Currently, under the Residential Tenancy Act, the rent increase formula is 2 per cent plus CPI (consumer price index). In 2019 that is calculated to be 4.5 per cent. However, the BC government is considering whether to rescind this model, and landlords in BC are not happy about it.
Operating costs have vastly outpaced rental income. Scaling back the formula could seriously impact a landlord’s ability to stay ahead of costs. When you compound what that formula allows over a 10-year period, it equates about a rent increase of 3.5%. During that same period, operating costs have increased 7.5 per cent.
The compound annual growth rate per annum for insurance went up 8.6 per cent over a 10-year period, the sewer rate was 7 per cent per annum and the compound annual growth rate for water went up 9.4 per cent for the last 10 years. The cost of repairs and maintenance have gone way up as well.
The vacancy rate is the percentage of all available units that are vacant or unoccupied at a particular time. In Victoria BC, the current vacancy rate is at 1 per cent. That translates into a paucity of available rental spaces, leaving only the worst available to potential tenants.
If the Provincial government decides to further scale back on the formula that allows landlords to increase rent and meet costs, the only remaining way for them to reset rental prices will be when their current tenants decide to move. That’s a serious handicap when combined with a low vacancy rate. When it’s difficult to find a decent place to live, current renters will stay put for longer periods of time, and a landlord will see profits erode and deficits grow year-over-year.
At a time when the city of Victoria is doing everything they can to increase the rental pool, it will be a sad day if the provincial government decides to undercut any potential profits for landlords.
Mathieu Powell I President
Coastline Marketing Inc.
Main Office: 778-425-4644
Sales: 250-516-6287
mathieu@coastline.marketing
www.coastline.marketing
Organic Marketing – Digital World
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