Perfect Storm For Landlords in Alberta

The slow down in the oil patch is affecting Alberta’s major city residential landlords. Seriously. The market was once quite hot. Now…not so much. CBC reported a doubling of the vacancy rate late last year.

Edmonton is a renter’s paradise right now. Economic slowness, coupled with more supply than demand in terms of available units, has flexed adversity on Alberta’s landlords. Vacancy rates have increased steadily since last year, and now range from six to eight per cent, depending on property type. The average rent in Edmonton and the surrounding area has dropped between 10 and 15 per cent from a five-year high in July 2014. This has been forcing landlords to get creative about attracting tenants and signing leases, including free Wi-Fi, amenities, groceries, and even flat screen televisions as part of rental agreements. We touched on this phenomenon in Halifax late in 2013, when landlords there were offering free iPads to prospective tenants.

In Calgary – a city where mayor Naheed Nenshi famously criticized what he considered rent gouging in 2014, things are not that much better. Rents have fallen astonishingly fast. A 20% drop in January of this year from the beginning of 2015. The Calgary Real Estate Board is anticipating that the vacancy rate will rise to 7% by the fall. By the fall of 2017, CMHC expects the vacancy rate in the city to decline back to 5.5 per cent. Calgary’s 2016 civic census revealed that while the city’s population increased slightly to more than 1.2 million in April, more people moved out of the city than arrived here. More than 20,800 units were empty in April, a 67 per cent spike over last year’s levels, which brought the vacancy rate for dwellings to 4.3 per cent, according to the census. According to the Financial Post, the vacancy rate hasn’t been this high since 2004, when the city reported the lowest level of migration in 12 years. A city hall analysis of historical housing data shows there are more vacant units in 2016 than in any of the past 16 years. To put this into perspective, Canada’s national vacancy average for urban centres is 3.3 per cent.

Even rural cities in Alberta have been affected.The Government of Alberta annually conducts the Rural Apartment Vacancy and Rental Cost Survey of multi-family dwellings in Alberta’s rural communities between the months of May and August. This survey does not include cities whose population is more 10,000 people. Vacancy rates have increased and decreased in a cyclical pattern with vacancy in rural Alberta communities being on an upward trend, having risen 3.7 per cent in 2014, up to 8.2 per cent in 2015. Not only are vacancy rates up in general, in a number of communities they are at their highest point since 2006.

Experts say the next big hit to the market could come in the spring, when many leases typically come up for renewal. Not good.

Questions? Comments? Are you a landlord in Alberta? We’d love to hear from you.

Embassy Tenant Andreas Pirelli Arrested This Morning In Calgary

Here’s an interesting development to the story with Andreas Pirelli. According to the Globe and Mail, he was arrested this morning in Calgary without incident from the duplex he “rented” from pensioner landlord Rebekah Caverhill and  had illegally claimed was an embassy. There were a few outstanding arrest warrants in Quebec apparently, and the police were able to swoop in at around the time he was required to vacate the house, and took him into custody without incident.

You know…this is just a suggestion – but – clearly this guy fled Quebec and changed his name in Calgary for a reason. Just sayin’.

It’s Time To Give Secondary Suite Landlords A Break

Landlords aren’t just people who own multi families and apartment buildings. Secondary suite landlords are numerous in Canada and the United States, and it’s on the rise.

I’m going to give a bit of definition to what constitutes a secondary suite, courtesy of our good friends at the CMHC.

The term “secondary suite” is generally used to describe a self-contained dwelling unit with its own kitchen and bathroom, which is separate from the principal dwelling in a house. It can be located either within the principal dwelling or in an accessory building on the same lot as the principal dwelling. These units are also known as “accessory apartments” and “in-law suites.

Here’s an interesting  metropolitan Canadian fact. Conservatively, more than 1 quarter of British Columbia residents rent out a secondary suite to help with the mortgage. That’s a lot of people. 52% of Vancouver’s residents are renters. That’s also a lot of people. I think it’d be safe to assume these numbers are so high, because buying real estate out west is incredibly expensive. That’s a bit of an understatement.

