist, its quite common. One ad has a renovated 4 bdrm house in MacKenzie Heights renting for 2200/month. No government is setting that rent. The landlord is asking the market price if a tenant agrees to the rent.
You aren’t going to get Manhattan rents without Manhattan wages.”
—
Honourable mentions:
pineal g. 8 May 7:54pm – “Good landlords who observe the tenancy act and behave in good faith have nothing to fear if this legislation is passed.”
LuckySlevin 8 May 4:32pm – “I am so tired of hearing landlords whining about how hard and costly it is to maintain their rental properties. How about you all go and find REAL jobs, because flipping properties is not an actual job.”
MarshallYVR 7 May 10:06pm – “There’s a crisis of affordable housing in Vancouver. People of my generation can no longer afford to buy. Yet they have no security in renting, either. Landlords should not be able to evict perfectly good tenants just because they want more money.”
Yeah that’s me. Its a scary time to be a tenant considering how this bizarre real estate market has fueled mass delusion among property owners. My own landlord acts like he’s giving me some “special deal”, and I just nod and grin because I don’t want to strain the relationship.
Nobody “deserves” a return on their investment. What, do they want a different kind of rent control where there is a price floor based on a 6% yield? That would either cause third world level inflation or turn this city into a ghost town.
This basic ignorance about economics is going to make for some interesting conversations once the bubble bursts. Just make sure those conversations are “anonymous” and on-line.
Hahaha. Do it. My job is virtual if they do that I pack my bags and move somewhere else. My job will follow
Being a landlord in Vancouver makes little financial sense in Vancouver for a few years now.
Three years ago I had the idea to maybe buy a property and rent it out, after five minutes of looking at prices for houses / condos and checking craigslist for rental prices it became clear this would have been a losing proposition. So I never really went for it.
It does not surprise me that many people who are stuck as “Landlords” start panicing now. They may have speculated on higher property values down the road but I guess they can feel the ground shifting under their feet and with more vacancies coming up rental prices will be under severe pressure in the near future.
As a renter: I am delighted, there is a reason why Hollyburn hasn’t given me a rent increase in two years, they know full well I could find something nice(r) for the same or less amount of money.
Mike -> Thanks again for the heads-up re the landlord comments, they are very telling.
You point in passing to another phenomenon of the bubble: The market knowledgable tenant who ‘tippy-toes’ around their landlord, not wanting to do anything that’d get the LL to do the back-of-the-envelope math and consider selling (and thus disturb the tenant’s comfortable ‘subsidized’ set-up).
We know of renters who do their own repairs for this reason.
Yes! My least favorite part of this bubble is that it’s made renting more risky as every suite changes hands and seasoned landlords leave the market (because the yield is too bloody low.)
Friends who think owning’s a bad investment have capitulated simply because they couldn’t stomach another go ’round of sale-and-eviction.
It makes me roll my eyes that rather than questioning their own financial decisions, amateur landlords would rather disparage & malign their clientele.
The legislation allows a landlord to raise their prices 2% above inflation per year: it doesn’t prevent a landlord from making a suite more expensive relative to wages, it just prevents that rise being too steep for any particular renter. There are places where it makes some sense to apply for extraordinary rent increase, but I must say this all makes me think of that saying “Poor planning on your part does not constitute an emergency on mine”.
A trend I’ve noticed lately among the speculators is renting suites out at what appears to be a decent rent (say $2200 for a nice 2-bedroom suite in Yaletown) to avoid living in their own suite during rehabs. The renters move in and the tarps arrive – workers on the balconeys and constant noise for about a year. It is extremely hard to discover information about a building unless you’re purchasing a unit so the renter is screwed – and when the rehab is done, the lease is up and the renter has to move on. All I can say is, renter beware.
So no way of redress in this kind of case? That seems pretty bad and mean. Looks like abuses goes both ways unlike what those landlords are claiming.
FYI, a link to this post and thread has been added to the ‘Renters’ sidebar post.
Those readers who haven’t yet seen that discussion and repository, click here.
My two favourite untrue myths:
1) Rental cap suppresses rents. Then why aren’t rents going up at the rental cap rate?
2) Property taxes increase when property values increase. Ummm… Nope.
Thanks Mike for forwarding those wonderful rants. I think the “word of the year” for 2011 should be “disenfranchised”. So many comments, so much anger, powerless to affect market democracy. You made my Monday.
