{"id":56657,"date":"2023-10-13T12:20:00","date_gmt":"2023-10-13T19:20:00","guid":{"rendered":"https:\/\/www.garbuttdumas.ca\/?p=56657"},"modified":"2024-03-18T12:36:12","modified_gmt":"2024-03-18T19:36:12","slug":"rent-increases-in-bc-capped-2024","status":"publish","type":"post","link":"https:\/\/www.garbuttdumas.ca\/2023\/10\/13\/rent-increases-in-bc-capped-2024\/","title":{"rendered":"Rent Increases in B.C. Capped at 3.5 % for 2024"},"content":{"rendered":"\n<p>In B.C.&#8217;s competitive rental market, landlords will soon be permitted to raise rents for existing tenants by 3.5%, up from the current 2% cap. This change, however, remains below the inflation rate for the second consecutive year, a shift from past policies that allowed rent increases based on inflation or inflation plus 2% prior to 2018.<\/p>\n\n\n\n<p>Denny and Monica explain what this all means for landlords and renters and share how this will affect the Vancouver real estate market.<\/p>\n\n\n\n<p>This episode will focus on the 3.5% rent increase cap in BC, the cost of strata fees and insurance, the impossibility of being cashflow positive, how low-paying tenants affect sales, the need for more rentals, the importance of small-time investors, and how the government plans on helping.&nbsp;<\/p>\n\n\n\n<p>Watch and listen to the <a href=\"https:\/\/www.garbuttdumas.ca\/blog\/\"><strong>Garbutt+Dumas Real Estate Podcast<\/strong><\/a> below and follow us on <a href=\"https:\/\/open.spotify.com\/show\/7JFln4tbyDwsQBjsnQitDf?si=HsSWGKYZQNqK93N6E6VbyQ\" target=\"_blank\" rel=\"noopener noreferrer nofollow\"><strong>Spotify<\/strong><\/a>, <a href=\"https:\/\/podcasts.apple.com\/ca\/podcast\/the-garbutt-dumas-real-estate-podcast-introduction\/id1498346075?i=1000465039581\" target=\"_blank\" rel=\"noopener noreferrer nofollow\"><strong>iTunes<\/strong><\/a> &amp; <a href=\"https:\/\/www.youtube.com\/channel\/UCHK2L-KswYO93195yndFAmA?view_as=subscriber\" target=\"_blank\" rel=\"noopener noreferrer nofollow\"><strong>YouTube<\/strong><\/a>.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Rent Increases in B.C. Capped at 3.5 % for 2024\" width=\"720\" height=\"405\" src=\"https:\/\/www.youtube.com\/embed\/JegeHd78coM?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-spotify wp-block-embed-spotify wp-embed-aspect-21-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe title=\"Spotify Embed: Rent Increases in B.C. Capped at 3.5 % for 2024\" style=\"border-radius: 12px\" width=\"100%\" height=\"152\" frameborder=\"0\" allowfullscreen allow=\"autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture\" loading=\"lazy\" src=\"https:\/\/open.spotify.com\/embed\/episode\/25H7KsTw2jSomg2pAczhVN?si=b641404feab1418a&#038;utm_source=oembed\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\"><style>.wp-block-kadence-advancedheading.kt-adv-heading56657_4a5740-18, .wp-block-kadence-advancedheading.kt-adv-heading56657_4a5740-18[data-kb-block=\"kb-adv-heading56657_4a5740-18\"]{text-align:center;font-style:normal;}.wp-block-kadence-advancedheading.kt-adv-heading56657_4a5740-18 mark, .wp-block-kadence-advancedheading.kt-adv-heading56657_4a5740-18[data-kb-block=\"kb-adv-heading56657_4a5740-18\"] mark{font-style:normal;color:#f76a0c;padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;}<\/style>\n<h2 class=\"kt-adv-heading56657_4a5740-18 wp-block-kadence-advancedheading\" data-kb-block=\"kb-adv-heading56657_4a5740-18\">Read the Transcript Here<\/h2>\n\n\n<style>.kadence-column56657_671f2e-7a, .kt-inside-inner-col > .kadence-column56657_671f2e-7a:not(.specificity){margin-bottom:30px;}.kadence-column56657_671f2e-7a > .kt-inside-inner-col{padding-top:25px;padding-right:25px;padding-bottom:25px;padding-left:25px;}.kadence-column56657_671f2e-7a > .kt-inside-inner-col,.kadence-column56657_671f2e-7a > .kt-inside-inner-col:before{border-top-left-radius:0px;border-top-right-radius:0px;border-bottom-right-radius:0px;border-bottom-left-radius:0px;}.kadence-column56657_671f2e-7a > .kt-inside-inner-col{column-gap:var(--global-kb-gap-sm, 1rem);}.kadence-column56657_671f2e-7a > .kt-inside-inner-col{flex-direction:column;}.kadence-column56657_671f2e-7a > .kt-inside-inner-col > .aligncenter{width:100%;}.kadence-column56657_671f2e-7a > .kt-inside-inner-col{background-color:var(--global-palette7, #EDF2F7);}.kadence-column56657_671f2e-7a > .kt-inside-inner-col:before{opacity:0.3;}.kadence-column56657_671f2e-7a{position:relative;}@media all and (max-width: 1024px){.kadence-column56657_671f2e-7a > .kt-inside-inner-col{flex-direction:column;}}@media all and (max-width: 767px){.kadence-column56657_671f2e-7a > .kt-inside-inner-col{flex-direction:column;}}<\/style>\n<div class=\"wp-block-kadence-column kadence-column56657_671f2e-7a inner-column-1 transcript-podcast\"><div class=\"kt-inside-inner-col\">\n<p><strong>Denny: <\/strong>Monica, super good news for investors right now.