Secondary suites are great. They provide a variety of benefits to neighbourhoods and communities. They’re also a significant source of affordable housing in serviced areas, and make better use of the existing infrastructure. They don’t change the character of neighbourhoods much and they diversify the housing types available. They also increase the number of residents living in an area, which in turn makes neighbourhood transit more viable and enhances commercial activity. Finally, they provide owners with income and increase property tax revenues for municipalities. That’s a whole bunch of double rainbows right there.

Secondary suites aren’t just popular in Vancouver and greater B.C. They’re big in Calgary too. The city has a 1.3% vacancy rate. That’s great news for landlords, but that’s pretty tight for people looking for a place to call home. To boot – mortgage rules changed in July of last year, making it a little more difficult to buy a home. As a result, Calgary is in the process of embracing secondary suites, much like the rest of western Canada, and is attempting to lax rules with respect to them as recently as before the beginning of 2013. Mayor Naheed Nenshi has been advocating easing restrictions on secondary suites for a while. One problem. Calgary’s city council doesn’t get it. Calgary’s already tight rental market is speculated to only get tighter after the flood that swept through the city. This is slated to be a key issue in the upcoming Calgary municipal election.

Secondary suites require a few things to conform legally. It’d be a lie to say that they’re all legal. They’re not. The point I’m trying to make is that the municipal laws that determine whether a suite is legal or not should be relaxed. Mayor Nenshi and several councillors have taken the position that existing suites across the city should be grandfathered in to be legally zoned suites, provided they comply with proper building and fire codes. Compliance with common sense rules like this is a given, of course.

The opposition on council have taken a not-in-my-backyard stance. They prefer the practice of having illegal suites reported by neighbours, and inspectors/by-law enforcement officers dispatched to investigate, and possibly enforce compliance with zoning and building/fire codes. Those in this camp appear to prefer want the to city focus additional resources to the inspection and enforcement of illegal suites in order to ensure the safety of Calgarians. That sounds like a relatively logical position, but in Calgary, legal secondary suites are tough to create because the province’s building code treats suites as duplexes or semi-detached dwellings with mandated separate heating and water tanks, restrictive square footage counts, among other difficult to meet regulations. To put this into perspective, according to a piece in the Calgary Herald in May of 2009, the city had shut down 2,104 “illegal” secondary suites because of bylaw non-compliance — not safety codes of any sort — since 2004. That amounts to the closure of 1 non compliant secondary suite a day. Seems a bit empirical to me.

What do you think? Are you a secondary suite landlord? Do you live in Calgary? Vancouver? Any other city that’s transitioning on the issue? Share your thoughts with us!



RCMP Warns Alberta Landlords and Tenants About Kijiji Rental Scam

Came across this informative piece courtesy of the Alberta Landlords Association. The RCMP issued a formal warning to landlords and tenants in Canmore, Alberta about a Kijiji scam. I took special notice of this, because this is the kind of thing that gives landlords a bad name.

Culprits posted ads on the classifieds website Kijiji advertising houses or condos for rent, with all money transactions completed through e-mail. The victims were advised that 24 hours before their arrival, they would receive a pin code to enter the property. But in one case, after thousands of dollars was transferred, all correspondence halted before a pin code could be sent. Further investigation found that the properties were never really in fact for rent in the first place (big surprise).

A similar occurrence was reported in Halifax. Check this out. There’s a nice Soundcloud clip of a rundown of how it occurs courtesy of Scott Simpson with the Halifax Regional Police.

Unfortunately, this has become a common thing. Similar incidents have occurred in Montreal, Winnipeg, and Calgary.

Most of the cases involve a landlord out of town, unable to show the unit, who asks for a damage deposit or first and last month’s rent to be wired to them. Sometimes – as in the case in Calgary listed above, someone has the gall to show up and actually conduct showings on a unit, and then ask for money.

The ALA has some valuable tips to share on how landlords and tenants can avoid getting caught up in these kinds of messes. Tenants should ask to see the property before committing anything financially, and receive a receipt for any monies given. Landlords should make sure tenants know who they are, where the property is, and give a receipt for any rent paid.

Hub Pages posted a nice little ditty on how to avoid getting scammed here. Kijiji has also posted some valuable tips on how to avoid getting victimized here.