Does a tenant failing to attend move out mean you get to keep the deposit?
Does a tenant failing to attend move out mean you get to keep the deposit?
When a tenant moves in to the property both parties, the tenant and the landlord are to meet at the property and identify the condition of the property when they move in. This information is indicated on the move-in inspection report. When the tenant moves out both parties are expected to meet at the property to review the original inspection report and compare the condition of the property after the tenant has vacated the unit.
During the move out meeting the two parties are expected to agree to any deductions from the deposit fund and indicate this on the move out inspection report. If the parties are not in agreement of the deductions there is a section on the report where this can be indicated and the tenant signs saying they disagree with the deductions. By doing this it requires the landlord to file a claim to keep those deductions. There are only two ways the landlord can keep deposit funds: one is with the tenant’s permission in writing and or by an order from the RTB.
What happens when the tenant fails to attend the move out inspection? Does the landlord automatically get to keep the funds?. The anwer is no but a bit more details are needed to understand what happens in this case. Deposit funds are held for specific reasons, security and pet damage. The landlord has a requirement to refund these funds within 15 days or file a claim to keep the fund if the parties are not in agreement. One factor that landlords misunderstand is that the 15 day window starts when the tenant provides their forwading address. If a tenant fails to attend the move out inspection they have two years to provide their forwarding address. If a year later they provide their forwarding address the landlord must return the funds or file a claim to keep the funds.
Without the tenant signature to keep the funds are an RTB order a landlord is in violation of their responsibilities to handle the deposits.
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When one tenant wants to leave and the other tenant wants to stay, what do I do?
The other day I was reading apost on line about one tenant was going to move out and the other tenant wanted to stay. The landlord was asking what they can do here?. The one tenant who wants to stay can afford the rent alone but they don’t want to give notice causing the tenancy to end which could allow the landlord to evict them. How can a landlord handle this issue?.
Our awnser to clients is to follow the law. What does the tenancy law say in this situation?.
When a tenancy starts the tenants sign a tenancy agreement. If you have used the BC standard agreement there is a requirement for the tenant to end a periodic tenancy by giving the landlord one month’s notice to end the tenancy.
There is one small factor many tenants who want to do this miss understand. If a tenant moves out without giving notice they have not relinquished their responsibility for that tenancy. A tenant’s responsibility only ends after they give notice and complete the move out process to end the tenancy.
How do we handle this situation?. First we ask a few questions.
One, is the tenant who wants to stay a good tenant?
Two, can they afford the unit on their own?
If these questions are positive then we work with the tenants to remove the one from their responsibility and to keep the one who wants to stay. We always ask for something in return, in these cases we ask the tenant who is staying to sign a term lease preferably for another year. In today’s market we are probably not going to get an increase in the rent though in other market times we would also ask for that.
We also talk to the tenant who is moving out to explain to them that if they leave without completing the notice to move out they are still responsible for the unit incluidig damage and unpaid rent. Most people have good friends though are not willing to take that risk of the tenant paying the rent or not cuainsg damage they could be held responsible for. When you explain this we often receive notice from the one tenant to vacate the unit.
One other factor is how you return the damage deposit to the tenant that is vacating. If they contributed they are entitled to the deposit funds. We will draft a letter to indicate that the tenant staying in the property will refund the moving out tenant their portion of the security deposit and send the copy to the tenant moving out preferably have them sign it.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
Does more rentals lead to less ownership?
The other day I was listening to a BC developer talk about the cost of developing housing and how more rental property housing has been built over the past few years. In fact rental housing starts outpaced new home starts in BC. The developer said this will lead to less home ownership. This will be true in the short term though it will change in the long term.
More purpose built rental housing has been needed in BC and particularly in the lower mainland for many years. How is this going to make more people home owners?
For many years the market has used individual landlords as the majority of rental properties in BC. These properties are condo’s purchased for the intent of renting them. With the slow down in the rental market many of these landlords will not be able to sustain long term vacancies and will eventually put the properties up for sale. The increase in sales supply will eventually push down the prices and that will increase the number of people purchasing properties. The renters will still be there, they will just move into the purpose built rental properties. We are seeing rental units vacant for multiple months and rental buildings will also eventually decrease the rental prices they are already offering incentives to move into their building that small landlords can’t provide.
There will still be a need for small landlords to fill the needs of the rental market. They have always existed and will always be needed. For too many years the small landlord has been the majority of the rental market growth. The problem with using this market is that it is volatile when the owners decide to leave the market. Purpose built rental properties stabalize the rental and housing market as these products never leave the rental market.
What would be a better process is if the market builds purpose built properties annually alongside of the market condos rental investors purchase. This would reduce the possibilty of the rental market fluctuating too much in either direction.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
Small Landlords need better protection
I was reading an article that stated smaller landlords need more protection than larger ones. I don’t understand this explanation. The article suggested that the small landlords are the ones who provide the basement suite, shared rooms, the first condo and the house in the area where you kids can have a back yard and not have to play in the hallway of a condo.
This is very true but it doesn’t matter who owns the house, condo or townhouse all landlords in BC must follow the same laws and regulations when renting their properties.
We work with many small landlords and speak to many who contact us about our services. The biggest difference between large and small landlords is not the protection they need, it is their knowledge of the laws and regulations. Large companies have employees who work in the field and learn and understand the tenancy laws. We often speak to landlords about the process of renting and are provided with direction or suggestions on how they want the property managed. When we advise them this is against the laws and or regulations a common reply is, if the tenants don’t like it then can rent elsewhere. This attitude will often result in the landlord ending up in front of the RTB at a hearing brought forward by the tenant. Large landlords treat the renting of their properties for what it is. It is a business, and needs to be operated like a business.
