Vancouver Condo Info

Like many VCI readers, I have been shorting the Vancouver property market by renting. And, like many renters, I have had to contend occasionally with landlords who take an all-to-casual approach to property maintenance. In this post, I’m going to describe a new legal method I have discovered which combines the Residential Tenancy Act and a Vancouver By-law to force landlords to fix certain maintenance and building quality standards that you may not have thought were “mandatory”. This includes things like ensuring there are enough electrical outlets in each room of a suite, or that the floors be properly levelled.

It all starts with the Residential Tenancy Act (RTA), which says in section 32 that

This is a very powerful statement, because it forces landlords to ensure that their properties conform to every building code, electrical code, maintenance code, etc.. in effect within the jurisdiction where the property is located. In the case of Vancouver tenants, this refers to any and all building maintenance by-laws, fire safety by-laws, electrical by-laws, etc.. as well as province-wide rules and regulations concerning buildings.

The City of Vancouver has an omnibus By-law simply titled, “Standards of Maintenance” (https://vancouver.ca/bylaws/5462c.PDF), which is “A By-law for prescribing standards for the
maintenance and occupancy of building sites within the City of Vancouver to ensure that such buildings and sites are free from hazard and are maintained continuously in conformity with accepted health, fire and building requirements.” This bylaw applies to, “all land and all buildings in the City, and, unless otherwise specified, the owner of said land and/or buildings shall be responsible for carrying out the work or having the work carried out in accordance with the requirements of this By-law.”

With that out of the way, let’s see how the RTA can be combined with By-law 5642 to force your landlord to fix certain things that you may never have thought needed to be fixed:

– Electrical Safety (see 5642 section 19)

+ Yes: Plenty of electrical outlets! “Every habitable room in a dwelling shall have at least one electrical duplex outlet for each 120 square feet (11.2m5) of the floor space; for each additional 100 square feet (9.3 m5) of floor space a second duplex outlet shall be provided. Every kitchen shall have at least two electrical duplex outlets which shall be on separate circuits.”

+ Lots of light! “Adequate levels of artificial lighting shall be maintained in good working order at all times as in Table 19A” — this includes specific lumens of light output in each type of room.

– Landlord storing his old junk in the back yard? Section 4 says, “All land shall be kept clean and free from rubbish or debris”

– Walkway old and cracked? Section 4 says, “Suitably surfaced walks shall be available on all land leading from the main entrance of each building to the street or driveway”

– Bed bug infestation? “If pests have infested land, or any building or accessory building on it, the owner of the land must eliminate the infestation”

– Breezy doors or windows? “Exterior doors, windows, skylights, and hatchways shall be maintained in good repair and weathertight.”

– Crappy floors? “Floors shall be maintained in a clean and sanitary condition, reasonably smooth and level and free of loose, warped or decayed boards, depressions, protrusions, deterioration or other defects which are health, fire or accident hazards.”

– Crappy walls or ceilings? “Interior walls and ceilings shall be maintained in good repair and free from holes, or loose or broken plaster that may create health, fire or accident hazards.”

The laws are there to protect us all. Don’t let your landlord convince you that he doesn’t have to fix the flaking plaster in your character living room just because “it’s an old house”. Show him the law, and get some fixing going on!

This post was submitted by ttul.

According to fundamentals, Canadian RE ownership continues to be significantly overvalued compared to rental cashflow. Even the bubbly Australian market has started to correct, but with interest rates low for at least 2 more years, who can predict how long the plates can continue spinning?

You can play with The Economist’s house prices chart yourself here:

http://www.economist.com/blogs/freeexchange/2011/03/global_house_prices

Got an investment condo or two? It might be a good time to sell because the City of Vancouver has just unveiled it’s plan to drive down property prices and rents.

In a plan that goes before council today, the city proposes to provide $42 million in land and capital grants over 10 years to create 38,000 new affordable homes, including 7,900 supportive and social-housing units, 11,000 market rental units and 20,000 new condo and “ownership” units by 2021.

Coun. Raymond Louie said in an interview that strategies may include:

• A “rent bank” where tenants facing eviction for not paying their rent can apply for either a loan or a grant, which is then paid directly to the landlord.

• Long-term leases, where the city maintains ownership of the land, which is leased at preferred rates for a defined term but is always owned by the city.

• Units that have fixed limits on the profits that homeowners can make when selling, which would end property speculation; any rise in property value beyond the set limit could be directed to the city for other social-housing projects.

