Philip Davies 3/7/25 Philip Davies 3/7/25

Tariffs and the rental market?

The economy is always challenging even in good times. When slower times occur, businesses have to adapt to the situation. Operating a rental property is owning a business. The recent challenge to the economy is the tariffs being threatened and applied by the US on Canada, Mexico and other countries. How could this affect the rental market in BC.

The tariff threat is causing uncertainty in the economy on both sides of the border, which often leads to people holding off on spending. The rental market and the housing sales market are interlinked and affect each other. When the sales market slows it creates a depressed rental market, and when the sales market is active it creates a tighter rental market.

For the past year and half we have seen a slow down in the sales market which is creating a large supply of rental properties. With greater supply and lower demand it is important for landlords to ensure their product is to current market expectations. We are in a tenant favourable market which allows tenants the opportunity to take their time to view multiple properties and decide which one is right for them. They also have the ability to negotiate the rental prices.

What can a landlord do if their unit is vacant? If you are not in an immediate need to rent the unit this may be a good time to take it off the market for a month or two and complete some upgrades to the unit. How old is the carpet, hard surface flooring or appliances? When was it last painted? Is there anything else that could be upgraded to make it more appealing in the current rental market.

If your unit is currently rented and is at a higher rental rate or close to the current advertised rental rates and your tenant asks for a rent reduction we recommend negotiating a new lease term for your tenant. Current market conditions are causing longer times to find a new tenant for the vacant unit. We are experiencing a minimum of three months to find a tenant. Why is it taking so long?. If a tenant in BC is looking to move they need to provide a calendar month’s notice to their current landlord. That means if they are looking in March then they would need to give the month of April for notice and would be available for May to start a new tenancy. Patience is important in these rental market conditions.

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

Philip Davies 3/1/25 Philip Davies 3/1/25

Due Diligence

As the rental market slows down we must remind ourselves of the importance of due diligence during the tenant screeding process.

We are finding the potential applicants attending showings look like good prospects, they paint a favourable picture of themselves, but are they good tenants. It is important now more than ever to have a thorough screening process when selecting a new tenant for your rental property.

Cartref Properties has a multiple step process which is not short and quick intentionally to deter bad tenants from following through with the process.

Our process starts with the first contact. When a potential tenant responds to one of our advertisements we request some basic information about who they are. This is the first step of, can they follow our basic instructions. It helps gather information and identifies serious tenants from just looking prospects. If they are willing to share the basic details then they are more often interested in the property.

Upon receiving the basic information provided we determine if the potential tenants meet our expectations. After assessing the information we make arrangements to show the unit to the potential tenants. An appointment is scheduled and we request that they contact us one hour before to confirm their attendance. Our experience is when people don’t waste our time and attend the showing at the assigned time, they are often good tenants. During the showing we are inquiring about them and confirming the details they shared in the request for basic information. On occasion people forget what they have provided us and we find them telling us different details.

If after the showing we find them a suitable potential tenant, then we will request they fillout an application form and submit this along with some information about them including financial details. Upon receipt of the application form we spend time reviewing the details and confirming the accuracy of the information provided. In today’s world it is easy for aperson to provide a mobile number to contact their supervisor. We spend the time to seek out if this person is an employee at the same location, and we contact the company directly to verify the details. It is surprising how often people provide details that are not accurate.

In times of this slow down we are finding more unsuitable tenants seeking new places to rent. Many landlords have their places vacant for multiple months and become desperate and fail to perform proper due diligence. This creates a situation where a landlord now has a tenant in their property who is difficult to remove, or doesn’t pay rent on time.

The longer and more detailed the process the more interested the potential tenant is in the property. Good tenants will answer your inquiries and provide the details you request in order to rent the property. Bad tenants will not complete the information or provide exuses why they are not able to give you what you request. These are signs they are not quality tenants and as a landlord should avoid them. It is important to read past the information and understand the people.

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

Philip Davies 2/21/25 Philip Davies 2/21/25

Vacancy Taxes, Do we still need them?

BC has two homes taxes that affect rental housing. The City of Vancouver has the Empty homes tax and the Province of BC has the Speculation Tax which has a similar effect for a majority of the Province.

Both taxes are designed to encourage people to not have their property vacant and have it used for housing either by a home owner or by a tenant. Current market conditions are having a significant effect on the rental market and vacancy rates. Rental rates are declining, while vacancy rates increase, due to the current supply of product exceeding demand. It is taking longer to find a quality tenant due to choices available to tenants. They are not in a rush to select a place. This could lead to your property being vacant past the time limit that the Speculation or Empty homes taxes become effective. Failure to have your property occupied could lead to these taxes being applied to your property.

This begs the question: are these taxes still needed? Maybe it is time for the City of Vancouver to consider removing the empty homes tax and the Province to reduce and or remove the Speculation Tax. The speculation tax is not applied to all areas of the Province at this time. This will only occur if the people make this a priority for the government to remove. The federal government also introduced the underused housing tax in 2024.

With all of these taxes and the current rental market supply and demand is going to push more products to the sales market which will push sales prices of homes down as well. This is what the government would like to see which is why we don’t think there will be any discussion to remove these taxes. The sales market has slowed and products are staying on the market longer than in the past few years. We anticipate the next two years will have the rental market on a downward decline in prices.

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

Philip Davies 2/7/25 Philip Davies 2/7/25

Security Deposit, What are they used for?

When a tenancy starts in BC the landlord is permitted to collect a security deposit and a pet deposit if there are pets in the rental unit. In BC the maximum allowable limit for the security and pet deposits is 50% of the first month’s rent. For example if the rent is $2000 the security deposit and pet deposit could be $1000 each.