Honestly with renovictions I think there needs to be a balance. There certainly are tons of abuse using this excuse but there are also lots of times when it is valid. For example a 50 years old building that’s never been renovated like contains tons of deferred repairs, deficiencies, and required updates to current electrical, fire, and other building codes. To say the landlord has to do all the repairs and work and then still charge the old renters the same rent doesn’t seem right to me. Yes, I know the owner should have budgeted for the work or done the work as needed over the years, or the new owner shouldn’t be paying so much for it. However reality is that you can’t have a fully updated building charging way below market rents, that also doesn’t seem fair to me. So with renovications, I think some comprise is needed and renters need to realize that they can’t have it both way of fully updated modernized building and paying way below market rents.
Sorry, but the Landlord had 50 years to save up for the repairs, that’s not an excuse.
It’s called the “cost of doing business” if you cannot do it then don’t get into it.
Renters / Landlords, it’s a business relationship, the rules are clearly laid out for all to see, if you don’t like the rules then don’t play.
True but then again in such cases, the rent charged is also below “market rent” is it not?
For example, if a new luxury 2 bedroom in Vancouver costs say $2.5/sq ft per month, a renovated and modernized 40 years old 2 bedroom costs $2/sq ft per month, and finally an unrenovated no updates done 40 years old 2 bedroom costs $1.35/sq ft per month, then when the owner (old or new) fixes it up and modernized, shouldn’t they be allowed to charge the now market rent of $2/ sq ft per month rather than keep charging $1.35/ sq ft per month?
That’s what I mean.
Now having said that, I believe that renters, the honest ones, are being treated quite looked down upon by landlords who likely do believe renters are a 2nd class citizens, serfs living at their lords (landlord that is) pleasure. I think part of it is this amazing need/desire to own a house/townhouse/condo. Part of it is also that most amateur landlords likely need every single last penny of the rent to meet their mortgages/debt payments and hence any requests for repairs, even due to normal wear and tear, or cheap products, are viewed as an unreasonable demands from an irresponsible renter. Multiply that by conversations between friends and family who are also amateur landlords in the same situation and a last perception of renters emerge. Renters have to realize that when you do make any requests that cost money, you are likely asking for blood from the owner and will be viewed as pariahs.
Now, I do also agree with some of landlords complaints that evicting a bad tenant, especially ones that knows how to manipulate the system, is way too hard and too long. There are bad renters and scammers out there and they know how to abuse the system to full extent. So we do need some good way to deal with them.
Lastly with rent increases, I find myself agreeing with arguments both for and against rental caps. Likely my view will shift depending on whether I’m a renter or a landlord.
It’s like the Justice System. The goal is to prevent wrong doings, read, the kicking out of a good tenant because they landlord just wants them out.
It’s a question of who holds more power and the landlord clearly holds most of the cards, the tenancy act is intended to even the playing field.
BTW, if you would remove all the hurdles the landlord has to go through to evict someone, how often do you think this would be abused? I’d say quite a bit.
Oh, you can only raise rent by 2.3% but you would like to double or triple that? Well easy, evict the person and then offer them a new contract at the new rate. That’s pretty much what happened in Edmonton a few years back if they didn’t just outright kick you out and do a condo conversion.
There shouldn’t be any rent controls. If you want to protect renters, then require a long notice period if the lease won’t be renewed. Renters need to search for apartments which lease for at least a year.
Let the market set rents. Landlords will learn real quick what the market level is and realize they don’t have all this pricing power they think they have.
Rent controls allow this type of thinking among landlords, that somehow rents are artificially low. Let them have their market rents. I bet you’ll see that they don’t budge all that much.
They probably won’t, but they will cause havoc with current renters as the landlord WILL push up the rent the next chance they get to what THEY consider “fair”.
That may be less of an issue if you’re renting a Condo in Yaletown as you most likely will have the financial resources to move somewhere else, but if you’re in the lower income bracket this WILL create havoc with your life and that of your family.
Rent controls are a convenient scapegoat for Landlords and an excuse on why they do or do not do certain things, but that does not mean we should just abandon them.
I disagree. Over time, rent controls just lead to significant distortions in the markets.
While I think the landlords in this post are completely wrong that market value should drive rents, and not vice versa, I do agree that there shouldn’t be undue restrictions on what they do with their own properties, or their ability to move people out after the legal requirements of the lease have been met.
The rental cap exists as a good way to represent the imbalance in negotiating positions. It is very disruptive, even as two well paid people to need to move once a year.
With that said, some of these laws serve as a replacement for having to develop a significantly trusting relationship between landlord and tenant.
I’ve seen tenants abuse the system, but it’s never been rent control that’s the issue. Rent caps don’t do much to the overall cost of the market in Vancouver, but create some amount of stability for renters. Which I think is a net good for neighbourhoods and employers.
