The City has been shut down and many people are out of work. What does this mean for your rent? This week, CEO of LandlordBC, David Hutniak, joins Adam & Matt to discuss the unique challenges facing the rental market in Metro Vancouver. What are the options for both landlords and tenants in these unprecedented times? And is there a solution that works for all? Tune in to find out and maybe consider a salad and a run… we will eventually have to see each other again.
Vancouver Real Estate News, Market Updates, Insider Tips, Stats, & Analysis
Sign up for insider real estate news & tips from our podcasting team.
Episode Summary
Who is David Hutniak?
David is the CEO of Landlord BC. LandlordBC is an industry association that represents owners and managers of rental housing in British Columbia. They have approx 3,300 members that include large owners and managers and mom & pop investors. Their goal is to professionalize the rental housing industry and ensuring the landlord tenant relationship is as positive as possible.
Are their more mom & pop investors in the lower mainland versus the rest of Canada?
There are 550,000 households in BC that use rental housing and there are many small landlords. Approx. 2/3rds of Landlord BC membership are small investors. If you extrapolate that across the province, it is probably higher than this. We need to work with these people to ensure the landlord / tenant relationship is positive and financially viable and this is a huge issue we are facing right now due to COVID-19 (Coronavirus).
Do the challenges being faced by landlords due to COVID-19 (Coronavirus) resemble any challenges faced in the past?
No, this crisis is unprecedented. With the health crisis caused by COVID019 (Coronavirus), the Provincial government invoked a moratorium on evictions, including for non-payment of rent to ensure people can properly deal with the health crisis (social isolation, social distancing). This has caused a huge range of challenges for this sector and many people are vulnerable. This is affecting the whole sector, but especially the small mom & pop investors.
Are there many renters in BC that have not paid their rent or deferred their rent due to COVID-19 (Coronavirus)?
This is a work in progress at this point and we are still gathering the numbers. LandlordBC has been proactive about asking landlords to start talking to their tenants. If the tenants will have challenges meeting rent payments going forward, they should be working together to find a mutually beneficial solution. It is important that the renter feels there is a degree of compassion coming from the landlord, but the landlord also needs to be able to meet their obligations. April may not be too bad, but we are more concerned about May and June. The government is planning to provide the rent supplement ($500 / mth), which will help, but we will need something more robust and substantial in the coming months as well. LandlordBC has been working with government to come up with the best solutions, including covering the full rent or having a rent bank. At this point, the rent supplement is what is available and we will see how the rest of it unfolds. As you know, $500 / mth doesn’t do much to cover monthly rents in Vancouver.
Is COVID-19 (Coronavirus) causing issues between landlords and tenants or is it providing an opportunity for these parties to work together and build a stronger relationship?
This is a challenging question. What is disappointing is that we are seeing a cohort of advocates that have been pitting landlords against tenants and encouraging tenants not to pay rent even if they can afford to, which is very disappointing. At the end of the day, we need people to stay housed and we need a solution that works for everyone. The sector needs to remain viable or we will see decreased rental housing and nobody wins.
Do you think the revised Residential Tenancy Act by the NDP recently was a positive change?
The Residential Tenancy Act in BC is the best one in the Country and it is largely balanced. Both the tenants and the landlords have problems with it, which suggests that it is doing something right. There are changes that were supported by LandlordBC and others that we took issue with. One change we took issues with was the measure to change the maximum allowable rent increase formula form 2% + CPI (consumer price index) to just CPI. This created some financial pressures on the landlords that have been further exacerbated by the COVID-19 (Coronavirus) crisis.
Why is the rental ecosystem in BC so vulnerable to small changes?
It goes back to mom & pop investors. This mortgage deferral offered by the big banks is not what it appears to be. It is not being offered in any robust fashion and is not free. There are fees, interest upon interest and everything is repayable. The bottom line is that there have been no specific measures to provide a backstop for the rental sector. In the next 3-5 months, there will be rent deficits and unpaid rent and the likelihood of collecting this back rent will be very challenging. These small landlords will still have their obligations to meet during this time for which they will not have the rental revenue to offset.
Why is your advice for renters and landlords at this time?
There has been confusion. Originally, the government was using the term ‘rent freeze’. There was in fact no ‘rent freeze’, but there was a freeze on increasing rents during this crisis. Many renters took ‘rent freeze’ to mean that they did not have to pay their rent and this caused a lot of confusion. Although the government said they expect people to pay their rent, it was not as clear and forceful as it could have been. In reality, many renters may not pay their rent, but it should be communicated clearly from government that this is the expectation. This is a tough time right now to get through April and landlords and tenants need to understand their responsibilities and meet those responsibilities. In the coming months, we hope to see more help and guidance from the government.
What is meant by a ‘rent bank’?
The concept of a rent bank is that a renter could always have a short-term blip in their financial situation, and they may not be able to meet rent. A rent bank would provide funds to cover the individuals rent for a short-term loan to ensure they were not facing the threat of eviction. The rent bank would provide the funds to the landlord directly and the renter would have a loan obligation to the rent bank that would need to be repaid in increments over a specified time period.
For this current crisis, our idea would be to have something similar to this model with government providing support to cover full rents for a 3-month period. The details would need to be worked out, but this would be the type of support we would like to see. Unfortunately, this plan is off the table at this juncture.
What will be the long-term impact of COVID-19 (Coronavirus) on the rental market in BC?
There will have been challenges for small mom & pop landlords, as we have discussed, but there may also be challenges for the bigger players as well. Over the next number of months, we will see tenants struggling to pay their rent. We will see higher vacancy rates as well. At the end of this crisis, we will have to see about the viability of this sector. Some players may disappear from the market and we will need to address the need for more rental housing. As more landlords disappear, we will have less rental stock for people to live in. We will get through this, but there will be impacts on the sector and the whole rental ecosystem. Demonizing landlords is never a good idea and landlords need to be compassionate to tenants. People need to work together to get through this as best we can.
5 wire:
Favourite neighbourhood in Vancouver: Westend
Favourite bar or restaurant in Vancouver: Bluewater Café
One piece of advice you would give your 18-year-old self: Save your money – don’t squander it!
Book you would recommend people read: The Wealthy Barber by David Chilton or Vancouverism by Larry Beasley
Something you have purchased for under $1,000 that has positively impacted your life: A mountain bike when I was younger for just over $1,000 that provided some great exercise and amazing experiences with friends
Find out more about LandlordBC.
This Post Has 0 Comments