VOL.10 NO.1 • APRIL 2017
RENTT: ATTRACTING & RETAINING TENANTS VACANCY RATES
ARE EITHER HOT OR COLD
#reflections LOOKING AHEAD
TO NEW TECHNOLOGY
Canada’s #1, most widely read publication for Apartment Owners, Managers and Association Executives
PRESIDENT’S CORNER AS LANDLORDS WE ARE living in interesting times. e Government of Ontario has extended rent control to apartments built after 1991, which were free of rent restrictions until now. Ontario has also imposed a tax on non-resident home buyers, and is providing substantial incentives for new private rental development. See the article on page 39, which addresses those changes, and how they may come to aﬀect landlords across Canada. On the positive side, the federal government recently decided not to raise capital gains taxes, although it will be reviewing certain other tax planning tools, as noted on page 35. e new federal Bill to legalize marijuana has been tabled, potentially opening up problems for both landlords and tenants who do not want marijuana odours or smoke in their buildings. Landlords are concerned about the impact of growing or smoking marijuana on their tenants, and also about potential impacts on their buildings. Concerns include: • Electrical safety hazards • Interference with other tenants, especially during the flowering phase • Potential damage to the building through mould • Potential liability for the landlord and risk to the tenants and mortgage holder • Potential cancellation of building insurance, or the calling of a mortgage, with financially disastrous results for an innocent building owner. CFAA urges Parliament to amend the marijuana Bill to prohibit all marijuana growing in multi-unit dwellings, and in rented dwellings of any size. (See page 37 of the January /February issue for more details, or go to www.cfaa-fcapi.org for the latest information.)
For the latest in information on all those topics and many others, plan to attend CFAA Rental Housing Conference 2017, which is being held at the Westin Prince hotel in Toronto, near the interchange of the 401 and the Don Valley Expressway, from June 6 to June 8. Special events include the Building Innovation Bus Tour during the afternoon of Tuesday, June 6; the Welcome Reception in the evening of June 6; and the networking reception and CFAA Awards Dinner, on Wednesday, June 7. RHC 2017 will oﬀer more than 30 sessions, with more than 60 expert and entertaining speakers, as well as lots of opportunities to ask questions, and to network. If you want to advance your skills, knowledge and contacts in Canada’s rental housing industry, you should attend CFAA Rental Housing Conference 2017. For more information see page 37 of this issue. To register, visit the conference website, www.CFAA-RHC.ca.
John Dickie CFAA President
Exploring new lands THIS PAST MARCH BREAK, I went to Panama (Playa Blanca) with my family, following the recommendation from some friends who went there on Christmas vacation. We had a great time (particularly my daughter) and I would definitely go back. As much as I enjoyed the weather and the ability to lounge around doing nothing for long periods of time, I think the people I met – from the staﬀ to the locals to other tourists – helped to make the vacation even better. Good people make life (including both work and vacations) that much more enjoyable. is issue of RHB Magazine features a RENTT panel that focuses on getting and keeping tenants, who are essential for landlords to make a living. Our panelists discussed diﬀerent ways of attracting and retaining tenants, marketing properties when there are no vacancies, conducting background and rental checks, using ILS websites, and the future of apartment hunting. eir discussion is full of great strategies and techniques for finding and keeping good tenants, as well as how to use resources to make the process more eﬃcient. As always, we have some fantastic articles that will give you insights not found anywhere else. For example, we published a piece that digs into the numbers behind CMHC’s Rental Market Report to get a better understanding of what the vacancy rates really mean in diﬀerent parts of the country. We also have an article from Yardi on how diﬀerent technologies are reinventing how Canadian real estate companies will run their businesses. Of course, you should also read through CFAA’s newsletter, National Outlook, as well as the Regional Association Voice. Don't forget to check out “Spin Cycle,” the newest feature in RHB Magazine. Of course, we always enjoy hearing from our readers, and we want to support two-way communication. If you have any comments or questions, send them to firstname.lastname@example.org. I look forward to hearing from you.
Enjoy the issue! David Gargaro Senior Editor 4 | april 201 7
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VOL.10 NO.1 2017
Vacancy rates are either hot or cold
Attracting and retaining tenants through new and old forms of media.
Location is the most important factor when determining the value of real estate.
32 #reflections An inside look into the lives and professional milestones of Canada's leading real estate executives.
37 National Outlook CFAA Rental Housing Conference 2017 is a chance to hear the experts, and share your views on the issues and practices that aďŹ€ect us all.
Regional Association Voice
News and views from LPMA, HDAA, EOLO and WRAMA.
A summary of industry topics and headlines.
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IN THIS ISSUE...
NATIONAL OUTLOOK 35. Capital gains tax increases oﬀ the table for now Minister Morneau seeks to quell continuing queries, which arise from concerns about speculation driving up the Toronto housing market
37. Busy year for housing: What does it mean to you? CFAA Rental Housing Conference 2017 is a chance to hear the experts, and share your views on the issues and practices that aﬀect us all.
39. Will Ontario’s new rental incentives outweigh expanded rent control? Increasingly, government action on rental housing has become intertwined among the orders of government.
40. Federal Housing Policy still largely up in the air How much money will go to social housing repairs, to new affordable housing construction or to rent subsidies?
NATIONAL OUTLOOK – DIGITAL EDITION available at www.cfaa-fcapi.org
CFAA Member Associations Eastern Ontario Landlord Organization (EOLO) www.eolo.ca P: 613-235-9792 Federation of Rental-housing Providers of Ontario (FRPO) www.frpo.org P: 416-385-1100, 1-877-688-1960 Greater Toronto Apartment Association (GTAA) www.gtaaonline.com P: 416-385-3435 Hamilton & District Apartment Association (HDAA) www.hamiltonapartmentassociation.ca P: 905-632-4435
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Investment Property Owners Association of Nova Scotia (IPOANS) www.ipoans.ns.ca P: 902-425-3572
Manufactured Home Park Owners Alliance of British Columbia (MHPOA) www.mhpo.com P: 1-877-222-4560
LandlordBC www.landlordbc.ca P: 1-604-733-9440 Vancouver Office P: 604.733.9440 Victoria Office P: 250-382-6324
Professional Property Managers’ Association (of Manitoba) (PPMA) www.ppmamanitoba.com P: 204-957-1224
London Property Management Association (LPMA) www.lpma.ca P: 519-672-6999
The Canadian Federation of Apartment Associations represents the owners and managers of close to one million residential rental suites in Canada, through 11 apartment associations and direct landlord memberships across Canada. CFAA is the sole national organization representing the interests of Canada’s $480 billion rental housing industry. For more information about CFAA itself, see www.cfaa-fcapi.org or telephone 613-235-0101.
Saskatchewan Landlord Association Inc. (SKLA) www.skla.ca P: 306-653-7149 Waterloo Regional Apartment Management Association (WRAMA) www.wrama.com P: 519-748-0703
ATTRACTING AND RETAINING TENANTS In this monthâ€™s issue, we asked our esteemed RENTT (Rental Executives National Think Tank) panelists to share their thoughts on attracting and retaining tenants. They discussed traditional and new ways of attracting tenants, marketing properties when there are no vacancies, conducting background and credit checks, using ILS websites, and the future of apartment hunting. The goal was to gain a better understanding of the best strategies and techniques for finding and keeping tenants, as well as using technology and resources to make it a more efficient and effective process.
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George Van Noten Senior Vice President, Property Operations, Minto Properties Inc.
Margaret Herd Vice President, Residential Property Management, Park Property Management Inc.
Damien Roussin Managing Director, Dorset Realty Group
Imran Jivraj Director, Property Management, Macro Properties
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RHB: Welcome, everyone, to RHB Magazine’s RENTT panel. Thank you for taking the time to participate and share your insights and experience. We are sure that our readers will learn a lot from your responses. Today we’d like to take a look at how you attract and retain tenants. To begin, what traditional and new methods do you use to attract potential tenants?
Margaret Herd: Park has built a reputation as a landlord that helps us to keep our buildings either full or with very low vacancy. Rent specials are not what drive clients to our properties and they have minimal impact in generating leads to our buildings. That said, we do not offer big promotions. Currently, only a few of our buildings will offer either $100 discount on first month’s rent or a $100 complimentary laundry card.
George Van Noten: There are a few opportunities we leverage. We are constantly optimizing and testing digital approaches and channels that allow us to interact with consumers in new ways; Internet Listing Services, social, paid search and, most importantly, optimizing our own web presence. At the same time, we focus and invest in resident and community activities that allow us to foster deeper more meaningful connections within the communities that we serve.
Damien Roussin: We do not offer any rent incentives at this time.
Damien Roussin: We use three main avenues to reach potential tenants: building signage with contact information, online classifieds pages and our company website. We recently tried and moved away from a “text for info” service.
RHB: Do you still market your properties when you have zero vacancy? If so, why?
