Source: The Westender
Article By: Jackie Wong , 05/05/2010 12:00 AM
Landlords in B.C. usually exercise their right to subject tenants to an annual rent increase as allowed by the province’s Residential Tenancy Branch, which is currently set at a maximum of 3.2 per cent. However, after learning that several rental-management associations want to lobby to raise that annual increase, Martha Lewis, a member of Vancouver’s Tenant Resource Advisory Centre (TRAC), is concerned that renters could be dramatically impacted if their wish is fulfilled.
Lewis says members of the Victoria-based Rental Owners and Managers Association are interested in changing the current rent-increase formula — the cost of living plus two per cent — to factor in utility expenses and property taxes. That would place rental apartments on the same playing field as what are known as ‘manufactured home parks,’ or mobile homes.
“If the landlords are given a free hand like that, the government will have no control, no oversight, into what the landlords are doing,” Lewis told WE in a phone interview, going on to explain that recent interest in raising the annual allowable rent increase may be due to financial pressure from property-tax increases. “[Landlords of large properties] have these big increases in their property taxes because the value of their property went up in recent years, and they want to pass on the cost to the tenant, even though all the benefit goes to the landlords,” Lewis says. “Affordability is a big problem for tenants already.”
Lewis met with B.C. Housing Minister Rich Coleman last week to alert him to the potential implications of these changes. “We want the government to actually put some real thought into this… ahead of time,” Lewis says. Coleman told Lewis he couldn’t deny that landlords’ costs have gone up, but also acknowledged tenants are already facing problems with affordability.
“It’s kind of getting to be a really vicious circle,” says Marg Gordon, CEO of the BC Apartment Owners and Managers Association (BCOMA), who has been in touch with Lewis about TRAC’s concerns. “The problem that’s happening is the rent-control formula is not addressing the real needs of landlords insofar as operating expenses. It’s getting to the point where some landlords, who haven’t experienced vacancies in almost a decade, are now experiencing vacancy losses. That’s not a huge issue yet, but it’s certainly something to keep your eye on.”
Gordon is even more concerned about the potential impact of the Harmonized Sales Tax (HST) on landlords. “Unfortunately for our sector, it’s an anomaly, in that there is no tax on rent — we have nothing to claim against,” she says. “The HST, if it’s supposed to be a consumer-inducer tax, it’s not working in our case. We’re asking for the ability to have input tax credits, so that we could, like any other business, claim the expense.”
Gordon acknowledges that landlords can’t transfer the HST onto tenants, nor do they want to. “That still doesn’t solve the problem we’re facing with the average age of buildings in Vancouver being 58 years old — aging and in need of major repairs,” she says. “Our fear is not only attracting new people into the landlord business, but it’s also that nobody’s building purpose-built rental buildings because you can’t make the numbers work.”