Here is an article about rent controls and tenant rights keeping a man in a four-bedroom apartment in San Fransicso for under $600. The renter has all the leverage. I don’t think it makes the landlord a “greedy speculator” to feel he’s getting a raw deal. This is the type of distortions that rent controls build up over time. It takes awhile, but they do show up and screw up the efficient functioning of the market.
http://www.baycitizen.org/columns/elizabeth-lesly-stevens/small-time-landlord-vs-big-time-tenants/
Snats, that’s not how rent control in BC works. It’s inflation + 2%, which works in the vast majority of cases for landlords wishing to gentrify against wages over time. For those that it doesn’t work (often due to lack of forward thinking, but not always) there is application for extenuating circumstances to the Residential Tenancy Office.
Plus, for MAJOR renovation, which is a different kettle of fish, there’s not really a problem in asking tenants to leave. The problem is can-of-paint renovation.
The rental cap isn’t what’s capping what landlords can get here. It is wages. The renovation evictions, most of the time, are based on new “investors” not doing their homework: they wanting to upgrade & flip, or, in a huge number of cases, attempt to compete in the luxury market. BC’s rental control is not a problem for any property owner who knows what they’re doing and runs the numbers before getting in.
…And the problems in the linked article are a whole raft of issues, not just rental increase caps. Using this vs. BC’s rental laws seems to me similar to saying that you’re against removing merry-go-rounds for child safety, so all child safety laws are problematic, so there should be no child-labour-laws. It’s a weird conflation of an extreme case (and San Fran IS extreme) to the entire category.
We rent and the owners made it pretty clear early on that they weren’t interested in investing a dime in maintaining the place. We have replaced defective light fixtures and cabinet doors, installed molding around the sink to deal with a silverfish issue , built closet shelving, installed a backsplash, arranged to have the recalled washer fixed… This adds up to real time and money for us but it makes our place livable. We like the location and the rent is not exorbitant and it’s paid on time every month. Our landlord is lucky to have us. When we leave this place it will be far nicer than the place we moved into.
Do some math. If you factor in the hours you spent (caluclate it at the rate that a professional would) and the money you sank into new hardware are you still getting a good rental deal?
Yep. We would never own this place at the prices being advertised. We pay about 1/3 of a mortgage payment and this is an old building which will need expensive enveloping work I expect in the next few years at which time we will move out.
Renting is weird in this city. I rented at Yaletown Park 3 for a while (ugh!) and the amateur landlords don’t really know what they’re doing. I expect a landlord to at least familiarize themselves with the Residential Tenancy Act. I don’t care if you don’t live in Vancouver proper – when something goes wrong in your poorly-built condo I expect you to fix it. Now, and before, I rent in Mt Pleasant in a building run by a “management company”. They’re stingy and never want to fix anything, and it’s hard to communicate anything with a landlord who is never present. My old building at least had a decent caretaker who would fight for us against the management company. The best possible situation to be in is a landlord who owns their own building and lives there, and isn’t an out-of-touch speculator or a penny-pinching management company.
You’ll be hard pressed to find someone like this. Hollyburn et. al. at least in the Westend have bought up most of the formerly “owner occupied” buildings and gave it that “Hollyburn shine”.
Several friends of mine in the last few years also were “sold” to a management company. At the current sales rates for property in Vancouver anyone who owns an apartment building and gets an offer is most likely to take it.
Another quick note… 1998-2003 I owned a loft which I lived in for a time but for a bunch of reasons I ended up having to rent out. I couldn’t sell it because I would I have lost money on it!!! While the purchase price was cheap compared to today’s prices, property prices weren’t appreciating. When I rented it out I found myself subsidizing the rent about $100 a month. I was okay with this figuring at the end of the day I was contributing to my investment. It’s crazy to me how the expectations of “property investors” have changed so dramatically in the last decade. A previous poster nailed it on the entitlement issue I think.
Who forced these asshole landlords to buy?
They should have been smart enough to do the math and realise it’s a suckers game.
Of course they are relying on asset appreciation to make it worthwhile and not yield.
No asset appreciation? Oh well, you lose. Next player, please.
Someone mentioned that yields are low and tenants are troublesome as being the reason no one is building rentals.
Playing devil’s advocate, I would say the reason is government policy has goosed the ownership side. That’s the reason why no rentals are being built.
“That’s the reason why no rentals are being built.”
No purpose-built rentals are being built because developers can sell for way more money to idiots who “subsidize” renters by choice — there are rental caps on neither newly-built housing stock nor housing stock that is let out when an owner-occupier vacates. Building properties to let in Vancouver is a horrible investment for anyone who wants to run a profitable business.