Margaret Herd: We use the same traditional means of advertising as most companies in the industry, such as local newspapers, magazines and Internet listing services. We also use new methods of advertising such as social media and Google AdWords.
Damien Roussin: Yes, of course, with building signs and on our website. We encourage tenants to come have a look at the properties and to join a waitlist if they’re not pressed for time.This way, when a vacancy comes up, we have a number of quality prospective tenants to follow up with.
Imran Jivraj: It’s safe to assume online ads are now considered traditional. We have successfully transitioned from print Ads to ILS platforms. However, we do find print signage in destination locations sometimes work well. Since we are in small markets, Kijiji works for us.
RHB: What rent specials (if any) do you offer? How much of an impact do rent specials have with increasing lead volume to your rental properties? George Van Noten:The most important aspect of reaching any consumer, whether this is through special offers or other means, is with an understanding of who they are, where they’re located and what they’re looking for. Not all consumers are focused on the same things. Certainly, when it makes sense, pricing strategies can impact lead traffic, but we let our understanding of the customer guide our decisions. Imran Jivraj: Depending on the city and market conditions, we have to be creative with incentives. Traditionally, landlords offer free rent, rent abatements, gifts, etc. These incentives were moderately successful. We have moved away from this venture in high vacancy markets and are finding that tenants are more focused on non-chargeable amenities and services.
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George Van Noten: Absolutely yes. It is our goal to sustain a conversation with our current and future residents at all times. With digital technologies we have the flexibility of turning the tap up or down depending on leads and availability but it’s important for us to always be present in the market.
Margaret Herd:Yes! Anything done in the virtual world will have an impact on SEO. It takes weeks for a property to start showing up in the first few pages of any online search engine after you keep them offline for a while. The price we pay to rebuild our online presence is definitely higher than the investment to keep listing properties where vacancy has come down to zero. Imran Jivraj: We do scale down on marketing. However, we do continue to market the assets to ensure the key assets are always top of mind for desirable tenants. RHB: Let’s talk about the next step in the process. What types of background checks or credit checks do you do during the screening process?
George Van Noten: We use a “basket of criteria” when assessing applications that includes landlord reference checks and background and credit checks provided by globally recognized companies. All of the information gathered is considered during the review. Margaret Herd: Park also obtains previous and current landlord information, personal references, proof of income, employment confirmation, if applicable, and a credit report, to perform proper tenant screening. Imran Jivraj: Credit checks are done based on market demands. Work and previous landlord references still play a critical role. However, a quick Google search of the potential tenant can result in informed results. Damien Roussin: We do standard credit checks and inquire with previous landlords, if available. RHB: We all want to keep good tenants in our buildings. What strategies or techniques do you employ to encourage good tenants to stay?
Damien Roussin: Our buildings are 100 per cent full today with very few move-out notices coming in. We ensure this remains the case by continually improving our buildings’ common areas and upgrading building amenities to ensure our tenants are happy to stay for the long term.
Imran Jivraj: We have to be true to our creed. In small markets, we work with rent structure, and in high demand markets our services have to be impactful with no room for errors. Low turnover and tenant loyalty help drive our retention strategy.
We offer $100 complimentary laundry cards as a gratitude gesture to those not moving out. RHB: Let’s talk about Internet Listing Services, or ILS websites, which have become a key resource in attracting potential tenants. What are the greatest challenges when dealing with ILS websites?
George Van Noten: From a technical perspective, the greatest challenges or limitations would be lack of connectivity to property management systems to facilitate real time pricing updates or changes in availability. The other challenges we see are the limitations to the consumer experience. It’s difficult to showcase value through small images and text. There is so much more advanced technology that should be brought to bear to deliver rich content experiences like virtual tours and video – improving the experience rather than simply offering a digitized classified ad. Margaret Herd: The biggest challenge used to be updating online listings. Canada does not have a national ILS provider as we see in the US, which makes us work with many different ones. Park uses a system that syndicates all our listings to most ILS vendors we currently advertise with. The system is fed by our website and pushes the changes we make to our building webpages to almost all ILS venues we use. ILS companies that are not partnering with the system provide us with access to secure websites where we can edit our listings. All together these options have drastically minimized the problem of keeping information in those listings up-to-date.The biggest problem we currently have in the industry is new or small ILS companies that are trying to find their space in the market. Many times they will scrape our listings to generate traffic to their websites. They will never update those listings and end up generating non-qualified traffic to our buildings. Damien Roussin: Keeping property info up to date on several sites can be administratively challenging. For that reason, we stick with one site and work to keep our properties in the top results.
George Van Noten: It’s an important focus to give all our residents a voice and a genuine feeling of involvement in Imran Jivraj: We would like constant monitoring of the direction of their community whether it be social, where the ads are placed. environmental, or upgrades to the living experience. We also strive to bring neighbours together and foster RHB: What features or services do you wish the ILS relationships that can help a community to prosper. websites offered? Sometimes creating these opportunities is as simple as developing a dog park or volleyball court to encourage people to interact and socialize. George Van Noten: Seamless connectivity to allow for real time updates and the opportunity Margaret Herd: Our leasing team receives a report to deliver richer more differentiated content of all tenancy agreements coming to an end within and experiences. In this age of real time access 90 days in their portfolios. They will contact those to information, consumer expectations are residents to inquire about their intention to renew heightened. It would be incredibly valuable to their lease or staying in a month-to-month basis. leverage this kind of paradigm for renters.
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Margaret Herd: There is so much we can do with technology these days, especially when it comes to mobile devices. There are millions of apps to provide answers to almost any need or question a human being may ever have, but it feels that we are a little behind in our industry. I wish ILS vendors would come up with options to use location services and send push notifications to possible renters based on their location and browsing habits. Something similar to iBeacons or Geofencing, completely tailored to our industry. Damien Roussin: I don’t have any suggestions right now. Imran Jivraj: Same here. Margaret and George made some great suggestions. RHB: What does the future of apartment hunting look like? George Van Noten: We believe technology will continue to play a bigger role and evolve to provide the consumer greater insights into the offerings available, access to richer content like the streaming of virtual tours and videos, greater levels of personalization, and consolidation of inventory into a single easily searchable source. The actual rental process will also be streamlined with paperless transactions being facilitated more quickly online.
Imran Jivraj: Future apartment hunting will be based on purely geographical location at the micro level and the age category of the renters. Renters will pick their location and then select their desired landlord after considering the landlord’s online reputation, safety and security, proximity to amenities, proximity to family and access to transit.
Damien Roussin: I think virtual tours will become so advanced and will provide such a real experience that tenants could reliably “view” properties from their home, perhaps with real-time Q&A. It would save time for all parties, increase the number of apartment/tenant options and eliminate disruption to current tenants.
Margaret Herd:The millennial generation will eventually rule apartment hunting and landlords will have to adapt to their way. One stop shop will be the way to go and human interaction will become less requested or necessary. Integration with social media will become crucial. We will need mobile apps that will fully integrate with our property management and accounting systems, providing renters with real-time availability information. Prospects will then be able to check availability, apply for a particular suite, be approved online and sign their leases with electronic signatures without ever having any contact with someone or actually seeing the apartment, all within a social media platform, using their mobile devices and within minutes. Once the application is approved and lease is electronically signed, their connections/ friends will receive information about their new address in their news feed, immediately advertising that property to thousands of people. That is also going to be a new way to do referral programs. Part of this technology is already available. Companies are only reluctant to use it, but that is our future. Of course, when that becomes a reality the laws that regulate this industry will have to be reviewed. RHB: Thank you all for your insight and experience.
RHB Magazine worked with our friends at Rentals.ca to develop the questions for this discussion. Thanks to Marcelo Gondim, Marketing Specialist of Park Property Management, for his assistance.
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Location is the most important factor when determining the value of real estate. This also appears to be true for vacancy rates of purpose-built rental properties across Canada. Depending on where your property is located, you could be either turning away potential tenants in droves or begging them to fill your empty suites.
“Since last year, the supply of apartment units in the primary rental market increased more than the number of occupied units, causing the vacancy rate to increase slightly,” said Anthony Passarelli, Senior Market Analyst, CMHC. “That said, regional trends across the country were considerably different, roughly offsetting one another at the national level.”
According to the 2016 Canada Mortgage and Housing Corporation’s (CMHC) Rental Market Report, the average purpose-built apartment vacancy rate in Canada’s 34 larger centres increased from 3.3 per cent in October 2015 to 3.4 per cent in October 2016. The report provides data and analysis for the primary and purpose-built rental market, as well as the secondary rental market that includes condominiums and other rental units.
“Considerably different” is an understatement, as vacancy rates are below 1 per cent in some markets and around 10 per cent in others. Many factors influence these figures, including the rising cost of homes, the availability of rental properties and competition from rental condominium apartments.
