B.C. landlords allowed to impose massive rent hikes after mortgage payments spike
B.C. landlords allowed to impose massive rent hikes after mortgage payments spike
Two B.C. landlords whose costs have skyrocketed – due to their variable-rate mortgage – have been allowed to impose huge rent hikes on their tenants to offset their financial losses.
Two B.C. landlords whose costs have skyrocketed – due to their variable-rate mortgage – have been allowed to impose huge rent hikes on their tenants to offset their financial losses.
In a recent ruling, an arbitrator with the province's Residential Tenancy Branch approved increases totalling 23.5 per cent over two years for each of the landlords' four rental units.
That's on top of the 3.5 per cent annual increase previously approved by the B.C. government for 2024.
"The landlords experienced dramatic interest rate increases which have made managing the property unsustainable," reads the ruling, which was published in May.
That's fucking bullshit.
Just because you made shitty financial decisions doesn't give you the right to violate rent increase rules... if you can't afford to keep the property then sell.
Butbutbut MUH PROFITS?!
Then fucking sell the property and cut your losses. Why is it that landlords are sacrosanct people that make money regardless of the bad "investment" they made?
The GDP is so tied to the real estate that we see inane shit like that.
It seems if you're wealthy enough your wealth gets to enjoy a nice racheting effect.
Won't that likely still cost the tenants their home? Any guarantee new owner will keep the old price if the interest rates are higher? Or who would want to buy it if it's a loss?
Or who would want to buy it if it's a loss?
If it doesn't sell, fine. Then maybe people will stop buying up housing to have rental income. And while I understand why people do it, I in no way agree with it ... because it's only wealthier people who can afford to do it. The average person is priced out.
So let those who bought at low-now high interest rates lose their shirts, as it seems that's the only way prices will come down ... because every level of gov't hasn't done sweet fuck all to stop (or even hinder) the practice.
Good rent control has rules about jacking up the rent in a property you acquired so selling it shouldn’t affect the tenants. Like the other people have said it would simply be that the landlord would have to sell for a price that makes sense.
Rich people can all find their way off bridges for all I care. This shit is vile, has no place in a functioning society, and is completely voluntary.
Tenants are already getting fucked over. People already on financial strain hit by a 25% rent increase over 2 years like it happened here will lose their apartment and the landlord gets to keep his property that "pays for itself" (see: someone else is paying their property). And that sets a precedent for other landlords.
At one point in time, the trade off for renting was a lower monthly payment than a mortgage and a maintained apartment by the landlord.
Nowadays, tenants pay for the entirety of the mortgage, and landlords complaint when they aren't cashflow positive month to month and don't maintain their property because they have the big end of the stick on a human right.
And the response from the government? "We'll look into it". Fuck that noise.
The problem occurs when house prices tumble from an influx of sales, and the 32% (In NZ) of your population that are paying their mortgage off on their primary residence are potentially plunged into negative equity on rising interest rates.
Once you’re there, you’re kind of fucked. You can sell, but you’ll still owe the bank money, so you can’t buy/downsize. You can’t even change banks. You’re a risky customer, so you get higher interest rates. All you can do is hope the market rebounds or declare bankruptcy.
So you’re risking fucking over 30% of your nation (and arguably the most productive segment of your country as they’re earning money to pay that mortgage), to appease a fraction of (as not every renter can/wants to buy. Eg, students, temporary immigrant workers etc) the 30% of renters that are being fucked over by high house prices.
Not to mention, all the renters you’ve displaced into an even more competitive rental market.
But that’s not to say the solution is to shrug your shoulders and let the landlord class continue to punch down.
It would be expensive, but you could guarantee (current) mortgages for primary residences in cases of financial hardship. Buy mortgagees out and turn the houses into state housing, renting them back to the previous owners at fair prices.
So if/when rates go back down the tenants can apply to have their rent lowered back, right?
They can apply all they want
Man, I can't wait until government schmuck decides that the stock I bought that dropped 80% over the course of the pandemic is 'unfair' and I should be compensated. Absolutely utter bullshit.
If their gamble on real estate didn't work out, take the hit, sell at a loss, and learn your lesson.
No fucking wonder people can't buy a starter home anymore.
Oh good! Does this mean the government's also going to protect my stock portfolio and guarantee those investments always succeed, too? Because if so, I should start having a stock portfolio!
Right?????
What the fuck?