Why? If you build a new rental building and you bring the suites on the market you can charge whatever price you want, the rental cap is not in effect at that point only the following year.
Unless you’re trying to tell me that they just can’t get as much money from a rental as they would like because the market just isn’t supporting the $3000/month on a bachelor, but clearly you must jest, this is the city where housing is apparently too cheap, hence why it’s a good investment.
Agreed… government policy, cheap money, and a speculative mania.
The whole “refusing to do maintenance” on a property is another favourite of mine but it’s no untrue myth. Since yields are low (i.e. land prices are high) a landlord will not be able to justify the expense of capital replenishment. But also many landlords are unprepared for the amount of effort a property takes to be properly maintained and will settle for a lower return for less work. This is, after all, Vancouver…
Methinks the most vocal landlords, who complain about the “lower-class” tenants and their need to be treated like children, are the ones who have no choice but to let their properties to these underclasses because they are unwilling to maintain their properties. Fancy that.
Judging by further comments on that Sun story, many people don’t even understand the limitation to rent controls in BC. They really believe those controls are the sole cause of the disparity between renting and owning. Anyhow, I’m done commenting there for now.
The problem is that these “investors” have no idea what they are doing. For year now in Toronto landlords are subsidizing rents in exchange for a crack at the great real estate lottery.
Many old time landlords are selling. They are cashing out and being replaced by those people who have no idea what the fundamental nature of the business is.
It’s like your friend at the office who made a couple thousand bucks on a quick penny stock flip who thinks he knows the stock market compared to the careful dividend stock value investor who’s been successful for 20 years with a balanced diversified portfolio. It’s absolutely idiotic and these people should be ashamed to call themselves investors. Investing has nothing to do with this madness.
Quite frankly renters will be up the creek once these idiots realize how much money they’re losing when the market goes down.
Not really. What are they going to do? Increase rents? The tenancy act stands a bit in their way.
Become nasty landlords and try to scare people out of the units? That may work in the short term, but they will soon realize that having someone in the unit is better than no one.
Walk away from the property? Possible, I guess in that case CHMC will become the landlord and that wouldn’t really affect the renter.
From my understanding if the landlord sells the building / unit your contract just continues on with whoever buys the property.
Ok, Rachelle wins for best post in this thread.
i don’t see how renters are going to be ‘up the creek’ – rents are not determined by what the landlord determines them to be, but what the market is willing to bear – as someone above stated, you can’t charge NY rents without NY wages – and i’ll add to that the excess supply of rental suites and empty condos etc. and it looks like a sweet time to rent – now as long as we can keep our shitty service sector jobs post bubble, that’s the question..
Dear Polyanna,
Who will be your landlord? Once the speculators get out of the game and cut their losses…and some condo buildings here in Toronto are 70% rentals, who will then provide you with your subsidized housing?
I remember the times when here in Toronto the vacancy rates were less than 1% Landlords charged what they wanted and people found places to live or not according to what they could pay. I myself paid a tenant $5000 to leave his apartment, and charged $700 more per month for the suite (double) I had 80 people come to see it, and the next morning there were 13 people with perfect credit, with certified checks for 2 month’s rent waiting for me to get the office.
Welcome to the next level… once people stop believing that capital appreciation works and they learn how much it sucks to be a landlord when you’re losing money hand over fist. You can’t afford contractors and property managers. You’ll be the one fixing leaky sinks and shovelling the driveway when it’s 30 below. (In Ontario Landlords must shovel the driveway for tenants) Compound that with a descending market.
Landlords are in business. They are not social workers or registered charities. Do you expect the grocery stores to sell you apples that cost them $1.00 for $0.75? There is nothing wrong with that and in a balanced market the landlord is able to make a small margin of profit renting out space. When all the “landlord businesses” fail you will pay the rent that’s available or live on the street. As a tenant it should be very much your concern that landlords are unable to profit just like you should be concerned if your favourite restaurant starts giving away food. They won’t be in business long and their doors will close, they won’t be in business to provide you with lovely entrees or housing.
Rachelle – it is not the tenants’ concern if a landlord is able to make a profit or not – the market will determine rents. As has been stated previously on this thread, rents are not increasing but are in fact decreasing in Vancouver. If an individual or company choses to become a landlord it is in fact their lawful duty to comply with the Act and ensure the unit is maintained in good order. Any landlord has the right to inspect a unit monthly with no notice (relatively recent ruling due to grow-ops) but most don’t bother . If, as you say, the landlord is operating a business they should conduct themselves as if they are – polite, on top of problems and willing to solve the problems of the customer (tenant) – all too often the opposite seems to be true.