• Limits to the profits that developers can make on the land speculation in projects; special consideration for a project’s approval may be based on the developer making a lower profit.

• Increasing co-op ownership and rentals, where a financial institution or the government makes the initial outlay of cash and is repaid over a long period of time.

Hey guess what everyone, Toronto is now more expensive than Vancouver.

..Or at least it’s more expensive to rent there if your paying with US currency. Don’t worry, we still have the most overpriced real estate.

Georgia Strait is reporting some tenants in the ex-Olympic Village are encountering higher than expected utility bills:

The group managing two City of Vancouver–owned housing properties at the Olympic Village is hearing complaints from residents about excessive energy bills.

Thom Armstrong, executive director of the COHO Management Services Society, admitted that his group also wants some answers.

“As to the level of the invoices, we have some questions about that ourselves,” Armstrong told the Georgia Straight in a phone interview.

Unlike many residents outside the Olympic Village, which has been touted as a model of a sustainable neighbourhood, residents of the Southeast False Creek development are charged two bills for energy.

One is for electricity consumption, and this bill comes from B.C. Hydro. Then there’s a bill from Enerpro Systems Corp., a North Vancouver–based company. According to information that Enerpro put out about its billing, the charges cover “heating, cooling, hot water, and cold water”.

It’s not necessarily that utility bills are higher than other units — though they may well be — but the uncertainty for future owners and tenants make this development all the more the black sheep. We already know the current rental environment is a “renter’s market” so to ensure that units can be filled the City may find it needs to take on more utility liability. But in terms of reducing energy consumption…

Armstrong said, “… I still very much support the notion of individual energy metering, because that’s the only way to create any incentive to lower energy use and lower the carbon footprint. So I think, on principle, it’s what we want to do. We just want to make sure that the system is working the way it should be.”

Indeed. When economic and carbon footprints collide, who pays, exactly?

I’m getting settled into my new home, a newly renovated duplex in a great neighbourhood near recreation and transit. It’s got all the features I’ve been looking for – 3 bedrooms, 1 1/2 bathrooms, stainless steel appliances, fireplace, garage, you name it.

But the best thing about it is the price. I got it for a one-time payment of $370,909 – including all future taxes and maintenance.

Now wait a minute you say, nobody can get a deal like that. Well here’s how. I figure I get an after tax cash yield of about 5.5% on my investments. If I set aside $370,909 worth of my investments, I get $1700/month, which is what I pay for rent. My name is on my brokerage statement rather than on the deed, but I get the same shelter.

So what if I bought a similar property? I’d have to pay taxes, maintenance and insurance. Say these total $5K/year. Again using the 5.5% yield I’d have to set aside $90,909 more of my investments to pay these. So I figure the property would be a decent buy at $280,000.

Which gives a price/rent of 165. I’m quite willing to wait for that to buy – in the meantime I’m doing just fine.

patriotz

(hat tip to M-)

This post was submitted by patriotz.

This piece is hardly a revelation to anyone familiar with a calculator, but it’s refreshing to see such title on Business Insider: Why I Would Rather Shoot Myself In the Head Than Own a Home.

How do banks make money? Very simple. They borrow from you at cheap interest rates and then lend to you at higher interest rates. What? How do they do that? Well, when they pay you 0.5% on your checking account its as if they are borrowing from you at a very cheap interest rate. When they then turn around and give you a 6% mortgage loan, they are lending to you. They make money on the difference between the 6% and the 0.5%. It’s a great business and I often advise people to become the bank when they have that opportunity.
It’s such a great business, in fact, that banks have spent 200 years drilling it into us with billions in advertising that the “American Dream” is to own the white picket fence, the paved driveway, maybe borrow more to make an extension to the house. Put in a swimming pool. Tear down some walls. Nobody can ever kick you out. You’re not flushing your rent down the toilet. You’re owning! You’re keeping up with the Joneses (the most successful, yet mysterious, family in American mythology, that we all have to keep up with. What happens behind closed doors when the beatings occur, when little Bobby Jones cries himself to sleep, the Joneses will never tell us) At least, in 30 years you will own. But at least you’ve fixed in a mortgage rate so inflation won’t kill you. And having your own home means you now have “roots”.

Read the full article over at Business Insider.

This post was submitted by Mansur al-Hallaj.