<\/p>\n\n\n\n<p><strong>Monica:<\/strong> I can&#8217;t wait.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>It\u2019s super good. Interest rates are up 28% right now. And investors are allowed to<\/p>\n\n\n\n<p><strong>Monica:<\/strong> You can increase your rent by 3.5%.&nbsp;<\/p>\n\n\n\n<p><strong>Denny: <\/strong>&nbsp;That\u2019s it. Problem solved.&nbsp;<\/p>\n\n\n\n<p><strong>Monica:<\/strong> Do you know what that means? Do you know how much that is? So if you have a rental that&#8217;s bringing in $2,000 a month, that&#8217;s $70.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>Doesn\u2019t it, that solves the problem though?<\/p>\n\n\n\n<p><strong>Monica: <\/strong>That does not solve any problems. Because you have to take into consideration all of the things that are happening right now. Yes, interest rates are crazy high but guess what goes up when interest rates go up?&nbsp;<\/p>\n\n\n\n<p>Strata fees, because the cost of everything is more expensive. So not only is your mortgage going up, but your strata fees are going up like crazy. Many stratas right now their fees have increased by 20-30%. So I&#8217;ve seen some increase like 40% and more you probably have too.<\/p>\n\n\n\n<p>So, who pays strata fees? The owners, the investor is not the tenant so their strata fees are probably going up way more than $70. Their mortgage payments are going up hundreds of dollars and now we have a 3.5% increase you can pass on to the tenant.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>Let\u2019s talk about the history of this. So during COVID They stopped rental increases. So that was zero for a year or two. 2022 I believe it was 1.5% increase allowed. 2023 this year was 2% increase allowed and 2024 they jumped it up significantly to 3.5% allowed. So think about an investor and, and then we\u2019ll kind of share what the average real estate investor is thinking about right now. Do they hold on to these properties or not kind of thing.&nbsp;<\/p>\n\n\n\n<p>But if you were an investor, you bought a condo let&#8217;s say 2018-2019 Yes, the market value is less than it was today. But your monthly rent is significantly lower. Let&#8217;s say a one bedroom and we\u2019re in Port Moody right now, so I\u2019ll say Port Moody, one bedroom in Port Moody in 2018 was renting for what $1,700. Each year you&#8217;re allowed to, well, 2020 to 1.5%. So it goes up, what was that? $22?&nbsp;<\/p>\n\n\n\n<p><strong>Monica:<\/strong> Yeah.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>The next year it goes up $30. The next year, you can put it up to whatever 3.5%t of $1,700 is let&#8217;s say $60 bucks. $50 bucks, something like that. So then, in total, you&#8217;re at $1,800 current market rent for those units. Somewhere between $2,400 and $2,700.<\/p>\n\n\n\n<p><strong>Monica: <\/strong>Yeah, like we&#8217;ll just say for example, we just know that new ones are The Clyde because The Clyde just finished those one bedrooms are renting out between $2,400 and $2,700 depending on where they\u2019re facing.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>So the issues here are, you know, yes, it&#8217;s easy for investors to say Woe is me. Life sucks. I&#8217;m now negative $500 bucks on a month on this view. If you\u2019re in a variable rate mortgage you&#8217;re negative a lot more than $500 bucks right now, plus your strata fees.&nbsp;<\/p>\n\n\n\n<p>The problem with, with not allowing landlords to increase rents is they then look at the cash flow situation and say: \u201cThis doesn&#8217;t make sense for me to hold this anymore. So I&#8217;m going to sell it.\u201d And when you sell it, a few things happen. One, it&#8217;s more difficult to sell because you are not going to sell to an investor, you are only selling to an end user. An investor is not going to buy this property. If the market, if the rent is now $1,800 when the market rent is $2,500. They can buy one next door in the building next door that an owner lives in, that they&#8217;re gonna get vacant possession of and charge $2,500 instead of $1,800. So you cut out a significant portion of the buyer pool.