The week’s top stories focus on the effect of rising property values released by B.C. Assessment last week, in both the multi-family and commercial sectors. With commercial values increasing as much as 55 per cent, property owners fear for the future of their businesses, while renters may bear the burden of increased rental property values. Meanwhile, commercial permit values are exceeding record, while a reworked task force in gearing up to deal with the turbocharged demand.
Here is Western Investor’s pick of the top commercial real estate stories published this week.
Landlord group says that increased property taxes will force apartment building owners to raise rents or spend less on building maintenance, reports the Times Colonist.
David Hutniak, chief executive of the organization that represents rental property owners and managers, said another year of increased assessment values could mean higher property taxes for the owners of rental buildings — hurting both landlords and eventually renters.
“Ultimately, renters will be impacted because any landlord contemplating holding rents in 2019 or not passing on the entire [consumer price index] increase [2.5 per cent], they will now have no choice but to do so,” he said.
Last fall, the province cut by two per cent the annual rent increase that landlords can charge, limiting increases to the CPI, which for 2019 is 2.5 per cent.
But with possible property tax increases looming as a result of high assessments, Hutniak said the 2.5 per cent falls far short of what landlords would need to keep up with increased costs.
“There’s simply no way to recoup that. It’s a frustrating situation,” he said.
B.C. Assessment, which sent out more than two million property assessments last week, told Glacier Media that the median assessed value of multi-family buildings in Greater Vancouver and the Fraser Valley rose by 10 per cent year over year in the 2019 roll. The Okanagan and Vancouver Island both saw overall increases of 13 per cent in value.
Hutniak said LandlordBC anticipated another increase in values, so it surveyed 20 per cent of the purpose-built rental buildings in Victoria and found last year they saw an average increase of 13.6 per cent in property taxes.
“That’s huge,” he said, noting the challenge they face is B.C. Assessment bases the value on landlords being able to charge market rent. “But with rent control, that’s just not the case.”
The result, he said, will be landlords delaying investment — from minor repairs to major improvements — in their properties, or putting them off entirely.
And there could also be fewer new rental buildings developed as the returns over time may no longer keep up with costs.
“Meanwhile, there’s so much pressure to invest and enhance these buildings and provide safe and secure rental housing, yet there’s so much pressure on the only source of income [rent],” said Hutniak. “It’s not sustainable. Something needs to give.”
Jillian Shoichet worries it will be landlords not being able to provide safe and comfortable homes for their tenants. The single mother of two rents a suite in a comfortable and well-maintained character building in downtown Victoria.
She said her landlord has worked hard to maintain the building and has only raised rent “as much as is fair and legal.”
But with the building now assessed at $1.55 million, up from $987,000 last year, there is concern the property taxes will jump. “Our landlord is, frankly, an extraordinary landlord,” she said, noting that on top of properly maintaining the site he is “always available to come by and look at things if we have concerns.”