Property managers, landlords and building owners are bracing for bad news today, as the COVID-19 pandemic’s effect on the economy is expected once again to disrupt the property rental market.
While reports suggest most residential and commercial tenants were able to pay their rent in April, it’s believed more will be asking for help this month and beyond in the form of provincial assistance, deferrals and forgiveness from landlords. “I don’t think there’s any question May will be worse than April, and June will be worse than May,” said David Hutniak, executive director of Landlord B.C.
“Right now, renters are hurting, and quite frankly, so are an awful lot of landlords.”
That’s why Landlord B.C., which represents 3,300 residential landlords with about 125,000 units in B.C., has petitioned the province to expand its rent-relief program.
Hutniak said the province is to be applauded for its rent-supplement program, which was enacted quickly and provided $300 per month for eligible households with no dependents, and $500 per month for eligible households with dependents.
But he said in a province where it’s not uncommon for renters to spend 30 to 50 per cent of their income each month on rent, it doesn’t go far enough.
Landlord B.C. is calling for the current rent-supplement benefit to be increased to $750 per month for renters with no dependents, and $1,000 per month for renters with dependents. It’s also asking that the supplement be left in place until August.
“We are a wealthy province and we can afford to do this,” said Hutniak.
The province hasn’t said how much it expects to spend on the assistance program each month.
B.C. Housing, which administers the program, said there have been 64,312 applications for rent relief since it opened April 9, and within two weeks of that date, more than 54,000 renters received confirmation they would be eligible.
So far, just over 8,700 payments have been made to landlords, and about 2,000 more are ready for the next cheque run, while another 43,000 applications are being processed.
The Ministry of Municipal Affairs and Housing would not comment on whether it would consider enhancing the program, but said that it’s the strongest rental-support program in the country with the highest level of direct support to help pay rent.
The ministry said it is committed to doing what it takes to support people, which has included freezing rent increases and stopping all evictions.
Dennie Linkert, president of Complete Residential Management, said the company collected rent last month for all but a handful of the 200 residential units it manages in Victoria.
She said in some cases, tenants are still working, while others have tapped into relief programs to pay rent. “But I expect it to be much more difficult [to collect] this month and next,” she said. “At least people were still working for part of March and probably set aside some of their income for April rent.”
Linkert said property managers are in a tough spot, as there’s little they can do if a tenant doesn’t pay because of the province’s no-evictions order. “Our hands are tied.”
Ken Cloak, vice-president of Colliers International Victoria, said at a recent conference-call meeting with some of the largest real estate investment trusts in Canada that more than 95 per cent of rents were reportedly collected last month. “It wasn’t a disaster, despite all the concern,” he said, adding May could be a different story.
Cloak said no-eviction orders, a high level of uncertainty and other factors mean the Victoria rental market will remain virtually unchanged for the time being.
While students might have vacated rental accommodation to return home, and a small number of short-term rentals have shifted from vacation-rental listing companies to the long-term market, Cloak said there’s not enough new supply to make much of a difference to the vacancy rate.
“I’m inclined to think it will stay steady at 1.2 per cent,” he said. “The influencing factor will be the delivery of new product later this year.”
Cloak noted that renters who had planned on buying their first home and leaving the rental market might reconsider due to temporary layoffs. Although interest rates will be attractive, the conventional lending community will likely tighten lending criteria, he said.
Hutniak agrees, adding because there’s no glut of new rental spaces, rental rates are unlikely to change.
Cloak said on the commercial side, a combination of landlord flexibility, relief efforts and some industries — high-tech and government in particular — still working meant most landlords collected rent last month.
That might get trickier in May, with the greatest concern being for the retail and restaurant sectors. “The indication I get is there has been the odd tenant reaching out for a deferral or a break, but so far there doesn’t seem to be any great mania just yet,” Cloak said.
The new Canada Emergency Commercial Rent Assistance program, which will offer a
75 per cent reduction in rent for qualifying small businesses, will help over the next three months, but concerns have been raised that not enough commercial building owners will take part in the program.
“In many cases, the landlord either thinks they don’t have enough information to make a quick decision, or they categorically reject the idea and bounce the problem back to the lessee,” said Gonzalo Peralta, executive director of Languages Canada, which has language schools in cities across the country.
Peralta said he has been told by some business owners that they aren’t interested in the program, which would see the owner lose 25 per cent of rental income.
“The Government of Canada must strongly encourage the participation of all landlords and lenders or find another way to address the challenge of fixed costs confronting [small and medium-sized enterprises],” he said.