<\/p>\n\n\n\n<p><strong>Monica:<\/strong> So an important thing, an important thing to note with what Denny was just saying. If an investor sells a property, they can only sell it to somebody who&#8217;s going to live in it. That&#8217;s like 99% of the people that purchase it are going to be somebody that moves into the property. So you&#8217;re changing the purpose of this property.&nbsp;<\/p>\n\n\n\n<p>It was a rental before and it&#8217;s most likely 99% sure it&#8217;s going to be somebody who&#8217;s going to live in it that&#8217;s going to own it. And the reason for that is if a new investor wants to purchase that property, they have to take on the tenant at that rent, they can&#8217;t increase the rent, they have to stay on schedule with the rent increases and they can&#8217;t evict the tenant and get a new tenant in because of the Tenancy Act.&nbsp;<\/p>\n\n\n\n<p>So that&#8217;s why the situation is so hairy and, and really not beneficial at all to tenants. Because we&#8217;re repurposing a property, a property that was a rental and that had been a rental for five years or more is now going to be an end user product.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>That was exactly my point. We must have worked together for a long time. You knew exactly what I was going to say.&nbsp;<\/p>\n\n\n\n<p>It&#8217;s, it&#8217;s a double edged sword. Yes, rents are going crazy. And it is very expensive to live in Greater Vancouver. But at the same time, we need more rentals. So by having super tight restrictions on how rents can be increased to try to get back to market rent each, every few years whatever that may be, is actually making the number of rentals in Greater Vancouver lower which is actually increasing rent.<\/p>\n\n\n\n<p><strong>Monica: <\/strong>Yeah, it\u2019s a pretty wild time for tenants and landlords. It&#8217;s kind of a stressful relationship, the tenant and landlord relationship and what you hear in the media often is tenants being very upset that you know rents are going up or tenants being very upset that they can&#8217;t afford to buy a home or, or things like that. And ultimately when you look at the facts like everybody isn&#8217;t going to be able to purchase a home. Every person in Greater Vancouver isn&#8217;t going to be able to be a homeowner. We need rentals but some don&#8217;t want to be homeowners. We need more rentals. And I like this 3.5% increase it kind of makes me laugh, because it&#8217;s the government&#8217;s way of acknowledging like, \u201cHey, we know there&#8217;s a problem. So we&#8217;re gonna like throw you this bone.\u201d&nbsp;<\/p>\n\n\n\n<p>\u201cBut also not too much, like not too much. We&#8217;re gonna give 20 billion increase in CMHC bonds that&#8217;s going to help major bazillionaire developers create more rentals. But for the people who are small time investors, which are actually really important to Greater Vancouver, we&#8217;re going to give you guys a 3.5% increase which is quite literally $70 a month.\u201d<\/p>\n\n\n\n<p><strong>Denny: <\/strong>People on the other side will say yes, but the rich keep getting richer in Greater Vancouver because the people that can afford one home are now refinancing buying their second, buying their third. They&#8217;re having five rental properties, which is making price points go up. And the first time buyer, the younger people, are not able to actually get into the market. How do you respond to that?&nbsp;<\/p>\n\n\n\n<p><strong>Monica: <\/strong>Well, that&#8217;s such a larger scale issue that has absolutely nothing to do with small time investors.&nbsp;<\/p>\n\n\n\n<p><strong>Denny: <\/strong>Agree.<\/p>\n\n\n\n<p><strong>Monica:<\/strong> That is a large scale issue of a housing crisis. That is the quantity of houses isn&#8217;t enough. It&#8217;s not the purpose of the housing that&#8217;s enough. And we see, let&#8217;s take new construction just as an example.&nbsp;<\/p>\n\n\n\n<p>Many of the people who purchase new construction are purchasing it, thinking maybe I might live in it one day, but maybe if you know because we don&#8217;t know the timeframe that it&#8217;s going to take but maybe if I don&#8217;t want to live in it by then I&#8217;ll just rent it out.