Actually I don’t know that he wants you to rent, but over at the Globe and Mail he’s got a column that compares owning to renting and it doesn’t make buying at these prices look so hot.

Do not base your thinking about your ability to afford a house strictly on what lenders or real estate agents tell you. They may have useful guidance, but their goal is to sell mortgages and houses. That’s why the affordability measures they use pretend you live a world where there are no claims on your household cash flow other than those related to your home and other debts.

Being able to amass the minimum 5-per-cent down payment on a house does not mean you’re ready to buy, either. In the real world of home ownership, 5 per cent is peanuts. By some estimates, the costs of buying a home – mover, property taxes and utility bill adjustments, legal fees and repeated trips to Canadian Tire or Rona could cost an additional 2 to 4 per cent of the value of your home.

I’m guessing the Globe and Mail doesn’t make as much ad revenue from real estate agents and mortgage brokers as the Vancouver Sun?

This post was submitted by The Ant.

The report entitled THE ROLE OF SECONDARY SUITES: RENTAL HOUSING STRATEGY – STUDY 4 published by the City of Vancouver’s Community Services Group is about a year old but nonetheless contains some interesting data on the state of Vancouver’s secondary suite rental accommodations. Here are excerpts from the executive summary:

The market-rental housing stock is usually divided into two segments – the primary or conventional rental stock, consisting mainly of purpose-built rental apartments, and the secondary rental stock made up of rented houses, secondary suites, individually rented condo units, and units in multiple conversion dwellings and SROs. Over the last three decades, the secondary rental sector has played an increasingly important role in meeting rental housing demand. This increased role reflects the decline in the construction of new purpose-built rental and the redevelopment and conversion of the existing rental stock.

…

Using 2009 BCA data, this report estimates that there are at least 25,000 properties with secondary suites in the city’s single-family zoned areas. The proportion of properties with suites ranges from 6% in Oakridge to 59% in Grandview-Woodlands. On the west-side as a whole, less than one in five properties have suites; on the east-side, almost one in two properties have suites. Six local areas on the east side account for three quarters of the city’s single-family zoned secondary suite properties.

It’s a fascinating report, highlighting how the concept of secondary suites is starting to percolate more and more onto the west side of the city and into the hearts and minds of city planners who realize that the term “single family home” is becoming outdated. We can look at all RS-zoned properties with secondary suites. It looks like a Vision/NPA civic election voting map LOL.

A few key facts and insights I picked up in the report:

• Data claim only 21% of homes built in the 1990s have secondary suites. (p13) Hogwash. There is something wrong with the data.
• There is some natural resistance to secondary suites on the west side because homes are generally of older vintage. That is, it’s less desirable to tear down an older structure that has been well-maintained but not suitable for suiting.
• The City is coming to terms with its dirty little secret: people are living in illegal basement suites and their permit officers purposefully turn a blind eye to properties with obvious basement suites installed but without the proper permits in place. According to the permit application data, about 20% detached properties are being fitted with legal suites, yet over 60% of new stock have basement suites. The City is well aware of this and looks poised to start the thin edge of the wedge into the dirty underbelly of the City’s basement suite accommodation.

“Council also approved a post-occupancy inspection program. Under the program, all new single-family houses are inspected a year after being approved for occupancy. Properties found with unauthorised suites are required to either apply for permits or to close the suites. Despite the changes, the proportion of single-family houses being built with approved suites has remained low.”

I commend the City of Vancouver for making this report public and shows, at least to me, they are aware of the problems illegal suites pose to the quality of life in the city, accelerated depreciation of neighbourhoods with slum housing, and (not least I’m sure) the chance for expanding their permit and inspection business unit!

Feel free to post your Vancouver secondary suite stories, good and bad, in the comments section: have you ever dealt with home inspectors overlooking secondary suites? What’s your most bizarre secondary suite experience, either as landlord, renter, or acquaintance?

There are a lot of Mortgage calculators already out there, but the problem is they don’t necessarily take into consideration all the details that affect the Rent vs. Buy decision. Most of them are overly simplified, or worse – they’re US based and make assumptions on tax write-offs that aren’t available to the Canadian buyer.

With that in mind Joycer has a created a more detailed mortgage calculator that lets you try out a number of situations and variables to factor into your rent vs. buy decision, particularly here in Vancouver. We’ve put the calculator on it’s own page, with all the details.

Go to http://VancouverCondo.info/rentvsbuy to check it out.