Saturday, August 11, 2007

FTBs apparently don't make good landlords

According to the Residential Tenancy Branch, dispute arbitration cases are up 40% compared to last year. The TC covers this story here. Reasons for rising number of arbitration cases:
  1. low vacancy rates: [landlords] "don't cut as much slack to tenants because they don't have to"
  2. expensive housing market: "noting rising costs have left some people struggling to pay bills and mortgages"
  3. rising number of secondary suites: "Most of the growth in rental units has been secondary suites, but [the suite owners] are not professional landlords," she said. "What you have are people who don't know the law renting [units] out to tenants and doing stuff on the fly. They don't provide written agreements, they don't provide rent receipts and they figure they can kick people out whenever they want because it's a 'my home, my rules' mentality."
Points one and two seem fairly straight forward and don't need much in the way of HHV colour commentary. Which leaves us with point number three. Yes, homeowners aren't typically professional landlords; some may be, but most are not. Most new suites are there because they are the only way that home gets owned in this market. Most incomes won't support "average" mortgages without mortgage helpers. And guess what? Those suites for rent are now commanding outrageous prices in excess of what apartment units go for. And most suites are anything but sweet.

Low vacancy rates mean that suite rentals are in a seller's market. That means cash strapped FTBs don't need to spend much on beautification or upkeep. And many won't know the long standing issues that came with their house when they bought it. I can imagine the phone calls:
tenant: "uh, Mr. Johnson, um, I don't know how to tell you this, but, whenever you and Ms. Johnson have a shower the downstairs sink overflows."
landlord: "you're kidding right."
tenant: "uh, no."
landlord: silence
tenant: "uh, can you fix it, the carpet's starting to stink."
landlord: "can it wait two weeks, we just got paid and the mortgage is due, interest rates just went up a quarter point and we're eating Kraft dinner? We have nothing left."
You get my meaning on that one. No surprise that there is a lack of paperwork happening with these suites. Why? Because many people, especially us young folk who have grown up with law-breaking sympathies tied to the marijuana culture, shirk our civic duties to pay taxes and play within the rules of the system. So they don't leave a paper trail, don't claim the rental income and don't "believe" their tenant has any rights because they don't play the game on the level.


Anonymous said...

Where do i start? I'll keep it short. We got screwed at our last rental. We went to arbitration because the house we were in was sold during our tenancy. In the end our rent went up 28%. We left 3 months later and we learned the new tenants actually started paying an additional 12% for a POS WW2 era house. The arbitrator had no clue and didn't live anywhere close to the town we were in. Arbitration is a joke.

Anonymous said...

Personally, I find the BC tenancy act already leaning too much in the direction of the tenants.

When I got my tenants to sign the contract, I scratched out about 20 sentences from the contract & got them to intial beside each one.

Stuff like, they can sublet to other people, damage deposit is subject to (stupid tiny amounts) of interest, etc. I also added about a 5 page addendum to the contract that makes it more balanced and employs rules that protect me. Like saying that tenants can't smoke in the house or have visitors bring their pets etc.

The other side of the coin is that there are a lot of landlords out there that also got screwed by tentants. The most common thing is late payments or no payments at all, and by law they can't be evicted immediately.

hhv said...

Anon at 10:39

You are, of course, quite correct. Deadbeat tenants are likely as numerous as deadbeat slumlords.

We've had good discussions in the past here about the perils of "forced" renting: many FTBs simply can't afford the mortgages associated with SFH in this town without tenants. In our case, we wouldn't be able to, and the house we buy would have to have a 2 bed suite getting $1000/month or more to create a situation where we aren't completely house poor.

Anonymous said...

Attn: Anon at 10.39am.

I hope you know that some of the changes you asked your tenants to sign for are, in fact, illegal.

I was a dream-tenant. And the only reason i became a tenant was because I had just sold a beautiful house in another province and could not justify paying 3-4 times what I got for a crappy house in BC. Decided to rent and wait it out.

Well, like I said, dream-tenant. Paid 6-12 months rent at a time in advance, no kids, no pets, non-smoker, no parties, no loud noise, kept the house in better & cleaner condition than I got it, blah, blah.. I even did my own repairs and maintenance, fixed garage door, dryer, changed shower heads, at MY expense. Stupid!

To thank me, my nasty landlord kept my deposit, and we had to go to arbitration. I have never collected, as he basically disappeared. I WISH I had been late with the last month's rent. Some landlords deserve nasty tenants. Sorry

olives said...