&nbsp;<\/p>\n\n\n\n<p>But this is, this is a really important step to the growth of the city is for there to be one off two off three off investors. These aren&#8217;t big time schemers that are out there, just like, you know, Scrooge McDucking the rental population. It&#8217;s just a normal progression of a normal city and normal society in North America. We&#8217;ve seen it all the time.&nbsp;<\/p>\n\n\n\n<p>It&#8217;s not taking away rentals. It&#8217;s not taking away it&#8217;s actually adding more rentals to the, to the inventory because they&#8217;re not building rental buildings. They&#8217;re not building buildings. So the only way for people who rent to be able to rent is for small time investors to purchase these properties.&nbsp;<\/p>\n\n\n\n<p>And oftentimes these renters are anywhere from college students to just out of college, I&#8217;m sorry, they don&#8217;t have the $10s of $1000s or hundreds of $1000s of dollars they need for a down payment on a mortgage and oftentimes they don&#8217;t even want one. They don&#8217;t know where they&#8217;re going to end up in five years. They don&#8217;t know if they&#8217;re going to be in Toronto or Vancouver or where they&#8217;re going to be, they want to rent their renters out there that want to rent.<\/p>\n\n\n\n<p><strong>Denny:<\/strong> What are you seeing in terms of number of rentals in the marketplace over the last 12 months. So what I&#8217;m getting at is here, it&#8217;s more difficult to be a landlord now because interest rates are much higher, your monthly costs are much higher. And it is super difficult to cashflow. We&#8217;ve done podcasts on this.&nbsp;<\/p>\n\n\n\n<p>Unless you have a really big down payment, you&#8217;re putting 20% down in the majority of cities in Greater Vancouver, you&#8217;re probably going to be negative $500 to $1,200 a month, which is discouraging people from being a landlord and investing in real estate.<\/p>\n\n\n\n<p><strong>Monica: <\/strong>There&#8217;s already plenty of reasons to discourage people from being investors. The most common investor that we see in our business is somebody who bought a condo for themselves, lived in it for five years or more, maybe met a partner and they moved in together and then they rent out the unit. That&#8217;s the most common investor that we see.&nbsp;<\/p>\n\n\n\n<p>Like I keep using the term small time investor that&#8217;s that&#8217;s what it is. It&#8217;s somebody who purchased the property with the intent to live in it. They did live in it or for a short time at least. And yeah, and then, then it transitioned into a rental property. I think those properties are important.<\/p>\n\n\n\n<p><strong>Denny:<\/strong> Where do we go from here? This question I was going to ask: Do you think there should be some sort of, there&#8217;s a lot of incentives for builders. Do you think there should be some sort of incentive for people to purchase or keep rental property?<\/p>\n\n\n\n<p><strong>Monica: <\/strong>Well, there is a hilarious incentive that the government released this year and it&#8217;s the government will pay back up to $40,000 right.&nbsp;<\/p>\n\n\n\n<p><strong>Denny:<\/strong> For the basement suites.<\/p>\n\n\n\n<p><strong>Monica:<\/strong> For the basement suites.&nbsp;<\/p>\n\n\n\n<p><strong>Denny:<\/strong> So they\u2019ll pay for up to 50% of your renovation. Yeah, if you&#8217;re, I mean, I haven&#8217;t seen all the details on this. I\u2019ll say what I know and you can fill in the blanks.&nbsp;<\/p>\n\n\n\n<p>But if you put a basement suite into your house, the government will give you half of the cost of the renovation up to $40,000. But you have to rent it at below market rent for five years.&nbsp;<\/p>\n\n\n\n<p><strong>Monica:<\/strong> Right.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>And so they announced I believe the exact numbers that they were looking for, I think in Vancouver it was something like $1,700.<\/p>\n\n\n\n<p><strong>Monica:<\/strong> This is, this is a classic case of what I&#8217;ve talked about in many podcasts today and other podcasts before of the government passing the buck to small time investors and saying:&nbsp; \u201cHey, fix our rental issue. We&#8217;re going to give you half as much as you really should get for it to let somebody live in your home, basically in your basement suite.