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Rental accommodation market vacancy rate, rising prices only going to get worse: society

Timothy Schafer
By Timothy Schafer
December 8th, 2020

The road to Nelson’s current nearly non-existent rental vacancy rate began 40 years ago, but it’s not going to improve with new construction and is only getting worse, says the West Kootenay Landlord Society’s president.

Trevor Jenkinson said there is no good news about the city’s current rental housing crisis, despite over 120 rental units set to come on stream in next year.

Forty years ago the city went from a government and mill town to a tourist town, he explained to city council recently, and at the same time the federal government decided to change rental property income and how it was taxed.

Rental property is taxed at a personal rate even if it is run as a corporation, so large buildings are paying upwards of 40 per cent in income tax, instead of a corporate rate of 10 to 15 per cent, Jenkinson pointed out.

“That made residential rental unappealing and all construction of purposeful rental property stopped in the early 1980s and, of course, it’s been a downhill slope since then,” he said.

There has been a decreasing rental supply in Nelson because some units are being aged out, some are being sold, some are being converted to short-term rentals and population increases and new people coming in have increased the demand.

Private sector landlords as a whole have also been vilified in the court of public opinion as a result of a few unscrupulous landlords, Jenkinson said, and the province made changes to the Tenancy Act in 2017 in an attempt to target them.

Those changes have made all landlords feel they are losing control of their properties, and rents have been climbing steadily since in an increasingly hostile environment to landlords, he said.

“Part of the reason for this is a lot of landlords are done. They are getting out of the business,” Jenkinson said. “It is extremely difficult to get a bad tenant out of a property and a lot of landlords are soured by that experience.”

A quick search of properties for sale in Nelson revealed 70 per cent of the properties were rental properties, Jenkinson added.

“When they are sold they are going to be occupied by the new owners. Nobody buys a single family dwelling as a rental unit; it just does not make sense.”

He calculated that the city has lost 30 rental units in the private sector in the last three years, and the city’s attempt to promote and encourage secondary suites and carriage homes is not keeping up with the loss and the demand.

Jenkinson pointed to a city survey that identified 18 of 25 short-term rental operators had converted to short term due to problems with tenants and a basic loss of control over their own properties.

He noted the city and Nelson Hydro contributed to that feeling, with a tenant defaulted power bill being added on to the property owner’s taxes.

“We’ve made a submission (to the city) that we hope is received,” Jenkinson said about a current review of Nelson Hydro bylaws.

According to Canada Mortgage and Housing Corporation the rental rates in Nelson have risen seven per cent in the last year, while the city’s Nelson Housing committee reports rental rates up by 10 per cent.

“A lot of people want to live in Nelson, so we are a victim of our own success in reinventing ourselves as a nice place to live,” Jenkinson said. “But the solution is not to turn the city into an objectionable place.”

Are there any solutions to the problems? asked Mayor John Dooley.

“In order to get out of it the federal government should change their taxation on rental revenue properties to make it appealing, from a business sense, to provide housing,” Jenkinson replied. “And at the provincial level, allow landlords to have some control over their properties.”

He said the province values security of the tenant’s physical tenure over the security of the owner’s property, even if the tenants are disturbing all of the other tenants in a building.

Society for landlords

The West Kootenay Landlord Society was formed to bring landlords together and to assist landlords with common landlord-tenant issues.

The society provides guidance on best practices for the selection of tenants, the preparation of leases, how to determine when legal assistance is required, and resolving disputes with tenants.

— Source: City of Nelson

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