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British Columbia Major centres in British Columbia have some of the lowest purposebuilt apartment vacancy rates in Canada. For example, Victoria and Abbotsford-Mission are at 0.5 per cent, Kelowna is 0.6 per cent, and Vancouver is 0.7 per cent.Turnover rates are also below the national average. “Vacancy rates are persistently low across Metro Vancouver and other regions of the province with the problem being acute in markets like Vancouver, Victoria and Kelowna,” said David Hutniak, CEO, LandlordBC. “Further exacerbating the situation, in some jurisdictions, is the high cost of land and construction as well as the challenges associated with existing redevelopment moratoriums, zoning anomalies, development application approval timelines, etc. So it’s a very challenging market to develop new purpose-built rental.” Today, condominiums (known as strata title properties in BC) are a necessary source of rental housing. However, this market is facing the same challenges. Vancouver’s rental condominium vacancy rate is 0.3 per cent, the lowest in the country. Given that condos are typically newer builds and more expensive than purpose-built rental properties, they do not necessarily provide better options for tenants.
“New condos in Vancouver, which are now typically being sold for $2000 per square foot, aren’t going to result in more affordable rentals, let alone available rental units at all,” said Hutniak. “The real solution is new purpose-built rental buildings, and lots of them.”
Alberta Alberta’s purpose-built rental vacancy rate is significantly higher than the national average at 8.1 per cent. Calgary (7.0 per cent) and Edmonton (7.1 per cent) are lower than the provincial average (and yet still quite high). The decline in world oil prices has had a significant impact on Alberta’s economy. Massive layoffs in the oil patch industry caused many people to seek employment in other provinces. Before the economic slowdown, new purpose-built apartments (and condominiums) were being built at the highest rate in 25 years.
“All of these factors – the economy, high unemployment rates, lower in-migration, increased numbers of new apartment units and condominiums – have all contributed to Calgary’s high rental vacancy rates,” said Gerry Baxter, Executive Director, Calgary Residential Rental Association. “While CMHC’s 2016 October Report indicated a vacancy rate of 7 per cent, we believe that it was closer to 8 to 10 per cent based on what we were hearing from our members.” Calgary’s condominium apartment vacancy rate is above the national average at 4.4 per cent, although it was 4.9 per cent the previous year. Many condominium units were completed over the past couple of years, and about one third of available units become rentals. This has also led to higher turnover rates, as tenants have been purchasing condominiums or homes. “To offset high vacancies, landlords have been forced to offer incentives, including a reduction in rent,” said Baxter. “As condominiums are newer and usually have more amenities than apartments, they generally command a higher rent. But the economy and all the other factors mentioned earlier have resulted in condo and other high-end rental properties reducing their rents. This has likely resulted in many people seeking to upgrade their living accommodation by moving into condos.”
Saskatchewan Saskatchewan has some of the highest vacancy rates for purpose-built rental properties in Canada. Saskatoon is the highest at 10.3 per cent, while Regina is at 5.5 per cent. Saskatchewan’s turnover rate is also higher than the national average. The province’s natural resource sector has greatly affected Saskatchewan’s economy, as well as vacancy rates.
“The large amount of new construction of single-family homes and condos has increased the housing supply in Saskatoon,” said Chanda Lockhart, Executive Officer, Saskatchewan Landlord Association. “We are seeing job losses, and folks are unable to rent. Combined with condos not selling and being brought back into the rental market, those two factors have driven up our vacancy rates.”
The supply of purpose-built apartments has increased from new construction, which means more availability for the market. This has affected Saskatoon’s condominium rental vacancy rate (3.1 per cent), which is somewhat higher than the national average.
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“While vacancy numbers have climbed over the last several months, there is optimism that the numbers will begin to steadily decline,” said Jamie McDougald, President, Saskatchewan Landlord Association. “The approval of the Keystone XL Pipeline has stimulated the oil sector and the tempered construction of new apartments will serve to moderate supply levels.”
Manitoba At 2.8 per cent, Manitoba and Winnipeg have a lower vacancy rate for purposebuilt apartments than the national average. This is down slightly from the previous year, but significantly higher than years past, when it was at or below 1.5 per cent. There has been little change in the number of occupied rental apartment units year to year, as weaker employment conditions offset higher net international migration. “We believe that the vacancy rate will be going up – we will be getting colder – for the next year or two,” said Avrom Charach, Vice President, Kay Four Properties (and spokesperson for member of the Professional Property Managers Association of Manitoba). “This is tied to a small amount of new developments coupled with low mortgage rates.” Turnover rates in Manitoba were above the national average. Winnipeg’s condominium apartment rental rate is 1.8 per cent, which is lower than the purpose-built rental vacancy rate. According to the CMHC, about 18 per cent of condominium apartments are made available for rent in Winnipeg. “With Winnipeg’s reasonably affordable purchase prices for condos and homes, people are moving toward ownership right now,” said Charach. “I believe that the drop in condo rates is due to low mortgage rates. I only see this changing when mortgage rates go up.”
Greater Toronto Area and Southern Ontario Many factors contribute to the decrease in purpose-built rental vacancy rates in the Greater Toronto Area (GTA) and Southern Ontario. These include the improving economy, the rising cost gap between owning and renting, and increasing international migration. Demand is outstripping supply, particularly in the GTA, London and Ottawa. Weaker job market prospects for youth are exerting upward pressure on vacancy rates. However, the rising cost of home ownership is keeping people in rental housing. “An improving provincial economy, eroding ownership affordability and rising international migration drove the Ontario vacancy rate to the lowest level since 2001,” said Ted Tsiakopoulos, Ontario Economist, CMHC.
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The GTA has seen an increase of 35 per cent in the new primary rental supply completed over the last 12 months, although that has not pushed vacancy rates higher. Increased completion of rental units were mostly offset by the removal of existing units from the market through demolitions, renovations and conversions to ownership. There has been a significant increase in the number of rental units under construction (40 per cent), as well as increasing demand for newer rental buildings with modern amenities.
“Rental housing is becoming an increasingly popular housing option for many people, including those new to the workforce,” said Jim Murphy, President and CEO, FRPO. “We have seen significant investments by apartment owners and property managers to existing rental buildings, making them more attractive to potential renters.”
The GTA’s red-hot condominium construction trend has slowed significantly, as completions declined by 37 percent from the previous year’s all-time high. The proportion of newly completed units that were offered for rent reached 50.3 per cent in 2016, which was slightly lower than the previous year. Low vacancy rates have encouraged existing condominium apartment owners to lease their properties. “CMHC estimates that 30 per cent of condominium units are investor owned, the majority of which are in the rental market,” said Murphy. “Condominiums have played an important role in the overall housing market by providing literally hundreds of thousands of units for rent since the early 1990s.”
Demographics appear to be a main factor. Younger people are staying in the family home longer, and this is a relatively small group. Baby Boomers are beginning to sell their homes, and younger families are moving out of rental properties to purchase these homes. Baby Boomers are also choosing seniors’ housing and condos over traditional rental housing options. This can be seen in the condo numbers as well. Condominium apartment vacancy rates are around the national average in Montreal at 4 per cent, and higher in Quebec City at 5 per cent. Condos have also played a factor in the higher purpose-built rental vacancy rates.
Quebec For many cities in Quebec, vacancy rates for purpose-built apartments are higher than the national average. Vacancy rates range from 3.9 per cent in Montreal and 4.9 per cent in Quebec City to 6.4 per cent in Sherbrooke and 7.0 per cent in Saguenay.
“In Quebec a large part of the rental stock is old and thus not very attractive,” said Hans Brouillette, directeur affaires publiques, Corporation des propriétaires immobiliers du Québec (CORPIQ), the largest apartment association in Quebec. “To a point, low rents can draw in tenants for the obsolete apartments, but that has a limit, and we have reached the floor.”
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“Many condos were built in recent years and, in many cases, they didn’t find buyers, so developers offer new and trendy condos at cheap rents to cover their operating costs and taxes, until they can be sold,” said Brouillette. “Purpose-built rental housing cannot match the amenities, so it’s hard to keep current tenants and attract new tenants. There are a lot of very old apartment buildings, and new condos are simply too attractive. As well, 35,000 social housing buildings have been built in recent years across Quebec.”
Vacancy rates for purpose-built rental properties vary across major centres in Atlantic Canada. On the low end are Charlottetown and Halifax at 1.7 and 2.6 per cent, respectively. On the high end are St. John’s and Saint John at 7.9 and 8.5 per cent, respectively. Turnover rates across Atlantic Canada are above the national average. Halifax has remained consistent with respect to vacancy rates over the last 10 years.
“Halifax has seen significant international migration, including many well-heeled foreign students, many skilled workers, who earn good wages, and the significant influx of Syrian refugees,” said Jeremy Jackson, President, Investment Property Owners Association of Nova Scotia. “Our economy and work force continues to grow. People continue to come to Halifax from other areas of Nova Scotia, and often rent. Numerous new rental apartments are coming on stream across the city this year.”
Higher vacancy rates can also be found in Atlantic Canada’s condominium apartment market. Halifax is at 3.8 per cent, but the condominium market is smaller than other Canadian centres. Numerous developers are ready to construct new buildings throughout Halifax, and operate them as rental buildings.