\u201d&nbsp;<\/p>\n\n\n\n<p>It&#8217;s just not enough and the cost of construction, the amount that people are paying for their mortgages, and they want it to be a below market rent. It&#8217;s just not enough. And I don&#8217;t see very many people taking advantage of that at all. I looked into it at first when I started hearing about it for my own home, and it&#8217;s just not, it&#8217;s nowhere near enough. It&#8217;s kind of like what we talked about and another podcast about laneway homes. The cost of it doesn&#8217;t even come close to outpace it to, for the rent to be outpacing the cost. So if we&#8217;re able to rent the one bedroom suites, like a basement suite for maybe $2,000 a month, that doesn&#8217;t come close, how many years will that take you to pay off at a below market value. If you spent $80,000.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>People, people don&#8217;t understand that you, you&#8217;re paying income tax on this rent, right? So it&#8217;s not, if you charge $2,000 for a basement suite, it&#8217;s not you&#8217;re collecting $2,000 a month.&nbsp;<\/p>\n\n\n\n<p>You\u2019re one, doing a big reno to put a kitchen and bathroom in there. Karl, what&#8217;s that going to cost? $70 grand. There we go. So how many years does it take pay, collecting $2,000 a month getting taxed on that? What? Let&#8217;s say your tax rate is 40% So you&#8217;re actually collecting $1,100 bucks a month or something like that. How many years does it take to pay off $70,000 investment?<\/p>\n\n\n\n<p><strong>Monica:<\/strong> Almost 4.<\/p>\n\n\n\n<p><strong>Denny:<\/strong> No no, more than that.<\/p>\n\n\n\n<p><strong>Monica: <\/strong>&nbsp;$70,000 at $2,000 a month?&nbsp;<\/p>\n\n\n\n<p><strong>Denny: <\/strong>No but you&#8217;re only collecting $1,100 because you&#8217;re paying tax.<\/p>\n\n\n\n<p><strong>Monica: <\/strong>Yeah, so yeah. 63 months, 63.6 months.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>63 months is five and a half years-ish.&nbsp;<\/p>\n\n\n\n<p><strong>Monica:<\/strong> Yeah, yeah. 5. Years.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>That&#8217;s a big ask.&nbsp;<\/p>\n\n\n\n<p><strong>Monica: <\/strong>Yeah.&nbsp;<\/p>\n\n\n\n<p><strong>Denny: <\/strong>And if you&#8217;re being forced to charge below market value, so let&#8217;s say in Vancouver, a brand new, nice one bedroom, basement suite in a decent location close to Commercial or wherever. Is probably renting for $2,500.<\/p>\n\n\n\n<p><strong>Monica:<\/strong> Yeah, so what&#8217;s below market then?&nbsp;<\/p>\n\n\n\n<p><strong>Denny: <\/strong>Well, I think they said the max you can rent it for $1,700 in Vancouver.&nbsp;<\/p>\n\n\n\n<p><strong>Monica: <\/strong>Yeah.&nbsp;<\/p>\n\n\n\n<p><strong>Denny:<\/strong> So you have to charge another $100 bucks less. Plus, you\u2019re getting taxed on the $1,700 reduction. Only collecting what $950? There&#8217;s a lot of, yeah..<\/p>\n\n\n\n<p><strong>Monica:<\/strong> It&#8217;s just smoke, it&#8217;s a smoke and mirrors with again like it&#8217;s them passing off this responsibility to me to you to Karl, they&#8217;re passing it off to the citizens of Vancouver to provide rental housing. It&#8217;s ridiculous. It&#8217;s not our responsibility to provide rental housing.&nbsp;<\/p>\n\n\n\n<p><strong>Denny: <\/strong>What&#8217;s the incentive that gets people interested?&nbsp;<\/p>\n\n\n\n<p><strong>Monica: <\/strong>They need to appeal to developers, they have to appeal to developers. And I don&#8217;t know, I haven&#8217;t been able to find a cost breakdown yet. I&#8217;ve been looking for one but with the new incentives that they&#8217;re doing on construction loans, with them removing GST for developers who are doing purpose built rental. I&#8217;d like to see what exactly that breaks down to because I don&#8217;t think it&#8217;s worth it to those developers either even with those incentives, based on what I can see.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>It also comes to this point where like, does a developer want to be a landlord to people?<\/p>\n\n\n\n<p><strong>Monica:<\/strong> That&#8217;s exactly right. That&#8217;s who&#8217;s, who&#8217;s going to be in charge of these rentals? Who&#8217;s going to be marketing them? Who&#8217;s going to be bringing people into the housing, it&#8217;s just, it doesn&#8217;t.