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.
I say it is time for the feudal system to be abolished. No more Lords.
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.
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.
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?!
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?!
Because they’re ignorant and entitled.
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
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!
If I were to play devil’s advocate, it would be that capped rent increases is to prevent predatory landlords from increasing rent more than their costs, but that if their costs go up more then they have a way to cover that without losing the property / going bankrupt.
That provision is maybe more acceptable when you’re talking about families renting out their basement suite, but I have zero sympathy for investors who took a risk and lost. And even in the case of non-investor landlords, I’m skeptical that it’s appropriate to make the tenant shoulder all the increased costs.
I’ll be honest, I have zero sympathy for any landlord here. Rent control is necessary to (hopefully) make sure there is housing that people can afford to live in - and acts as a kind of limit to the extraction of an ever-increasing portion of the paychecks of the working class by the landlord class.
If the renter loses the ability to pay for a home, they become homeless. If a landlord loses the ability to pay for a property, they become a renter. Economic conditions changed? How about this: these landlords should sell, and make property prices drop a little, instead of having renters getting kicked onto the street.
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)
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.
So if/when rates go back down the tenants can apply to have their rent lowered back, right?
They can apply all they want
Why allow rental rate hikes instead of allowing the tenants to purchase the building dirt cheap?
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.
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.
This is a dystopian ruling.
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!