“I suspect the new rental construction has pushed the condo vacancy rate up, as renters can rent brand new apartments with condo-quality amenities, and professional management and services,” said Jackson. “That will almost certainly continue to be the case.”
Conclusion What do the numbers tell us? Across the country, vacancy rates are slightly higher on average this year, on the surface, where you own and manage rental property determines whether your building is full or empty. When you dig deeper, economic, demographic and social factors are driving these figures locally and regionally. Generally speaking, construction of purpose-built rental properties is on the rise, which is positive for both tenants and landlords. However, competition from the condominium rental market is affecting purpose-built rental vacancy rates, and could become a greater influence as more investors enter the rental market.
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Looking ahead to new technology Technology is transforming the way the real estate industry functions. Todayâ€™s software tech can help you better market your properties, generate new leads, automate your operational tasks and get increased transparency into the overall performance of your property. Learning how to leverage it to adapt to rental market changes and increase profits should be a key consideration for multifamily property owners and managers.
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When it comes to best practices in property management and making smart decisions to drive revenue, leveraging the latest technology innovations provides many advantages — including the ability to manage the entire lead to lease lifecycle online, obtain optimal rents based on market conditions, and improve the way you access and analyze operational data across your entire portfolio. Here’s a look at new technologies that will reinvent the way Canadian real estate companies run their businesses.
The leasing lifecycle Today’s renters are accustomed to managing their lives digitally. This means they go online to seek information about your properties, communicate with you, and complete leasing and financial transactions. To successfully attract the renters of today, it is crucial that you expand your digital footprint. Software makes it easy for you to manage the entire marketing, leasing and resident services lifecycle all in one system. The first step is a dynamic website with compelling images and detailed information about your units and property. Guide your site visitors through their discovery process with intuitive navigation and pre-set, timed nudge marketing that encourages them to contact you or further explore their leasing options. This is easily accomplished through marketing platforms that deliver self-managed websites with templates, nudge marketing functionality and integration to social media that is easy to brand and implement. Marketing solutions that are integrated with your property management software allow you to track your marketing efforts online, measure ROI and tweak your website content to better target your ideal resident. The second step is allowing prospective renters to apply online. Your prospects can complete lease applications at any time of day including submitting information for resident screening, applying for renter’s insurance and signing the lease entirely online. Finally, once your prospects become residents, give them access to online portals for submitting maintenance requests, making online payments and amenities reservations, and communicating with management at any time. Not only does it keep the modern renter in mind, this increases efficiencies for your staff, while boosting your customer service by catering to current consumer behavioural trends of online transactions.
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Rethinking revenue management As we explore the leasing process, there are new ways to maximize your revenue that will give you a competitive edge, but also provide your prospects with additional rental term options. To increase rental revenue without affecting occupancy, revenue management software is fast becoming a necessity. A transparent, trends-based system built into your property management and accounting platform delivers comprehensive metrics that draw from your inventory and area comparables to enable pricing that increases revenue and reduces vacancy loss. Also, Canada faces some unique challenges — including the fact that most leases go month to month after a year. While flexible lease terms consistently add proven value, leasing is often affected by competitors’ rates, so you must
know your comparables to price successfully. A dynamic and transparent revenue management system lets you constantly test the market and helps you accurately evaluate the best combination of occupancy and rent. And with constant flux in supply and demand in the residential space, the ability to balance occupancy and rent is key to achieving maximum revenue. Increasing business intelligence Beyond managing your marketing, leasing and revenue management processes through one software system, your next step should be consolidating your companywide data to make fast and well-informed decisions based on current information. Providing meaningful information to all stakeholders is also critical. A business intelligence platform that combines your operational, financial and services data, applies pre-established key performance indicators and threshold criteria, then delivers the insights in the form of easy to read visuals and graphs â€” on demand to your smartphones and tablets â€” is the innovation changing the way real estate businesses combine, analyze and use their data. This new generation of business intelligence systems empowers decision-makers with customizable dashboards and toolsets that ensure that each staff member and manager is seeing exactly what they need to see, precisely when they need to see it. Replacing tedious and hardto-interpret spreadsheets with impactful analytics saves
time and money while increasing visibility into the health of your business. Getting a 360Â° view into your operations portfolio-wide is only possible with an integrated business intelligence system. And, using a solution that is built into your property management and accounting platform is the only way to automatically unlock and deliver critical data, with the added benefit of reducing system maintenance and training costs compared with third-party solutions. Bringing it all together Operating your business in silos is a thing of the past and will likely cause you to fall behind in a fast-changing real estate market. Consolidating all your processes and data on a single connected platform ensures that every aspect of your business, including customer-facing services, is harmonized, optimized and mobile to position your business for growth and maximum revenue. Taking advantage of new, integrated technology will keep you profitable and competitive. Peter Altobelli, Vice President and General Manager Yardi Canada Ltd.
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#reflections, with its biopic format, provides us with an inside look into the lives and professional milestones of Canadaâ€™s leading real estate executives. Watch the premiere episode, featuring Greg Romundt of Centurion Asset Management, which is now LIVE at www.perpetualmediagroup.ca.
Stay tuned for our upcoming episode on Kris Boyce of Greenwin Inc. schedule for release in May 2017!
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Budget 2017: Capital gains tax increases off the table for now By John Dickie, CFAA President On March 20, two days before the federal Budget was to be released, Ontario Finance Minister Sousa called for the federal government to increase the capital gains tax on people who buy rental housing for investment. He alleged that the prices of single family homes in Toronto and surrounding areas are being driven up by speculation. Despite that call and the rumours that had been swirling around in business circles, Budget 2017 did not make any changes to the capital gains inclusion rate. However, the concern continued. The day after the Budget, Finance Minister Morneau sought to quell the continued concerns. He told The Globe and Mail, “[Reviewing the capital gains inclusion rate was] not in our budget and those are not key areas of focus.” He went on to say, “I don’t want people speculating on tax…by not talking about those things [capital gains tax rate changes], we’re not talking about them...” Both Finance Ministers and Ontario’s renters should be grateful to the developers who have built condos and the investors who buy condos and rent them. Due to the provincial governments’ limits on the land available for houses and the onerous taxes and impositions on new housing developments of all types, new condos are the main source of new housing supply, especially in Toronto and Vancouver. Federal tax increases, applying across Canada, would have a chilling effect on rental investment, and hardly get at the real problem at all. Besides replying to Minister Sousa’s call, CFAA had earlier made a submission arguing against any increase in the capital gains tax, in general and on rental housing in particular. Other tax planning issues Budget 2017 promised a paper in the coming months on several tax planning strategies, including: • Sprinkling income on family members (in lower tax brackets) through private corporations • Holding a passive investment portfolio inside a private corporation to gain better tax treatment • Converting a private corporation’s regular income into capital gains That review will require monitoring so that rental housing providers are not sideswiped. CFAA opposes all tax increases on rental housing, and advocates tax reductions on rental housing to draw in more investment to make rental housing more available and more affordable. ∎
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A busy year for housing:
what does it mean for you?
his year has already been a busy one for our industry. Marijuana legalization is underway, and Canada’s National Housing Strategy is due to be released in the fall. In major Canadian centres, the housing market has been hot. There have been calls to cool Canada’s hot housing markets, calls for more rental housing supply, and calls for tighter regulation of rental housing, such as the licencing of landlords in Toronto, and the elimination of the post-1991 exemption from rent control in Ontario.
What does it all mean for you? CFAA Rental Housing Conference 2017 is a chance to hear the experts, and share your views on the issues and practices that affect us all.
CFAA invites Canada’s landlords to sessions for handson landlords, investors, executives, regional managers, property managers, and those in specializations like human resources, marketing, leasing, asset management and building science. CFAA will be presenting three keynote speakers addressing leadership, intergenerational housing issues and the Canadian economic forecast, so that delegates can apply a new perspective to their work in the rental housing industry. Cont’d on page 38
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HENRY BURRIS In his keynote speech, Grey Cup-winning Redblacks quarterback Henry Burris, will speak on the value of perseverance and community engagement.
PAUL KERSHAW In his keynote speech on how reformed housing policies would work for all generations, Dr. Paul Kershaw, the founder of Generation Squeeze, will educate you on how the demographics of the housing market are evolving.
BENJAMIN TAL In his keynote speech dissecting the major world economies, Benjamin Tal will address the economy and rental demand in Canada in the new environment 6 months into the Trump Presidency.
RHC 2017 offers streams of topics covering: • investment issues • building science and emerging technologies • apartment marketing and leasing solutions • HR solutions • the state of, and future of, rental housing in Canada • operations and technology • building and management apps. RHC 2017 will offer more than 30 sessions, with more than 60 expert and entertaining speakers, as well as lots of opportunities to ask questions, and to network. Special events include the Building Innovation Bus Tour during the afternoon of Tuesday, June 6; the Welcome Reception in the evening of June 6; and the networking reception and CFAA Awards Dinner, on Wednesday, June 7. If you are looking to advance your skills, knowledge and contacts in Canada’s rental housing industry, you should attend CFAA Rental Housing Conference 2017 in Toronto from June 6 to June 8. For more information or to register, visit the conference website, www.CFAA-RHC.ca.