The article suggests that small landlords can’t afford to be without rent for a month, afford a bailiff, legal fees and are not equipped to deal with conflicts from bad tenants. I disagree with these statements. Small landlords can hire a property manager who has the skills to properly select tenants and deal with tenant related issues. Many small landlords see the fees for hiring a property manager as a detriment to meaning their property then cry foul when they end up in a negative situation due to their ignorance of the laws.
Can small landlords afford not receiving rent or hiring a bailiff. Large landlords are not charging a different rent that allows them access to a larger pool of money to pay for these items. If the larger landlord has a vacant unit for six months they are losing money, just like the small landlord. If they need a bailiff they also have to pay the same fees the small landlord pays. The difference with small and larger landlords is they run numbers based on the unit being vacant for periods of time and save some of those funds for these emergencies. This is operating your rental like a business. I have discussed renting a property for many individual landlords who have owned their properties for ten or fifteen years and still have a very significant mortgage on their property even though it has been rented for all of those years. This is not managing your money effectively while renting your property. This is taking all the profits out of the property before you have earned them.
Managing a rental property is very complicated to understand all the rules and regulations of the RTB and for some reason many people think they can manage a rental without any education or knowledge of the system. It is the only business I think people buy into without any understanding of the business they are entering. What does Warren Buffet say,
“I only invest in things in my circle of confidence”.
If you have no knowledge of managing a rental property why are you buying one?
If you do buy a rental property why would you not hire an expert to assist you with the knowledge you are lacking.
It is not that small landlords need more protection from teannts, they need protection from themselves.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
Rental Rate Data
Recently I was at a breakfast meeting where a real estate agent provided a very detailed presentation of the recent housing sales. Their presentation had statistics identifying the number of sales, the average sale prices and the stats were separated by the type of property including single family homes, townhouses and condos. The information was great and very useful if you are wanting to understand the housing sales market. The reason they were able to provide a detailed presentation is the sales market updates stats monthly.
The following week I was at another event and the topic of what are current rentals prices today came up. I described this report and said it is very difficult to determine what is the current market pricing due to the lack of efficiently collected data.
I asked google gemini where CMHC obtained their rental housing data. It’s reply is below.
“Statistics Canada (StatCan) gets rental market data primarily from administrative sources like major online rental platforms (Rentals.ca, Zumper), complemented by Labour Force Survey (LFS) data for context, and partners with CMHC (Canada Mortgage and Housing Corporation), using their survey data for some reports. They combine these sources, clean the data (removing outliers), and use methods like linking to the Statistical Building Register to create reliable statistics on asking rents for apartments and rooms. “
The second question we asked was how often does statistics Canada update rental data.
“Statistics Canada (StatCan) updates their key rental rate data, specifically the Quarterly Rent Statistics (asking rents from platforms) and other related indexes, on a quarterly basis, providing fresh insights into the Canadian rental market every three months. While some core housing data is released more frequently (like monthly GDP), the detailed rental figures, including breakdowns by unit size and area, come out quarterly for timely analysis. “
The response to these questions provide us with why the rental market is hard to determine what the current rental rate is
Let’s look at our second question first. CMHS updates rental rates quarterly not monthly. If data is only collected and updated each quarter we are often far behind on the current market conditions when the data is released. Rental rates can change rapidly especially in times of economic turmoil. It would be more effective if the data was updated monthly.
If we are reviewing data that is three months old to evaluate where we should price a rental property we are misleading our clients.
With regards to the first question of where the data is obtained it is an imperfect system of collecting the data. CMHS indicates they use data from various rental platforms creating reliable statistics on asking prices. The problem with this model is that the asking price is not the rented price, especially in a volatile rental market. There are multiple rental websites that many landlords are not using creating a great discrepancy in the amount of data collected. Yes statistical analysis can make assumptions based on a sample size of the market, though in this case the amount of data missing creates a large discrepancy in the market.
An example of this is the vacancy rate in Vancouver. Why are we able to obtain sales data on each city Vancouver, Burnaby, Port Moody, Coquitlam and Surrey for example. The rental data is not evaluated on every municipality and this can create a very misleading evaluation of a market when it is grouped with the neighbouring city which has a different market. The other concern is that the data collected fails to collect a significant amount of rental properties. These are the mom and pop often self managed individual rental properties where data is often missed. Working as a strata manager in Vancouver, CMHC would contact us to determine the number of rentals in a building and we didn’t even have the correct data as many owners were not identified as renting their unit. Although they were required to advise strata they were renting often they would not do this. Since 2010 the majority of condos built in the lower mainland of BC are rental properties. This leads us to believe that the estimated number of rental properties is significantly under estimated.
How could this be improved? CHMC needs to report data more frequently, monthly reporting would be better. It would be great if CMHC could develop better data collection sources. Maybe the government needs to develop a system where landlords are required to register their data in order to file a claim with the BC RTB before a hearing. The information could include when the tenancy started and what the rental rates were. This would create a database of information that would be more accurate. It would be more accurate if the landlords were required to enter the data at the time of renting the property then the information would be upto date at the time the unit was rented.
Maybe one day there will be more effective and timely data to understand the current rental market rates.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com