If you invest in something you gotta assume the risk.
Past growth performance gave me good reason to expect that I would make money, too! But now I'm not! Government, help meeeeee!
As a renter, this is deeply disturbing. Their rent is going up 7.7x the previously stated legal limit so that "Two B.C. landlords" who didn't properly anticipate the consequences of their borrowing can be bailed out of financial losses?! WTF are these "two B.C. landlords"? Corporations, probably, right? Modern-day capitalism is such a fucking grift: if you're not rich, you're on your own; if you're rich, you get bailed out. The renters did nothing wrong here: they were fiscally responsible. But the laws will be bent to extract (steal) unforeseen amounts from them in order to bail out wealthier people who chose to take on the risk they did to satisfy their greed. If you're not rich, standing on your own two feet isn't good enough. If you are rich, don't worry about standing on your own two feet--keep taking on risk to make more money and we'll protect you if you incur losses
I was always told landlords deserve to extract profit from the economy for nothing because of the risk they take on. Yet time after time it seems like they can't possibly tolerate any risk at all.
The landlords, who are identified only by the initials S.O. and K.O., argued they had good reason to expect the rate would remain low when they purchased the property. The Bank of Canada had kept its interest rate low for more than decade, as part of the government's effort to stimulate the economy following the 2008 recession.
… in 2021? We were in the middle of a global pandemic, economy was already starting to show signs of stress, and a nationwide property values had shot up 25% YoY. How did they even manage to make the argument that anyone in their right mind would expect interest rates to remain low until the end of their term?!
You raise a great point. That's @#$%ing absurd. It sounds like the "an arbitrator with the province’s Residential Tenancy Branch" was unqualified to work on this case if they do not understand that economic point
Because they're ignorant and entitled.
Holy shit. When are things going to snap and people start hanging or humiliating landlords like they did in China??
Things are so bad right now.
Yes please.
I say it is time for the feudal system to be abolished. No more Lords.
Do you propose to start building communism? If not, how exactly this is going to work?
Why do they hate tenants?
They less hate tenants and more don’t see them as people but more of an income source. It’s the same reason why companies don’t care about burnout so long as someone can be replaced(even though it’s a lose-lose we’re not talking about smart, long-term thinkers here).
I know. The phrase is what I wish journalists asked point blank at any spokesperson answering questions about it.
Why allow rental rate hikes instead of allowing the tenants to purchase the building dirt cheap?
How on earth is it possible for an arbitrator to just override legislation like this?
Because they aren't overriding it - the legislation allows for these rent increases in certain circumstances. Not agreeing with the law or the decision, but the arbitrator isn't making up some new power.
Thanks, yeah admittedly I hadn't read the entire article before posting - and quickly realized the answer to my question when I did! I should really know better than to do that :)
Anyway, maybe the question I should have asked is more like, "why the heck did they give arbitrators so much latitude" - which it sounds like we agree on!
Mortgage rates shouldn't be considered and no one should be bailing out real estate speculators. A competent investor knows there is a market rate for rent, and would consider the variable risk of debt financing and would never have considered the 'investment'. Owners of units that aren't highly leveraged have minimal exposure to these rate increases. These people are simply greedy speculators that not only took stupid gambles, they are partially responsible for the current real estate crisis in the first place. High leverage, low interest rates drove high demand and market scarcity.
This ruling needs to be disputed as the adjudicator's decision appears incompetent, prejudiced, or both.
"I find the world and economic events in reaction to the pandemic were not reasonably foreseeable and have impacted the landlords, despite them taking reasonable precautions by accessing a mortgage through a recognized and well-known lender," the ruling reads.
Really? It wasn't reasonable to foresee this crisis with record low emergency interest rates and highest real estate prices in history? Idiot.
I wonder what impact these kinds of government protections have on artificially inflating the property prices in BC
U N I O N N O W
Why is it the tenant's problem when these "businesspeople" made bad business decisions?
Nobody owes you protection from the consequences of your own actions.
This is a dystopian ruling.
I don't really have an opinion on weather this particular decision is justified - tenant boards are known to usually side with tenants. But, to be fair, setting rent controlled increases to amount less then inflation is not really fair - it creates imbalances, where wealthy tenant maybe paying way less than market rates (like surgeons renting in San Francisco)
A 23.5% rate hike is far, FAR beyond a cost of living increase and therefore unjustifiable.
Those landlords can go to hell.