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Ontario’s expanded rent control comes with development incentives Increasingly over the last few years, months and weeks, government action on rental housing has become intertwined among the federal, provincial and municipal governments, and tied in with house price issues. For example, on March 20, Ontario Finance Minister Sousa asked Federal Finance Minister Morneau to raise capital gains tax on houses and small rental properties held for short periods to cool the Toronto market. Thankfully, Minister Morneau did not raise the capital gains tax. On April 18, Minister Morneau asked Minister Sousa to refrain from measures that would increase demand for housing, and Minister Sousa did refrain. Instead, on April 21, Minister Sousa, Premier Wynne and Housing Minister Ballard announced “Ontario’s Fair Housing Plan” with 16 measures designed to calm the Toronto home ownership market, and also to clamp down on the rental market. To address the rental market in Toronto, Ontario made numerous changes that will have side effects, both good and bad, on the rest of Ontario. Future federal responses to address the housing situation in Toronto or Vancouver could easily have side effects across Canada. The main measures aimed at Ontario rental buildings are these: • Rent control has been extended to all buildings, including those built after 1991 • The property tax rate on all new multi-residential buildings is to be similar to the rate on single family homes across Ontario (instead of often twice as high) • The province is providing rebates of a portion of the development cost charges (DCCs) on new rental construction, in “areas where that is needed” (with funding of $125 million over 5 years.)
Thankfully the government left untouched vacancy decontrol, under which a landlord can agree on a new rent whenever a unit turns over. That will be available to the owners of post-1991 buildings, as well as older buildings. The extension of rent control is the big negative, both for any owners of post-1991 buildings with rents below market, and for developers deciding whether to build a new rental building now. However, less competition from new developments may be good for the owners of existing buildings, especially those built before 1991. That applies across Ontario, even though the original problem was limited to Toronto and the surrounding area.
The incentive effect of the property tax reform and the DCC rebates will vary greatly. The cities of Toronto and Ottawa and the Region of Waterloo made that the tax reduction 10 years ago, but many other cities did not. That may encourage new developments in those other places. In fact, the positive effect of the tax reduction could exceed the negative effect of the extension of rent control. See Table 1 for the impact in selected cities.
Table 1: Differential impact on a per unit basis City Toronto Mississauga Oakville London Waterloo Ottawa
2016 Development Charges
Possible DCC Rebate (at 33%)
$24,600 $54,200 $35,500 $18,600 $19,800 $16,600
$8,120 $17,900 $11,700 $6,100 $6,500 $5,500
Projected Property Tax Saving (Over 5 Years) $0 $3,750 $5,000 $7,500 $0 $0
Total Possible Saving Over First 5 Years $8,120 $21,650 $16,700 $13,600 $6,500 $5,500
NOTES: 1. Based on a new 2 bedroom apartment with an assessment of $250,000. 2. Applied on its own the decrease in the tax rate would yield twice that tax benefit, but MPAC adjusts the property value upwards, which partially offsets the tax rate decrease. 3. The tax benefit does continue after 5 years. 4. For illustration only. For any decision, an investor should recalculate based on hard numbers. Will the new cost reductions overcome the negative effect of the extension of rent control? We will have to see how developers and investors react.
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Federal Housing Policy still largely up in the air Through Budget 2017 we now know how much money the federal government plans to spend on housing over the next 11 years. However, we still do not know clearly what programs they plan to spend the money on, largely because the government has not decided yet, and because many of the specific decisions will be made in future years through mechanisms which have not yet been decided or created. How much of the money will go to social housing repairs, to new affordable housing construction or to rent subsidies? We simply do not know. Even for the money likely to go to new affordable housing we do not know how much will go to social housing and how much will go to the private sector, perhaps for scattered subsidized units within larger projects. Tables 1 and 2 show the funding envelopes, the decision makers and what the funding may be used for.
Table 1: Continued funding Funding envelope
Possible uses of the funding
Approx. $4.4 billion, by maintaining the baseline funding related to social housing operating agreements
Federal government in consultation with the provinces and territories, and the social housing associations
• Renewal of the operating agreements • Social housing capital repairs • Rent subsidies tied to the units (as now) • Rent subsidies tied to the tenants
While the amounts listed in Tables 1 and 2 may look like a lot of money, the federal funding available for new affordable housing construction would not exceed $6 billion over 11 years, given all the other demands for the money. At current subsidy rates, averaging $150,000 per door, that would produce a maximum 40,000 new affordable rental units, or an average of 3,650 units per year. That would be less than 1/10 of 1 percent of the rental units in Canada each year. Such a limited creation of new affordable units will not have any transformative effect. Each year, two-thirds of low-income households will continue to rent in the private rental market, but receive little or no housing-
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specific assistance. 500,000 low-income households could be helped for the 11 years if that funding were used for portable housing benefits. Under the National Housing Fund, referred to in table 2, the lending could be substantially more than the amount of the fund since the fund will be used to provide guarantees and to subsidize interest rates. Conceivably loans of $20 billion or $30 billion could be generated. However, the value to developers is the interest subsidy, not the amount of the loan.
MARCH/APRIL 2017 Table 2: New funding commitments Funding envelope
Possible uses of the funding
$5 billion for a new National Housing Fund
Federal government, CMHC or delegated decision makers (such as public-private boards in charge of separate funds)
• A “Transformation Fund” to help social housing providers transition to new operating models • Expanded lending for new rental housing (social or affordable private units) • Grants to support innovations • Rent subsidies, tied to units or tenants
$3.2 billion for provinces and territories to support key priorities
Provinces and territories, and in Ontario, municipalities (because of downloading)
• Repair or renovation of existing units, • Construction of new units • Rent subsidies, tied to units or tenants
$2.1 billion to expand the Homelessness Partnering Strategy
Federal government in consultation with the Alliance to End Homelessness and other associations
• Better homelessness services in more communities • More or better shelters • Rent subsidies tied to formerly homeless tenants
$202 million to fund gifts of surplus federal land
• New social housing • New homeless shelters or facilities
$241 million for better housing data and more research
• Better data on the private market, including foreign ownership, domestic speculation, etc.
$300 million for Northern housing
Federal government in consultation with the territories
$225 million for urban and rural Indigenous housing
Federal government in consultation with aboriginal groups
• Construction of new units • Support for partnerships between social housing providers and private sector providers
The total new funding listed in Table 2 amounts to $11.2 billion. That is in addition to the $4.4 billion of continued funding listed in table 1, which was to expire over the next 11 years, but which the government has committed to maintaining. There are to be six more months of consultation on the National Housing Strategy. CFAA will be working hard to get pieces of the total funding allocated for private sector development or retrofits, and for portable housing benefits. The provinces and other housing sector associations will also play a major role in many of those decisions. The federal government is still developing a national Poverty Reduction Strategy. Visit www.CFAA-FCAPI.org/submissions.php to read CFAA’s submission to the HUMA Committee of Parliament on why a PHB program is essential for cost-effective poverty relief.
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Spring cleanup is key to improving curb appeal
Landlords appreciate the importance of curb appeal in cultivating a sense of pride in residents. And now that spring has arrived, there is no better way of neatening properties than by collecting litter from lawns and dispatching abandoned vehicles and unwanted furniture. Heather Chapman, manager of municipal law enforcement services for the City of London, Ontario, encourages homeowners and landlords alike to clean up their properties as soon as the snow begins to recede. “It just benefits everybody,” she says. In 2016, the City’s bylaw enforcement office received 3,358 yard and lot maintenance complaints from residents, which is the primary way the City's yard and lot maintenance bylaw is enforced, down from 3,876 complaints in 2015. An accumulation of garbage topped the list of complaints, followed by long grass and the presence of weeds. Derelict vehicles also create problems for many landlords because there are "very few, if any” towing companies in London that will do unsolicited towing, Chapman says.
“Because we understand the property owner is trying to be proactive, we will waive the administration and inspection fee that typically would go along with that,” Chapman says. “We understand that they're trying to keep their properties looking nice but their hands are a little bit tied.”
The regulations are less clear cut if the vehicle has been left sitting but is still drivable. If there is just one vehicle, the City can’t remove it. But if there is more than one unlicensed vehicle (without current valid licence plates) in the parking area of a residential complex, a clause in the bylaw allows the City to treat the vehicles as refuse. This allows contractors to remove all vehicles but one, regardless of the condition; one must remain due to a stipulation in the zoning bylaw.
She encourages landlords to contact the bylaw enforcement office to determine if the vehicle on their property can legally be removed. To be eligible, the vehicle must be in inoperative condition, meaning it must have flat tires or be missing glass or parts that prevent it from running. After the property owner has made the request in writing, the City can remove the vehicle although the towing fees charged by the City’s contractor will become the property owner's responsibility.