I had a landlord who asked us to leave three months after moving in and signing a one-year lease because she wanted to move into the house herself again. She had no idea what a lease meant was and told me the Residential Tenancy Branch said she could get us to leave, even with the lease in place. idiots.

hhv said...

As I understand it a landlord can break a lease if they are moving into the space themselves, but they must give two months notice, return DD and provide one month's free rent. That's per the BCTA.

Anonymous said...

And if they landlords do not move into the property - and rent it to someone else - You, the tenant, nail them to the cross with the BCTA

Know your rights as a tenant.


olives said...


The landlord wanting to move into the home themselves is sufficient cause to give notice (with the two month notice and month's rent), but they can only do this after the lease is complete or if you are renting month-to month.

Otherwise, what is the purpose of a lease? The lease can only be broken by agreement - or in my case I told her she would have to compensate me (alot) for breaking it.

hhv said...


I'm fairly certain that the case is as I described it. Those conditions have to be met: free month rent, two months notice, landlord moves in. If any of the 3 don't happen, you'd have a case.

Lease contracts are hardly binding for tenants. You can break a lease as a tenant. You lose your damage deposit only. The landlord has no recompense other than that.

I've heard of cases where a tenant broke the lease, knew they were going to lose their DD and then didn't pay the last month's rent, in this way actually coming out ahead by breaking the lease (stealing a half-month's rent). The landlord went to arbitration and didn't get anything because the tenant had moved out already. The tenant only loses a reference.

The BCTA is very lopsided in terms of over-protection of tenants and under protection of landlords. Of course there are deadbeats on both sides. The BC case is much better than that of Alberta where most of the protection is landlord-based.

olives said...

"For landlord's use of premies where the tenancy is for a fixed term, the notice cannot take effect before the end date specified in the tenancy agreement".

The lease is binding on the landlord at least,and a good idea to sign one if you are a renter.

hhv said...


I stand corrected then... cheers.

vg said...

Sorry if I am changing the thread topic here but it looks like no Black Monday so far. The warning I got last week from a stock TA site I subscribe to retracted his call over the weekend once he saw all the liquidity pumped in on Thursday/Friday. Look for a volataile week still and this is so far from being over,he classed it as Enron times 10,000. I am expecting a very rocky September and October.

Just to get an idea how stupid our market is,get a load of this gem for only $349,000: MLS®: 233984

vg said...

Here's one reduced $33,000,motivated seller, looks like a flipper for $385,900. The cracks are showing.

MLS®: 231005

Lucky Luke said...


It seems like the Bank of Canada was all ready to hike interest rates for the first time in a year again, possibly more than once before 2007 was out.

Now that all this volitility is going on in the markets, they are hoping that lending the banks billions as a short term solution will still allow them to raise rates in the near future; however, they are saying that if things get worse that they may not raise interest rates....

... which would suck for us bears, in two ways: 1) This in my view is kind of like rewarding the thieves & the greedy by being 'bailed out' 2) Same or lower interest rates will only allow this Real Estate high pricing madness to carry on, although hopefuly with tighter lending rules.

What I'm wondering is just how many more hits this market can take before people REALLY start panicing. I mean, what are the long term affects of Central Bank lending billions to banks for the next couple of months? Anybody know the answer to this?

I also read somewhere that due to the interest rates in Japan being at 0.25% (unlike our ~4.5%), there were some additional tricks of the trade employed by US & other world banks that basically resulted in doing "Yen carry" trades. To make a long story short, Japan is raising its interest rates, and so all these other countries that were taking advatange of the low cost of borrowing from Japan, are now going to be in a hurry to pay back their loans before they get hit by higher interest charges & lose their profits; resulting in an almost guaranteed Yen price rise as well as a depletion in returns for all these foreign investors/banks.

Add to this the somewhat empty, but still scary Chinese threat of pulling back 1.3 Trillion from the US, and the likelyhood that oil prices have peaked... and no wonder people are panacky (however you spell that).

All in all, one thing is almost certain, much tighter lending rules are just around the corner, and that will most definitely have an impact on Real Estate prices. When Joe starbucks employee can no longer afford to buy that $300K condo, those condos will eventually start coming down in price.

Lucky Luke

vg said...


I am in agreement with all your points and the bottom line is what should have happened a year or two ago with tighter lending rules will have to hit home soon if it hasnt already and the end result will be a correction. Question now is how much and how fast,going into winter is in the bears favor. Eventually the BOC will raise rates wether its September or November but we have reached a catalyst for sure.

The yen carry trade has been the biggest free ride to big money in eons,what better way to borrow and invest in a rising stock market at only .25%,now we have to wonder how much of that went into real estate funds and is taking a hit.