When moving out tenants sometimes misunderstand what the deposits are used for.

We often have requests from people when vacating a property requesting we use the deposit funds as part of the last month of rent. This is not what either of these two deposits are designed for.

A security deposit is to be used for damage and other costs to the unit when the tenant vacates the property. We often experience people who fail to clean the unit to a satisfactory level. They often miss behind the fridges and under stoves for example. In strata corporations there are move out fees applied which tenants sometimes fail to pay.

The pet deposit is a different item which is to be used for specific damage to the unit caused by the animal. The animal would not fail to clean behind the fridge, or book the move out. It would scratch and damage the floors, baseboards, carpets and other items of this nature.

The other main factor tenants misunderstand is that the deposits are not to be returned until the forwading address has been provided to the landlord. A tenant is required to meet and complete the move out inspection report with the landlord or their agent to determine if part of the deposits should be withheld. On the move out form is a section to provide the frowarding address. Some tenants at this time refuse to provide a forwarding address believing that the requirement of the landlord returning the deposit within 15 days allows them to claim twice the amount of the deposit. The time of the 15 days starts when the tenant provides the forwarding address.

The move out form also has a section where a tenant can sign the form and provide the forwarding address but disagree with the proposed withholding of the funds. If this section is indicated then the landlord must file a claim with the RTB for dispute resolution within the 15 day time frame. Failing to file in the 15 days could result in the landlord owing the tenant twice the deposit amounts.

What if the tenant fails to attend the move out inspection, sign the form or provide a forwarding address. A tenant has two years to provide the forwarding address. What this means is that as a property management company we must hold these funds in trust for two years before dispersing them to the owner. If self managed the tenant can provide the address in that two years and then at that time the 15 day period begins. If the landlord has not held the funds they would need to distribute them to the tenant in 15 days.

A landlord should perform the move out inspection even when the tenant fails to attend the meeting and complete the form as if they were in attendance.

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

When moving out tenants sometimes misunderstand what the deposits are used for. We often have requests from people when vacating a property requesting we use the deposit funds as part of the last month of rent. This is not what either of these two deposits are designed for.

The other main factor tenants misunderstand is that the deposits are not to be returned until the forwarding address has been provided to the landlord. A tenant is required to meet and complete the move out inspection report with the landlord or their agent to determine if part of the deposits should be withheld. On the move out form is a section to provide the frowarding address. Some tenants at this time refuse to provide a forwarding address believing that the requirement of the landlord returning the deposit within 15 days allows them to claim twice the amount of the deposit. The time of the 15 days starts when the tenant provides the forwarding address.

A landlord should perform the move out inspection even when the tenant fails to attend the meeting and complete the form as if they were in attendance.

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

Philip Davies 1/31/25 Philip Davies 1/31/25

What has caused the rental market to slow down?

Often now when speaking with a client or potential clients the most common question is why is the rental market slow at the moment. The first question is has the Air BnB ban caused the rental market to decrease that much?

Our response is that although the Air BnB ban has contributed to the current market conditions it is not the main or only cause of the slower rental market.

When covid occurred in March of 2020 the first reaction to the rental market was rental prices decreased. In the fall of 2020 the housing sales market started to increase and many individual rental products were sold removing a large number of rental products from the market, which created a significant supply shortage compared to demand.

Governments at various levels have attempted to control the housing market with the implimentation of the Empty homes tax in Vancouver which required a property be occupied for at least six months of the year. The Provincial government had implemented the Speculation tax which also required home owners to occupy the unit or have it rented to avoid the speculation tax.

During covid the economy started to experience high levels of inflation and in 2022 the bank of Canada started to increase the interest rates to slow inflation. This eventually had an effect on the housing sales market which led to less rental properties being sold and removed from the rental market.

The BC Government in 2022 made a change to the strata property act eliminating the right of some strata corporations to have a rental restriction bylaws. Prior to this, properties built before 2010 had the ability to restrict the number of rentals in their building. The intention of this change was to increase the number of rental properties in the market.

The federal government then brought in a restriction on foreign buyers being allowed to buy property in Canada which took effect January 2023. This would slow housing sales which has an effect on the rental market.

Prior to covid and during covid both federal and provincial governments were trying to control the increasing costs of housing by providing developers incentives to build more purpose built rental properties adding more supply to the market.

Provincial governments and other officials complained about the amount of immigrants being brought into the country at increased levels in the past few years. The federal government made changes to the immigration policy reducing the number of students and imigrants that would be permitted to enter the country reducing the demand for rental properties.

In the lower mainland many new condo and rental developments were in the process of being built and are completed and are now entering the rental market increasing the supply to the rental market.

In 2024 the BC government brought in a restriction on short term rentals throughout the province with some exceptions including spaces in your primary residence, and some smaller communities. This prohibits people from renting out full condos or homes on short term rental sites which adds more product to the rental market.

Starting January 2025 a new tax, the anti flipping tax was brought in to prevent people from buying and selling properties in a short period of time. If you buy and sell a property within two years the seller will be subject to an additional 20% tax on the profit of the sale of the property.

The current rental market has been affected by all of the above factors. The one other factor that governments don’t like to admit is the economy has slowed and may or may not be in what is considered a recession.

For all of the above reasons the rental market has slowed causing a greater supply than demand for rental properties. When the supply is greater than the demand this is called a tenant favourable market, which allows tenants to take their time to find the right property and negotiate with landlords for the best rental price of the property. During tenant favourable markets we also find more questionable tenants seeking to move and relocate. Why does this increase?. When small landlords have a property vacant for multiple months it might be difficult for them to continue to keep the property payments without incoming rent, causing landlords to make decisions on potential tenants without performing their due diligence.

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