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>It&#8217;s a totally different business model. And a lot of developers are in the game of purchase land or sit on land for a little while, develop it when the financials make sense that they&#8217;re going to make a profit, some sort of profit margin and move on to the next project.&nbsp;<\/p>\n\n\n\n<p>Do they want to be holding this building? Like there&#8217;s a few in Port Moody that have gone up in the last few years, Does a developer want to hold 120 unit building and have to deal with the property management company all the time and people moving in and out and vacancies and all this thing for 20 years, and then they go to sell the building. And how many people in Greater Vancouver can afford to buy a I&#8217;m just making this number of $40-$50 million building that has 80 units in it or something like that.<\/p>\n\n\n\n<p><strong>Monica:<\/strong> That&#8217;s old and probably needs maintenance. This is the reason why developers have left Greater Vancouver. We saw a lot of developers dip their toes in the Vancouver market in the last 15 years. And it&#8217;s just too hard and they move on. They move on elsewhere and they&#8217;re building up of incredible communities. Just not in Vancouver because it&#8217;s just not worth it to them.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>On development, I will end this podcast with this quote. This is a, something I read yesterday talking about the changes in density to Vancouver and one of the quotes they said was Vancouver: Council approved significant simplification to the regulations to make new homes easier and faster to build.\u201d&nbsp;<\/p>\n\n\n\n<p>Sounds glorious, right? Like look at the amount of time it takes to get a building permit in Vancouver, probably 18 to 24 months. So significant simplification, what does that mean? 12 to 18 months now, that&#8217;s pretty significant. Six months is a difference.<\/p>\n\n\n\n<p><strong>Monica:<\/strong> It&#8217;s deceiving because that was on the heels of the Vancouver City Hall announcements on September 15. But that, the simplification is them combining the zoning that&#8217;s what they were really talking about.&nbsp;<\/p>\n\n\n\n<p>They&#8217;re like \u201cOh, we&#8217;ve combined these nine zones\u201d and they make it sound like they&#8217;ve just like, created rocket fuel like it&#8217;s just no, they&#8217;ve combined some zoning so that it&#8217;s easier for the city to give permits. So they&#8217;re not having to you know, figure out okay, where&#8217;s this one? And where&#8217;s that one? They&#8217;ve just, they&#8217;ve put them all together. That&#8217;s the significance simplification of the application that they&#8217;re talking about. And they&#8217;re hoping that that speeds along the process. I don&#8217;t believe that it will.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>It is funny like I never really understood why there&#8217;s so many different single family zones.<\/p>\n\n\n\n<p><strong>Monica: <\/strong>Yeah, well, I mean, it&#8217;s so classic Vancouver it&#8217;s because there&#8217;s RS1 and RS2 you can do this and then RS1B and RS. Well, you know, it&#8217;s pretty hilarious whether they&#8217;re putting all together, nine of them into one, that&#8217;s a significant simplification that they&#8217;re doing. It&#8217;s not going to, I mean maybe it makes it nine times faster because, I doubt it though.<\/p>\n\n\n\n<p><strong>Denny:<\/strong> If you are the Premier of BC and you have all the power in the world regarding housing, what type of incentive do you promote or put in to incentivize small time investors to continue to purchase and have rental properties?<\/p>\n\n\n\n<p><strong>Monica: <\/strong>Well, the speed is always a big one, the speed in which they can get things started and break ground. So prioritizing them, which is going to upset so many people, that prioritizing some developers so that they can get important projects off the ground.&nbsp;<\/p>\n\n\n\n<p>You know, it all comes down to the lending to and how much that cost. So and that&#8217;s not something that a small time, Mayor can do, right? But you have to you have to be able to provide affordable construction loans and that&#8217;s what that&#8217;s what they&#8217;re trying to do with the new CMHC mortgage bonds.