As a clearer picture of the economic impact of the COVID-19 crisis begins to emerge, it is evident that the weight of the crisis will be felt broadly across the economy, with many sectors experiencing devasting results. Unemployment has already reached levels never witnessed before, and we are collectively beginning to come to grips with the fact that the notion of a rebound to “normal” is not in the cards. Furthermore, we have yet to determine what the “new normal” will look like. It is going to take time for us to get past this crisis and the road ahead is filled with considerable uncertainty.
Suffice it to say that the residential rental housing sector is experiencing challenges and uncertainty. While April rent collections were better than expected, and we are anxiously awaiting the May results, it is encouraging to see that the Federal and Provincial programs have started to gain traction and are having positive impacts for our sector. However, it would be naïve to expect that our sector will be transitioning to “normal” immediately after the Emergency Measures Act officially expires and the eviction moratorium is lifted. We can anticipate higher vacancy rates, some tempering of rents, a paring back of investment in the enhancement of existing rental units/buildings, and new purpose-built rental construction becoming less viable and therefore pushed to the sidelines. How long and to what extent these impacts will be experienced is, frankly, anybody’s guess. We should be prepared for these impacts to last for some time to come as the economy begins to recover and, in many sectors, redefine itself.
Residential landlords should be prepared to expect that the BC government will likely want to consider measures specific to our sector and will not want to see mass evictions, nor does our sector. Mass evictions are in no one’s best interest. As a result, it will be incumbent upon landlords to continue to engage in frequent and constructive communication with their tenants so that collectively we can limit evictions. As we stated at the outset of the pandemic, there undoubtedly will be some rent deficits accrued during these early months of the crisis. It is our view that if you engage with your tenants the right way and they feel that you’re here to help them during this crisis and they are open to engaging with you, the likelihood of getting to a better place improves dramatically.
LandlordBC continues to advocate for supports for renters like the enhancement of the BC Temporary Rental Supplement Program. We continue to believe that both the Federal and Provincial government have a responsibility to directly support residential renters and, by extension, rental housing providers. There is still time for both senior levels of government to respond. We are especially concerned about rent deficits and the recoupment of such and believe senior levels of government need to implement programming now. LandlordBC continues to advocate to the Federal government and is in active discussions with the BC government, both independently and in collaboration with stakeholders, regarding the anticipated rent deficit. This issue is clearly more pronounced for small mom and pop landlords, but we know that the entire sector has been impacted.
One potential solution is a refundable tax credit for tax year 2020 that allows a landlord to be compensated for a meaningful portion of the foregone rent from a rental unit. This response could come from the BC government on its own or in partnership with the Federal government. The refundable tax credit would cover the unpaid rent but not any increases, interest, or late fees. Other limits may apply. For ease of administration, our initial thoughts are that the landlord would provide a copy of a residential tenancy agreement, evidence of their efforts to proact initially when the crisis first struck to implement mutually agreeable solutions with the tenant, and then documentation of their subsequent collection efforts. The rebate would be paid in 2021. Another potential solution is the notion of a rent bank for renters whereby renters would fund 50% of their rent deficit via the rent bank, and the BC government and individual landlords would enter into a sharing agreement for the remaining outstanding amounts, subject to the landlord’s ability to pay. We are in the early stages of trying to quantify the scale of the rent deficit issue. Through consultation the goal will be to achieve a mutually acceptable solution to help mitigate these impacts as best we can, recognizing that in this unprecedented time, our sector will not be left unscathed.
So with a future that consists of considerable uncertainty for our country, communities, and sector, know that LandlordBC continues to actively represent your interests to all levels of government and that we are here to continue to help you navigate this crisis. To-date, we have held three outstanding COVID-19 focused webinars with attendance exceeding our wildest expectations. Recordings for all three webinars can be found here. Our website’s COVID-19 portal, “must-read” e-newsletters, blog, and social media posts continue to provide our members and the broader sector with immediate access to all the information needed to manage your tenant relationships and rental businesses during these uncertain times. For our members exclusively, our “Help Line” has remained available to you for specific, more in-depth information needs. We do however continue to ask our members to please limit your accessing the “Help Line” due to call volumes, and instead use the extensive resources we’ve compiled on our website and shared with you via the e-newsletter, etc. Thank you for your understanding and cooperation.