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According to the City’s website, www.london.ca, common bylaw violations include: • Grass and weeds over 20 cm (8 in.) in height • The presence of a refrigerator, freezer, stove or other appliances • Open garbage, kitchen waste, cardboard and indoor furniture • Grass clippings, tree cuttings, brush, leaves and garden refuse • An accumulation of water exceeding 30 cm (12 in.) without a temporary barrier • Unmaintained swimming pool water • Graffiti • Uncontained refuse and refuse containers without covers When the City receives a complaint, a work order is sent to the property owner outlining the nature of the infraction. The City generally gives owners two weeks to clean up the property. “We're hoping for voluntary compliance, that they take the necessary action prior to the compliance date,” Chapman says. After that date, an officer returns and if the problem has been rectified the complaint is closed. If the problem is still evident, then enforcement action is taken. The property is inspected and the City arranges for its contractors to complete the cleanup. The City bills the owner or applies the cost of the work to the property owner's municipal tax bill. The City can also charge owners $215 for failing to comply with the bylaw. “We very rarely fine. We move to cleanup action almost 100 per cent of the time because it resolves the problem right away,” Chapman observes. In the first case, when a work order is issued, it’s the property owner's responsibility to ensure the property is maintained for 12 months from the date of the order. If there are further problems, an officer places a notice in the form of a door hanger on the front door. It lists the complaints and states that the owner has 24 to 72 hours to rectify the problems. “We're hoping that if they have good tenants, at least the tenants will pay attention to it and if they can’t take care of it, they’ll call the property owner and say the City has contacted us and needs you to do something,” Chapman says.
Sean McNally, owner of MCI Properties, owns townhouses as well as apartments above commercial properties in London. He says he tries to be proactive by giving garbage and recycling information to new tenants. He also drives by his properties regularly after garbage day. When there are issues, he sends a written notice to tenants. But if a problem is confined to a specific tenant, he contacts that person directly “to see if there’s some sort of challenge as to why they’re doing it and we work together to come up with solutions that work for both of us.” McNally says residents value curb appeal. “Five years ago it was a different tenant than it is now and curb appeal has become that much more important. Curb appeal really shows your brand — what you’re proud of and what you focus on as a company. I think it comes down to being involved and the landlord in general has to address things as they happen and not let them fall through the cracks. Problems won't fix themselves.”
President’s message Happy spring! I would like to extend a warm invitation to members and associates to come out and celebrate the 50th anniversary of the founding of LPMA at a party on May 9. The event, which will be held at the Greek Hellenic Centre from 5:30 to 8:30 PM, will honour the organization’s achievements. There will be cocktails and a buffet of hors d’oeuvres; please RSVP by April 27. We are particularly proud of the fact that LPMA demonstrates strength in numbers with its continued growth of 500-plus members. We held a Facebook contest in March to give away two floor seats to a London Lightning basketball game. Thank you to everyone who participated. We continue to offer education through our monthly meetings and seminars throughout the year. Our trade show and food drive, both held in April, boasted great turnouts. Please visit www.lpma.ca for full details.
Landlord licensing fee jumps dramatically in London
In 2016, the City cleaned up 696 properties at the owners’ expense, up from 410 in 2015. (The 2015 number was lower due to a 59-day labour stoppage by 750 inside workers at city hall.) Even so, Chapman says most owners take care of the work on their own.
Since January 1, fees for new residential licences in London, Ontario have tripled. But what makes the increase truly hard to bear is the way in which the fee change was introduced.
“The number of cleanups was 20 per cent of the complaints in 2016,” she adds.
The City of London increased its charges for a Residential Rental Unit Licence from $55 to $165 for new
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applications; the annual renewal fee still costs $55. The Residential Rental Units Licensing Bylaw was passed in 2009 and applies only to buildings with four or fewer rental units and converted dwellings. Rental units in apartment buildings and townhouses are exempt.
issues relevant to landlords. We have written to the mayor and members of council to request that the changes be repealed. So far, one councillor has replied. LPMA will continue to lobby council in the hopes of correcting these punitive and unfair measures.
According to media reports, the fee increase appears to be motivated by landlords who allegedly provided the City with inaccurate information in their application about their units, in particular the number of bedrooms, basement ceiling heights and the presence of windows.
By Emma Sims, Past President, LP
The Cityâ€™s website, www.london.ca, states that when applying for a new licence, property owners must now complete an application form for each rental property and a sketched floor plan that identifies the location of all rooms, windows, and entrances and exits. The fee increase covers the cost of having a property standards bylaw officer inspect the property to ensure the information on the application is accurate. An inspection will take place for licensing applications submitted to the City after January 1. What is troubling to LPMA is the way in which this proposed change came about. London City Council approved the new fee on December 19, but it wasnâ€™t until a reporter from The London Free Press contacted LPMA for a comment that we learned of the approved changes. A search of the Cityâ€™s website revealed an obscure notice posted on December 8 of a public participation meeting to be held on December 13 to discuss inspection protocols. This notice was also published in a community paper with limited circulation and not in a daily newspaper. Unfortunately, no LPMA members observed the notice. The meeting proceeded on December 13 with virtually no public participation. In addition, there was no consultation and no communication with LPMA with respect to the proposed changes despite the fact that City staff members, under the previous municipal leadership, notified us of
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Three big wins when you integrate resident screening Screening prospective residents is a crucial step in creating a safe and secure community and minimizing risk to your business. Background checks and credit reports help you reduce loss from collections, evictions and legal action. No matter which decision criteria you use to screen your residents, there’s a way you could save even more time while keeping your properties and profits secure. Using a resident screening solution that integrates with your property management platform allows you to make better rental decisions more quickly. In addition to being the smart choice in today’s fast-paced rental industry, integrated screening provides you with comprehensive reporting and analytics that let you know if your properties are on the right track. Save time & reduce errors Increase efficiency with just one system and one login that lets you get more done during the leasing process. Integrated screening software automatically populates information from the online leasing portal to the screening application, removing the need to enter applicant information on multiple forms and the risk of delays caused by inaccurate data. Did you know that decision criteria can be tailored for each of your properties to customize the screening of every applicant? Get accurate results and automated rental recommendations based on your pre-determined decision criteria. Approve only the renters that are right for you, instead of the ones who are just generically okay. Gain insight to improve processes An integrated resident screening system compares your screening process with the overall financial performance of your portfolio. You may have a number of properties in the same market in a certain neighbourhood – in some cases, directly across the street from each other – but with very different demographics. Integrated screening helps you drill into where the applicants are coming from at each of your properties. And it helps you select the highest quality residents for all of your properties.
Software collects the marketing source of each applicant that goes through the screening process. It then analyzes those sources to see which produced the highest and lowest quality residents. This insight lets you evaluate your marketing initiatives and determine if your screening process has any effect on your overall revenue. Integrated screening software also gives you the ability to conduct what-if scenarios that take market conditions and vacancy rate changes into consideration. This helps you adjust your scoring system to get the desired number of approvals. Appeal to the modern renter According to Informa Canada’s Canadian Multi-Res Tenant Rental Survey, the features residents desire most are high-speed Internet and online portals, indicating that they want landlords to be more tech savvy. Property managers should be thinking about increasing automation to engage with their prospective renters, and one way to do that is with a smoother transition from applicant to resident. Integrated screening caters to Millennials and other members of your target market by making sure their application experience is as effective as possible. When you offer one easy online application – without extra steps and paper waste – your property management business stands out from the crowd. Faster, smarter & more competitive In summary, integrated resident screening is a smart choice for your business because it speeds up leasing and gives you a detailed look into your screening process. You can use comprehensive reporting and scenario analysis to compare it with your property’s financial performance. This allows you to choose the best renters and quickly move on with your day. Being able to get more done with confidence? That’s a big win for any property manager! Peter Altobelli, HDAA Board Member & Vice President and General Manager, Yardi Canada Ltd.
