Rental Housing Needs to be Exempt
LandlordBC is a non-profit industry association representing over 3,300 owners and managers of rental housing in BC. In September of this year we undertook an expense analysis of a purpose-built rental building in Metro Vancouver integrating invoiced figures provided by the member owner of the building analyzed. The analysis attempted to illustrate how much higher the actual operating expense of this typical purpose-built rental building have increased over a 10-year period compared to the maximum allowable rent increase under the RTA rent control formula of 2% + CPI during that same period.
Property taxes are a major expense component for landlords and totally outside our control. We are just learning that Vancouver City Council is proposing a 4.9% increase in property taxes. The City says that it needs a portion of these additional monies to increase housing supply and affordability. This is indeed a noble objective and one that our industry supports. However, as illustrated in our September 2018 expense analysis, one of the major cost-drivers we must absorb as rental housing providers, is property taxes. In a rent-controlled environment, and one that appears to be on a trajectory to even more prohibitive regulation, these steadily increasing costs, over which we have absolutely no control, make it impossible for us to provide affordable rental homes.
In Vancouver we have a disproportionately large contingent of landlords in the secondary market providing rental homes in basement suites and strata buildings (condos). They will be directly affected by these increased taxes with no immediate ability to recover these costs through the monthly rents they collect. Secure purpose-built rental building owners are facing even greater impacts, they in fact are impacted by an order of magnitudes by these increased property taxes when compared to the secondary market landlord.
As we said, we support the City’s goal to increase housing supply and affordability however, there’s an obvious disconnect here. How can you keep increasing our costs as rental housing providers and at the same time expect us to deliver affordable rental housing? The math doesn’t work. Rental housing needs to be exempt from this property tax increase.