&nbsp;<\/p>\n\n\n\n<p>But it&#8217;s really hard, I&#8217;d say it&#8217;s not easy and then we&#8217;re gonna leave that to the politicians but I think doing a kind of like if you scratch my back, I&#8217;ll scratch your situation. It&#8217;s that&#8217;s kind of a tried and true. It&#8217;s a significant simplification of what that process is really like but I think saying hey, if you build a small rental building for us, here, you fund it, you pay for it, you build a small rental building, we&#8217;re gonna like absolutely fast track your resale building like there&#8217;s some of that that needs to happen. I don&#8217;t know if it&#8217;s already happening, but it&#8217;s not happening fast enough.<\/p>\n\n\n\n<p>What about you? How do you fix it?<\/p>\n\n\n\n<p><strong>Denny: <\/strong>I&#8217;m thinking very individual, like talking about you and I and Karl and you know, John, who has two rental condos in Burnaby. But if there&#8217;s some sort of incentive on capital gains tax or something to keep people interested in owning the property long term, right, because owning a rental right now is not sexy in any way.<\/p>\n\n\n\n<p>&nbsp;Owning a one bedroom condo in let&#8217;s say, Burnaby you&#8217;re going to be negative like $800 bucks a month. So you need to have a pretty significant cashflow to be able to float that on top of your current like your, your mortgage that you live with the home that you live in. So this is like an extra nine or $10,000 a year that people are paying today because of interest rates that rents are not catching up but their rents are going to catch up eventually. But it&#8217;ll take years for them to catch up.<\/p>\n\n\n\n<p><strong>Monica:<\/strong> So for small time investors, the very simple way of helping them is what they&#8217;re already saying that they&#8217;ll do for big developers is taking away GST. So GST breaks, property transfer tax breaks, property transfer tax rebates is something that&#8217;s done in other countries, but where if you buy a rental and you show that you&#8217;ve rented it for a year, at the end of the first year, you get a rebate from your property transfer tax from the government.<\/p>\n\n\n\n<p>And those are small but important steps to make if they&#8217;re wanting to pass the buck to small time investors which they are, we can see that they are yeah, I rebate of some kind is the best.<\/p>\n\n\n\n<p>Incentivize people I think.<\/p>\n\n\n\n<p><strong>Denny: <\/strong>Monica &amp; Denny: Running for Premier of BC. When\u2019s the next election? 2025?&nbsp;&nbsp;<\/p>\n\n\n\n<p><strong>Monica: <\/strong>Can you imagine?&nbsp;<\/p>\n\n\n\n<p><strong>Denny: <\/strong>All right, I guess really the summary of this podcast, we kind of went off on some tangents there but the new rental increase for 2020 is 3.5%.&nbsp;<\/p>\n\n\n\n<p>So I guess the other thing to talk about like if you are a landlord, it&#8217;s pretty important to stay up to date with these rental increases because of thing we mentioned quickly but let&#8217;s kind of tie it all together.&nbsp;<\/p>\n\n\n\n<p>If you are yes, it is nice to reward great tenants by not increasing rent every year. I have a couple of them that are awesome that do minor fixes they don&#8217;t call me unless something big is a big issue happens but if you&#8217;re not increasing the rent, and then you go to sell in three or four years like the scenario we talked about, you&#8217;re renting for $1,800 when market&nbsp;is $2,500 you&#8217;re cutting out a significant percentage of the buyer pool.<\/p>\n\n\n\n<p><strong>Monica:<\/strong> You have to increase your rent. If you happen to have that one investor that wants to purchase your property but they see that you have a below market rental, that&#8217;s going to completely steer them away. You have to increase your rent every year.&nbsp;<\/p>\n\n\n\n<p>The tenants are getting raises at work probably, you know everybody&#8217;s cost of living goes up, your cost of holding that property is going up. It&#8217;s not a mean thing. It&#8217;s not a negative thing to increase rent. The reason why those percentages are there is because you need to do it. Otherwise the government would be like \u201cOh yeah, no rental increases\u201d but they&#8217;re saying \u201cYeah, you like 3.5%\u201d you\u2019ve got some costs. I would do it.<\/p>\n<\/div><\/div>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>In B.C.&#8217;s competitive rental market, landlords will soon be permitted to raise rents for existing tenants by 3.5%, up from the current 2% cap. 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