Allowable Rent Increases
I spoke with Marg Gordon, the Chief Executive Officer of the BC Apartment Owners and Managers Association last week, and she was pleased that the provincial government raised the allowable increase for rents to 4.3%, up from last years allowable increase of 2.3%. Gordon said that it was great to see the wider latitude offered by the possible increases, but was still short of the Associations goal of removing rent controls from the BC rental landscape.
“ I’ve spoken with every single Liberal MLA over the course of the last couple of years, and it’s amazing how many were surprised that we still have a legislated system of rent controls in a pro free-market province like BC,” Gordon said.
There has, however, been no move on the government removing or restructuring the system. A frustrated Gordon quipped that “ I guess knowing about something and doing something about it are two entirely different things.”
Gordon went on to explain that the system of rent controls was actually bad for the industry as a whole, and counter productive to the new urbanism being promoted by the Province and the mayors in the Metro Vancouver area. By placing a legislative restriction on rents, there is a perceived negative that keeps developers out of building new properties for the rental market.
“The other problem with an imposed rent control system is that it also harms the people it was designed to protect - the tenants. With rent controls many landlords postpone or defer maintenance and improvements to their buildings,” said Gordon. She also cited the reduction in on-site management and a reduction in caretaker hours.
“The government can control rents, but they can’t control costs for landlords. The addition of the HST alone was a 3% increase for landlords, and add that to the other increases that the government has influence or control over and you’ll see that there is a real problem.” Gordon pointed out that with the average rental building age being 58 years there is a real need to remove rent controls so that landlords have the ability to accumulate sufficient cash reserves to maintain and improve their buildings.
I did some research into rent controls and found that there is no consistency in Canada. It is a real mixed bag, with each of the provinces having rental legislation but several having no restrictions on the amount of an increase. In Alberta there are no rent controls, but strict timelines for giving increases. Manitoba has rent controls limited to 1.5%. Two of the Atlantic provinces, Nova Scotia and New Brunswick have no rent controls either. In the United States, only 5 states have rent controls, but 38 states have laws preventing municipalities and counties from enacting rent controls.