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President’s message On Monday, March 20, 2017, The Hamilton Spectator published an article titled “Bill aims to plug rent increase loophole,” which described how New Democrat Peter Tabuns was introducing a Private Member’s Bill in the Legislature to eliminate the 1991 rent control exemption. Currently, annual rent increase caps only apply to residential buildings or units constructed before November 1991. This year the rent for those tenants could be increased by up to 1.5 per cent without the landlord applying to the Landlord and Tenant Board. Recent articles like the one in The Hamilton Spectator wrote about rent control are misleading. Calling the exemption a loophole is not the whole story. This slanted view ignores the fact that the government policy decision in 1991 actually worked as intended. By removing rent control on all new buildings, the hope was to spur more rental developments, which it did. New construction in Ontario (after a gap of about 30 years) is the result. Even though the majority of economists agree that rent control is not beneficial to tenants in the long run, the tenants and some policymakers are only looking at the shortterm impact of unexpected rent increases. Companies that are building today take a very long-term view of their investment because they are large enough to be able to absorb the initial losses. Rents in new buildings today are not enough to cover costs and the risks involved in development projects because the expenditures outweigh the income for many years during and after construction. The implementation of the exemption is the single most important driver for the development of new, badly needed purpose-built rental housing. Hamilton is expected to see a number of new buildings over the next few years, but only if this
exemption remains. This Bill, if passed, will stop the construction of thousands of units over the next few decades. Today's new housing may be expensive but it will be the affordable housing 30 to 50 years down the road. Affordability is a function of two things: the cost of the housing (which continues to go up as it ages) and incomes from rent (most of which are controlled by the government). Housing is expensive to build, which in part is due to high taxes from all levels of government. Ontario's housing stock is old and needs major upgrades, which must be recovered from rents; otherwise they won't happen. Municipalities in Ontario charge property taxes at two or three times the residential rate for multi-residential buildings even though the provincial government has set a guideline of 1 to 1.1 and put in place a mechanism for tax reductions to be passed onto tenants. Equalization of the tax rate would reduce rents in Hamilton for thousands of people by $100 or more a month. Anyone who is an advocate for tenants should put tax equalization and a guaranteed income for everyone at the top of the list. It is time for Ontario Works, ODSP and EI to be reworked so that every person in Ontario and across Canada has a guaranteed income that is sufficient to live on. Even though the Private Member’s Bill would have a negligible effect on members of the HDAA (because there are very few units in this category in Hamilton), it will have a huge impact on the landscape of the rental industry for years to come. If this Bill stops new construction today, when will the rental properties be built for our future generations of renters? Arun Pathak, President, HDAA
Hamilton and District Landlords Since 1960, the Hamilton and District Apartment Association has grown significantly. Our member landlords and property managers manage in excess of 30,000 units throughout Hamilton, Burlington, Brantford, Guelph, Mississauga, Oakville, St. Catharines and into the Niagara Peninsula. e association is a highly respected organization, sought out regularly by government, industry, media and the public. To join, submit the application form available at www.hamiltonapartmentassociation.ca, or contact HDAA at 289-208-5445. 50 | april 20 17
Recent Events Basic landlord forms We had a fabulous turnout for the second education seminar on March 8, 2017. The seminar walked people through the process of approving a tenant and exit strategies. Tina Novak gave some excellent tips to avoid problems down the road by doing it right from the rental application to the first missed rent payment. Don’t worry if you missed the seminar; we plan on doing it again!
Upcoming Events 2017 Selling a tenanted property It was standing room only at the REALTOR® CONNECTIONS Conference & Trade Show knowledge POD presentation. Lucie Brusse made a 20-minute presentation on why HDAA was a great association for realtors and their customers. She pointed out how important it was for new landlords to understand tenants’ rights and their responsibilities once a property has been purchased. It was such an important and informative presentation, the Realtors Association of Hamilton-Burlington (RAHB) has asked us to do it again!
Spring Hope Food Drive
A Night at the Races
Dinner meeting: Landlord corporate structuring, succession, estate and tax planning
CFAA Rental Housing Conference, Toronto
Morning education seminar: Human Rights Code
Dinner meeting: TBA
Morning education seminar: Landlord Tenant Board
Dinner meeting: TBA
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EOLO addresses liability at education event At its Spring Networking event on March 9, EOLO adopted a different format for two of the education sessions. Instead of presentations, we gathered together two panels of experienced property managers and other experts. Theresa Pelletier (Minto), Kelly Kerrigan (District) and Bev Johnson (Osgoode) addressed operational issues, including compliance with government regulations (such as Ministry of Labour rules), the 28 day notices of termination for domestic abuse, and dealing with insurers and adjusters over water damage in a building.
As far as property claims are concerned, 43% are due to water damage and 40% to fires (see Chart 1). Within the water category, almost half of all claims are due to burst pipes, and another 30% are due to overflow. Among fire claims, the most common causes are cooking and appliance malfunctions, while smoking is in third place.
Chart 1: Property claims - Frequency by major categories
In the second panel, Julie Chapdelaine (Minto), John Loubser (Timbercreek) and James Malcolm (AP Reid) addressed risk management and reducing insurance costs. Julie led off presenting slides about the frequency and severity of claims by category. In real estate, 71% of liability claims are based on slip, trip and fall incidents. Julie also noted, that â€œin the past decade, there have been more large awards from courts for personal injury [and] lost employment incomeâ€Śdue to slip and fall related injury.â€?
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John spoke to the key ways to minimize those common claims. To mitigate slip, trip and fall claims, landlords should maintain records of snow clearing, salting and sanding. They should require their snow removal contractors to do likewise, and check that the work is being done and the records are being kept. As well, resident managers, property managers and hands-on landlords should make a point of looking for possible tripping hazards as they go around their properties. Burst pipes can be reduced by notices to tenants about the danger of frozen pipes when winter is approaching, and by checking for open windows, especially in the first few weeks of freezing temperatures. To minimize damage from fires, the key step is to inspect smoke detectors, and record those inspections. Besides annual or semi-annual checks, another good practice is for repair staff to check the smoke detectors whenever they are in the unit for any other reason.
owner is probably subject to having any claim reduced based on the principle of co-insurance, which applies in most property policies. Third, James pointed out that buildings which are well kept and have a record of no or few claims are often eligible for reduced insurance rates. The panels were very well received. EOLO thanks the panelists, and plans to include a panel in upcoming education sessions.
Mark your calendars now for EOLO’s Fall Education & Networking event, to take place on Thursday, September 28.
James contributed several warnings. First, he noted that an attitude of not caring about safety can put a person’s insurance coverage in jeopardy, or at least delay claim resolution. For example, in a slip and fall incident, if there is no evidence that the responsible person ever cleared or salted a pathway, insurance coverage could potentially be denied. Insurance is to cover an occasional error, not wanton ignoring of responsibilities. Second, in terms of coverage, James warned that if a building is underinsured, the insured
BECOME AN EOLO MEMBER NOW! EOLO invites Ottawa area landlords to join the organization. Have your interests and concerns heard, and benefit from EOLO’s support. As an EOLO member, you will: • Receive prompt email notification of relevant City rule changes • Be able to attend two networking receptions each year • Be able to attend two free education events each year 54 | april 20 17
• Receive EOLO’s newsletter with more information about new issues and developments at the City and in provincial funding programs and landlord-tenant laws. To apply for membership, go to www.eolo.ca, download the membership application form and send it to us at the contact info on that website.
Licensing status and issues In Ottawa, ACORN (Association of Community Organizations for Reform Now), and other tenant advocates, are promoting landlord licensing. They have some traction among a few City Councillors, who are proposing pilot licensing projects in limited areas, such as Sandy Hill and around Algonquin College. As currently discussed, those pilot projects would be limited to landlords of small rental buildings.
In addition, Toronto has just passed a licensing bylaw, which will apply city-wide to larger buildings, namely those with 10 units or more, or more than three floors.
The Toronto bylaw requires • Names and contact information of all building owners • Names and contact information of the building operators • Specific information related to the building and related elements (e.g., materials used in construction, number of floors & units, accessibility features, availability of cooling spaces, heating & cooling systems, security features)
Tenant Board for orders or compensation for persistent maintenance or repair problems. • A licensing regime is not directed at the real problems (which exist in some few cases), but rather creates new requirements and offences. • The few landlords who ignore their obligations now are probably as likely to ignore licensing requirements, so that a licensing system will primarily impose new requirements and costs on people who are complying with the rules now. • Licensing regimes require landlords to file plans for maintenance and for garbage removal or for parking, when what is required is not a piece of paper in a City file cabinet, but rather the delivery of appropriate services. • It will require a bureaucracy to administer, when the City is trying to contain staffing and operating costs.
• Sub-metered electricity information including name of local distribution company/provider servicing
• It would raise the cost of rental housing, which will tend to make rental housing more expensive.
• Information relating to specific management and maintenance practices, and information requirements for the following defined areas:
• It would raise the hassle factor in operating rental housing, which will tend to reduce the supply, which will also tend to make rental housing more expensive.
Tenant service requests Tenant notifications Pest management Waste management plans and requirements Cleaning plan and requirements Licensed contractors for maintenance State of good repair capital plan Record keeping Not renting a unit to a new tenant where there is a property standards order related to the unit
Ottawa City Council considered exploring a broad licensing program in 2008 and rejected it by a vote of 23 to 1. EOLO and other opponents of landlord licensing make these points: • Landlords are heavily regulated now, with tenants able to call in City property standards officers to issue work orders, and tenants able to apply to the Landlord and
• In some cases it smacks of age discrimination because its driving force is often to try to keep student renters out of neighbourhoods. The proponents of licensing do not think through to the end point. The ultimate sanction in licensing is the cancellation of the license, but will that mean the landlord in question must stop renting the units in question. If that is not the case, what is the point? If that is the case, then the licensing regime will just have caused tenants to be evicted. The stated goal of more proponents is to get better maintenance. The way to achieve that is to make the property standards enforcement regime work, not to create another set of rules and another set of officials. EOLO opposes landlord licensing so that good landlords do not face more requirements and costs. We are in favour of effective enforcement of reasonable maintenance requirements by means other than licensing.