There are times when rental properties are in short supply, and rents move up accordingly. I’m not convinced that we are in a time like this. I’m seeing quite a bit of affordable housing advertised (not basement suites), but co-ops and Metro Vancouver’s housing society. So the landlord who wants to charge $2000 for a 1 bedroom condo may be out of luck. In my building, where I rent a 2 bed, 2 bath for $1350 (yes, for which there was a lot of competition, but we got it over the other applicants because we told the landlord (honestly) that we will be long-term tenants), there was someone trying to rent a 1 bed plus den (which I think was actually the storage room we all have in-unit) for around $1500. I saw it advertised for months. Maybe they were flooded with replies but couldn’t find ideal tenants? Possible, but I think the more likely scenario was that no one was willing to pay $1500 for a 1 bed plus closet. There was also that laneway house the person was trying to rent for an exorbitant amount we all knocked for awhile. I just don’t find it reasonable that landlords can charge whatever they want, whenever they want. Supply, demand and competition all come into play.
One problem with you reasoning Rachelle is that you assume that rental stocks decrease when speculators exit the market and find that they need to raise rents. Let’s say speculators realize that housing price isn’t going up and they need to charge 50% more rent to make an acceptable return. The problem is that rents are constrainted by wages and if they tried to charge 50% more and the renters can’t/unwilling to pay then they aren’t going to get the money.
Using your example of stores selling apples for $0.75 when it costs them $1.00. Why would the store do that? Because losing $0.25 is a lot better than lost $1.00! That’s why.
Same with current rental market, there are a lot of inventories on the market that landlords are having trouble finding good tenants to rent to at current price. Just because you need to make more revenue doesn’t mean you will automatically get it from your customers. If that’s the case then no companies will ever go bankrupt. The fact of the matter is the landlord can try increase the rent to try to make more profit, but what they will likely find is that they wouldn’t have a renter paying rent and they will lose $3K/month instead of $500/month like before. The renter wouldn’t necessarily end up on the street either. Some families will be hardhit and be screwed by this, but overall I believe in the current market, people are likely to double up, choose smaller accommodations, etc, etc and thus leaving a lot of these spectulator landlords with empty condos and no revenue whatsoever.
With regard to your story about Toronto having tight rental market and such back in the days, all I can say is that does it have the same tight rental market conditions now? If not then what happened then is not going to happen now unless there is a surge in demand (like higher than normal immigration, family formation, etc) or a huge decrease in existing supply. Other than that, landlord can wish for the good old days when they can charge whatever they feel like but it’s not likely to happen.
Ah, I don’t think it’s bad as all that: there are those with property management experience and saved $ that will happily invest in being a landlord when the numbers make sense again. (Depending on where I am when the prices make sense again, I might slap on m’hipwaders and get back in.)
The numbers will only ever make sense when looking at the incomes of the renting demographic and making sure that what you’ve got is going to fit the pocketbooks of your customer base. Just like any other business, right? It only makes sense to buy and sell apples at a dollar if there is a market that can afford to buy and sell apples at a dollar. Otherwise, *don’t buy apples* … and you’ll never be at a place where you’re “subsidizing”.
(( That was in reply to Rochelle!))
I should also put out there that it’s pretty easy to see where rents are vs. incomes these days on Craigslist – taking the pulse of the market is way simpler. Those listings, plus vacancy rates, gives you a pretty good idea. Overall, I think that supply crunches are non-permanent. You may always pay a premium for living in a place that’s desirable, but you’re not going to see rental staying at 60% of average (or even median) income for a long time, because people will move or builders will build.
We haven’t had purpose built rental for a long time because it’s a terrifyingly low-paying investment when speculation is removed. The only real solution is to have investors wake up in bed with a clue stick.
I can only see good things when speculative landlords are forced to sell. Hopefully, that will be once prices are lower so serious landlords can buy and have it make sense.
The unemployment rates in Vancouver and Toronto are over 8% so it might be awhile before wages start going up again. Immigration is nothing spectacular right now, and I expect the majority Conservatives to keep it that way (despite their new immigrant focus, their base is rural).
Long-term renter bears should take advantage of the current market to find well-managed buildings. If you suspect your landlord is a speculator you might want to move, rather than amuse yourself watching the fool suffer. But that’s a personal choice LOL.
Maybe it time to drop the use of the word “landlord”. I used to think of it as a cute, antiquated term but too many take it to heart. They really believe they are lords of the land and the tenants are serfs.
Last I checked, no-one’s forcing anyone to be a landlord.