Category Archives: renting

The rental vacancy tax

Over at the Vancouver sun there’s an editorial by former BC supreme court justice Ian Pitfield proposing a rental vacancy tax.

This would be a tax that municipalities could impose to discourage vacant units held for speculation.

A vacancy tax would oblige a non-resident who beneficially owns housing accommodation in British Columbia, wherever the non-resident resides, to ensure that it is ordinarily occupied by the owner as a principal residence or available for rent at a competitive market rate. Failure to satisfy the requirements would result in liability for a vacancy tax equal to the monthly fair market rental value of the housing unit. The tax would be payable annually and not just at the time of purchase as is the case with the property purchase tax, or at the time of sale, as is the case with the income tax.A vacancy tax could increase the rental pool by some 15 per cent across the board, and by as much as 25 per cent or more in certain areas, if Mr. Yan’s estimate is correct. An increased supply of rental accommodation would also tend to put downward pressure on rents generally. The tax need not be seen as a bad thing by speculators. Avoiding the tax will produce income for the owner and offset the cost of owning and carrying the property in the course of speculation.

Read the full article here.

Tsurreal: Prices may go down more than 15%

So a new Fitch report says real estate prices in Vancouver are overvalued by 26%.

They expect prices to drop about 15% in the next few years.

Somewhat suprisingly Tsur Sommerville agrees, prices are coming down and it all depends on interest rates:

“A lot depends on where interest rates go over the next few years,” explains Sommerville. “[If] interest rates three, four, five years from now are substantially higher than what they are now then housing prices will correct.”

Sommerville adds local home values could drop even more than the 15 per cent predicted by Fitch.

“If there was to be a correction, you might expect to see a bigger correction in house prices than in condos,” he explains.

So why would anyone buy now?

Well there’s this:

“One thing that I find striking, though is that [with] current interest rates prices, make some sense, when compared to rents,”

Some sense? Ok, sure, but what kind of sense? Good sense, common sense or non-sense?

I’m sure you can find your own examples, but a quick scan of craigslist will give you real easy rent / purchase comparisons.

Here’s one for the Hudson downtown, a two level loft.

Buy it for $610,000 or rent it (a slightly larger version) for $2300 / month.

A quick mortgage calculator says 5% down (You’re not using that $30k for anything else are you?) at 2.99% rate leaves you with a monthly payment of $2,829 without maintenance, strata, etc.

So some sense? Sure, but maybe not good sense.

Living in a Van… couver

For the longest time the rallying cry ‘location, location, location’ was used by real estate salespeople everywhere.

Then marketers started to bore of that chant and realized they had to also sell property way out in the boonies or in an industrial area with landfills and transit hubs and cleverly adapted the old adage to ‘transportation, transportation, transportation’.

Well some enterprising souls have a housing solution that fits both of those bills: living in their car.

In early December, Arthur bought a $500 used van off Craigslist from a farmer in the B.C. Interior. With the help of his family, the vehicle was gutted, cleaned of mice feces and rebuilt with $400 worth of furniture, wiring and insulation.

In the small space, the van has four main areas: the kitchen and sink, work space, storage and bed. Without a personal toilet or shower, he has a daily excuse to go to yoga for exercise and to use the studio’s facilities.

The difference has shown in his savings: his monthly rent has reduced from $850 to a $200 parking fee plus $50 for hydro.

Full article over at the Huffington Post.

Price to rent bubble in the Province

Looky here, the Province newspaper has discovered the price to rent ratio!

Take the house price and divide it by what it costs to rent for a year to get the price-to-rent ratio: Price divided by (Monthly rent x 12) = X.

(Estimates for additional costs of homeownership, such as taxes, maintenance and insurance are factored into the equation.)

If the number is higher than 15, it’s generally not a good time to buy.

If the ratio is less than 15, buying is a better deal than renting, if you plan on living there for at least five years to offset moving and closing costs.

By the time the number hits 20, renting is apparently the way to go, except if buyers expect to stay put for at least 15 years, according to a formula used by trulia.com to rank major urban U.S. centres every year.

B.C.’s numbers, as shown in the graphic, are through the roof, from 29 (Prince George) to 73 (West Vancouver).

Compare that to a few little housing markets like Manhattan (20) and San Francisco (17).  That ratio doesn’t mean house prices are <i>low</i> it just means that they’re more reasonably priced compared to rents.

Since you can’t take on a big loan to pay rent it tends to show how much a place is actully worth in terms of desirability and local economics.

Realtor & landlord trespass in tenant homes

There were a couple of interesting comments in last weekends free-for-all post on the same topic, the first from XYZ:

Well today was interesting. We left the house for an hour for a quick Costco run and when we were about 15 mins away from being home, my 16 year old daughter calls me really upset that some Chinese person just walked into her bedroom :O HER BEDROOM!!!! Apparently he closed the door and went on to wander through the rest of the house, and my son (11) noticed him when he got up from his computer to get his hourly snack and was in what I can only describe as state of shock.. Not every day you see some Chinese dude wandering around your house uninvited and unannounced.

Turns out this was the Realtor. (who’s name for know shall be withheld to protect the guilty, at least until I decide what my next course of action will be.)

Obviously I called the landlord and ripped him a new one. He said that he explicitly told the Realtor that they were not to disturb the tenants. Clearly the Realtor thought since our car was gone he would just waltz right in. :-O

We have an inspection scheduled tomorrow so the only thing that saved that Realtors a$$ from the cops being called was the fact that I needed a few minutes to confirm the inspection date and speak to the landlord.

All the while my daughter stood in her room scissors in hand ready to strike.

I definitely see a complaint being filed in the near future for trespass against this Realtor.

What would you do in this situation?

The second in a similar vein from DR:

Alright folks, I need a little tenancy agreement advice. I have been after my landlord to fix some broken tiles in the kitchen from a water leak. There are now several broken ones with sharp pieces continually coming off. The building is having some renovation work done as many of the units are being updated.

I have been trying for several weeks to get the landlords (as it is family run) to discuss the long over due repair. I just learned from one of the contractors that the landlord entered my unit without notice or permission this morning to look at the tiles. Rather than communicate with me, he decided to just check things out for himself.

This is a huge violation of my privacy and rights as a tenant. I am more than mad at the moment, but I wanted to see if any of you bears have had similar experiences and what your recourse was.

By the way, I have been a longstanding tenant in excellent standing, and the landlords were extremely appreciative when I notified them of the leak because of the potential for serious damage. However, this failure to communicate has become a recent trend as every phone call is never returned and some requests just end up getting taken care of (again without letting me know).