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February general meeting WRAMA held its second general meeting of the new year on Wednesday, February 8, 2017. In addition to two timely and informative guest speakers, President Andrew Macallum reminded members that they can stay informed about events and the latest in news impacting the rental industry by following WRAMA on Twitter @WRAMAprez. WRAMA welcomed two guest speakers: Erica McLerie, CMHC Senior Market Analyst, Office of the VP, Housing Markets and Indicators, and James Craig, President of the Kitchener Waterloo Association of Realtors & Senior Sales Associate, CBRE Capital Markets. Mr. Craig spoke to strong demand in the local market. Complementing his presentation to WRAMA members, the Kitchener-Waterloo Association of Realtors’ press release for January Home Sales stated, “President Craig points out that Waterloo region is in high demand. Getting into the housing market at the moment is not easy, and buyers need all the help they can get. It is more important than ever that you avail yourself of the professional knowledge of a local REALTOR® to guide you through these unique market conditions.”
Ms. McLerie provide detailed insight into the 2016 CMHC Rental Market Report Kitchener-Cambridge-Waterloo CMA. The report can be found at https://www.cmhcschl.gc.ca/odpub/esub/64399/64399_2016_A01.pdf?fr=148 6604290006.
After thanking property owners and managers for their participation in the CMHC report, Ms. McLerie acknowledged that the rental market is all about supply and demand. Factors that have influenced analysis results include a changing of boundaries by Wilmot township, impacting the CMA zones that are reflected in the report. With regard to vacancy rate, the market has been relatively flat over the past couple of years, with the overall vacancy rate remaining unchanged at 2.2%. With the lowest vacancy rates in Guelph and Peterborough and highest in Thunder Bay and Sudbury, Kitchener-Cambridge-Waterloo have maintained a middle ground in the province. Ms. McLerie attributed other influencing factors to there being fewer first-time buyers, with less people moving out of the rental market. Prices are also rising at a fast rate, so households who want to buy are having to stay in the rental market longer with hopes of saving for a down payment – not surprising given the gap between renting and owning is about $900 per month based on a three-bedroom unit. She cited other factors impacting demand, such as an increase in smaller households and downsizing, newcomers to Canada who typically rent when first landing, and a decrease in full-time employment, particularly between 15 and 24 year olds. On the supply side of things, Ms. McLerie suggested that the largest competing part of housing completions have been student rentals, including true rentals and rental through condo ownership, having an impact on the market. Waterloo is especially aware of this given the number of new, purpose-built student housing that has flooded the market over the past 10 years. From not having enough student housing in the mid-2000s to a substantial increase today, students have more choice and are making their lodging decisions based on amenities, proximity to campus, number of bedrooms per unit and affordability. In addition to Ms. McLerie’s presentation, an article published by the KitchenerWaterloo Record recently cited a report from CMHC that found “...between 2010 and 2015, enrolment surged by
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3200 students at Wilfred Laurier University and the University of Waterloo. Student housing surged by 8500 beds over this same period, with a further 3200 beds recently completed or under construction.” (KW Record, February 4, 2017) Market survey results suggested that demand in the region was so strong that the vacancy rate actually declined slightly. The intricacies of the data reflect various factors that impact either an increase or decrease in vacancy rate. The following table captures a few of the points Ms. McLerie spoke to.
Increase in vacancy rate
March gen WRAMA held its third general meeting of 2017 on Wednesday, March 8, 2017. With changes to the Region of Waterloo residential garbage and recycling curbside pick-up schedule starting on March 6 and with wet spring weather just around the corner, our three guest speakers were relevant, timely and informative. vacancy rate
David Moss, owner/operator of Just Junk Grand River, provided the audience with firsthand Buildings built before 1975 Buildings built between 1975 & 1989 accounts and pictures of situations where tenants have left Towers Mid-sized buildings (3-5 units) furniture, refuse and other unwanted items in apartments Rent range of approx. $1100/month Lower rent range that have been vacated. The connection between having to Townhomes clear these items out of a unit to begin cleaning and preparation for prospective tenants The forecast for 2017 sees an increase in vacancy rates was not lost on landlords and property managers. Mr. with more units planned for construction. The average Moss spoke from his experience as a rental property owner rent will increase and the movement to home ownership and emphasized the fast, local and professional support his will decrease. This will be balanced with a move by company provides to landlords as well as tenants. immigrants, young adults, students and seniors who are downsizing to push against a vacancy increase. New mortgage rules were not reflected in this report but will be included in 2017. Bachelor & 1-bedroom apartments
2 & 3-bedroom apartments
For more information, please contact Erica McLerie at email@example.com or 416 218-3318. Photo Courtesy of CMHC Photo Courtesy of Just Junk
Discover the benefits of being a member of our association: e mission of the Waterloo Regional Apartment Management Association is to actively and positively develop and sustain the integrity of its members’ business – the provision of private residential rental accommodation – in Waterloo, Kitchener, Cambridge, Guelph and surrounding areas. To view the full range of valuable property management resources we oﬀer our members, or to apply online go to http://wrama.com/, or contact WRAMA at 519-748-0703. 58 | april 20 17
eral meeting Photo Courtesy of Region of Waterloo
Attic Inspection Photo Courtesy of Green Trust Services
Kevin Green, registered home inspector and owner/operator of Green Trust Services, spoke to his experience as a home/building inspector and the importance of addressing seemingly small issues immediately before they grow into large and expensive problems. Perhaps the most common issue that he has seen is water related, primarily relating to roof integrity and then to interior plumbing issues. He suggested that old shingles look two to three times worse when looking down on them as opposed to looking from the ground.
Inspecting the roof of a structure annually by using binoculars will provide the information needed to plan replacement and repair. Mr. Green passed infrared cameras and moisture metres through the audience, allowing members to experience some of the science
Thermal Imaging Photo Courtesy of Green Trust Services
Thermal Imaging Photo Courtesy of Green Trust Services
that he uses in providing inspection data to owners and prospective owners. He emphasized that “...infrared imaging can detect water and moisture not seen with the naked eye, can show what’s going on, but cannot see through something.” Mr. Green spoke to “overfusing,” another common issue he sees in rental apartments with fuse boxes. To prevent blowing a fuse, tenants will sometimes install a fuse that is too large in the fuse box. This can lead to wires overheating and pose a possible fire hazard. One remedy could be to replace the fuse box with a modern breaker panel. Another might be to install a mini-breaker, which is more common in older, larger buildings. Always consult a certified electrician for advice and guidance with electrical issues. Megan Shackell and Jason Wilcox from Waste Solutions Canada closed the evening, introducing the audience to WSC, a third party provider and single point of contact that will review a current waste removal contract, look for savings and develop a proposal that is 100% independent and results based. Mr. Wilcox spoke to WSC offering a sustainability report, drawing a comparison between current costs and possible savings. With one in four waste invoices reviewed by Mr. Wilcox having errors, it might be prudent for landlords and property managers to be vigilant about the cost of waste removal. With offices in Calgary and Ontario, Waste Solutions Canada services clients across the country. By Andrew Macallum
Photo Courtesy of the Kitchener Record
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Previously known as “One last thing...,” this year we introduce the new Spin Cycle brought to you by Coinamatic. Catch the final spin with RHB’s Newsreel, delivered weekly to your inbox.
How to evaluate a brand name: 5 important questions Property owners and managers are often faced with internal and external marketing challenges that require considering both existing and future market conditions. Naming, or branding, is one of the trickiest aspects of the process. Whether it be a new product offering or property name, you don’t want to get it wrong. Here are a few helpful tips to get you going in the right direction.
1. Is the name distinctive? A great brand name is unique yet comfortable. To test the distinctiveness of a brand name, compare it to the competition. Create a list of all your direct and indirect competitors. Is your brand name following a trend, blending in or standing out?
2. Does the name support your positioning? The wrong name can stunt your brand. Evaluate your brand name through the lens of your customers. How do they relate to the brand compared to alternatives in the market? How do they identify with your product or property? Does the brand name reinforce that experience?
3. Can the name stretch? A key benefit of a functional brand name is that it clearly describes the product. Shredded Wheat is shredded wheat cereal. USPS is the United States Postal Service. Challenge your brand name. Would the name still fit if your company entered a new market or launched a new service?
4. Is the name easy to pronounce, and easy to spell? A great brand name should be easy to pronounce and easy to spell. Focus on words that are simple. A good test is to ask a group of 10 year olds to spell your brand name. If they struggle with it, look for another name.
5. Is the name sticky? Finally, is the brand name memorable? Does it stick in your customers’ minds and create a reference that they can come back to again and again? The more memorable a name, the more sales it can generate.
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