Rental housing associations look ahead to the rest of 2021 By David Gargaro
According to CMHC’s Housing Market Outlook for Spring 2021, rental demand is expected to recover when immigration returns to normal levels, and the labour market improves. However, vacancy rates are expected to remain higher than normal for some time, particularly in markets with high numbers of purpose-built rental developments coming onto the market. Bob Dugan, CMHC Chief Economist, believes that economic conditions “are expected to return to prepandemic levels by the end of 2023…” In this month’s issue, we asked those of our esteemed RENTT (Rental Executives National Think Tank) panellists who are leaders of rental housing associations across Canada to assess the industry amid the pandemic at the midpoint of 2021. They discussed what they project for the remainder of the year with respect to vacancy rates and rents, the impact of government mandates and incentives on the industry, and what industry members need for their businesses moving forward.
RENTT experts: • David Hutniak, CEO, LandlordBC • Donna Monkhouse, Executive Director, Alberta Residential Landlord Association (ARLA) • Cameron Choquette, CEO, Saskatchewan Landlord Association • Tina Novak, President, Hamilton & District Apartment Association (HDAA) • Shane Haskell, President, London Property Management Association (LPMA) • Kevin Russell, Executive Director, Investment Property Owners Association of Nova Scotia (IPOANS) • John Dickie, President, Canadian Federation of Apartment Associations (CFAA) (We’d like to congratulation Tina Novak and Shane Haskell for their recent elections as presidents of their respective associations.)
RHB: Welcome to RHB Magazine’s RENTT panel. We appreciate the time and effort involved in participating in today’s discussion and sharing your experience. Our readers will benefit from your input. Today we’d like to take a look at what has happened over the past six months, as well as what to expect moving forward. What do you project for the rest of the year with respect to vacancy rates and rents? David Hutniak: With BC’s “restart” initiative
announced May 26, assuming the vaccine rollout continues as robustly as it is, and we do not experience any setbacks to the progress made in
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terms of new case counts, we expect to move to something resembling a pre-pandemic market, which means vacancies in the 1 per cent and higher range by the end of the year.
Donna Monkhouse: People aren’t moving
to Alberta. People are buying homes because
interest rates are low and they’ve saved money due to lockdowns and restrictions for down payments. This has created a lot of vacancies in a high vacancy rate market. We’ve seen vacancy rates as high as 15 per cent to 50 per cent in some parts of the province. Rents are being offset by increased incentives to attract tenants. We’re hopeful that in September, vacancies will make their way downward and there will be relief for landlords.
in-person classes, increased immigration, and a return to normal business, elevated vacancy rates should fall. In turn, that should strengthen rents in those areas.
Cameron Choquette: We are optimistic that
challenged because of the BC government’s extension of the rent increase freeze through to the end of 2021. However, we do not expect an extension of that measure into 2022, as the government is aware of the challenges our sector is experiencing with expenses increasing.
vacancy rates will stabilize at a more normal rate and rents will move upward, as we see the demand for rental units increase in major cities. Saskatchewan’s real estate market is hot, which has motivated sellers to cash in and turn to rentals for housing over the next year, while they wait for the market to cool down. These new renters have been keeping vacancy low in our province’s newer and more expensive rental units.
Tina Novak: Hamilton continues to struggle with affordable supply of rental units. There are not enough units in the city to keep up with demand. Prices will increase with a demand on limited stock. Just the other day, a local news broadcast reported that, on turnover, average rents in Hamilton have increased at the rate of 25 per cent. I see this trend continuing well into the end of this year and next.
Shane Haskell: In London, we anticipate
RHB: How have federal or provincial government mandates and incentives affected the rental housing industry in your region? David Hutniak: Unfortunately, revenues are
Donna Monkhouse: The Rent Assistance
Benefit just opened April 1, so it’s too new to tell how effective it will be. The program replaced the Direct to Tenant Rent Supplement, a longtime benefit that subsidized Albertans with low incomes. This new benefit will open affordable housing for people who have been waiting for it for a long time. A new Temporary Rent Assistance Benefit opened for applications. It will help other eligible tenants stabilize their situations and pay their rent. That benefit will help people get back on their feet and help the economy.
Cameron Choquette: The Government of
vacancy rates to continue to be at a historic low as the cost of purchasing a home is so high. The real estate market has seen a dramatic increase in the average home price over the past few years, driving many people out of homeownership. Market rents will stabilize as the price of purchasing stabilizes.
Saskatchewan recently passed amendments to our Residential Tenancies Act, which will reduce claim periods for applications and provide clarity for landlords and tenants. The Saskatchewan Housing Benefit has been expanded to increase engagement with low-income renters in our province, a change that is supported by our members.
Kevin Russell: In Halifax, we started seeing
Tina Novak: The federal government’s financial
softness in the market last September, and vacancy rates have risen since, going from 1.9 per cent to around 2.5 to 2.6 per cent. However, rental providers are well positioned for growth when normality returns. We expect to see inward migration increase and students returning to in-person classes. We should see vacancy rates return to pre-pandemic levels.
John Dickie: Vacancy rates vary between cities, and within some cities. The common factors are the impact of COVID-19 on rental demand, including an area’s economy, and reduced demand in the centres of large cities, and in areas serving universities and colleges that went to remote learning. With students going back to
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support of development of housing has resulted in many cranes in the sky in Hamilton, and in plans for new developments. Many landlords have decided to place their residential rental stock up for sale due to the increased value of the housing for owner occupation. When a landlord removes a home from the rental inventory, that has a devastating trickle-down effect, including the displacement of lower rental rates and choices for tenants. Many small landlords are frustrated with government rules preventing them from increasing rents of currently occupied units, the moratorium on evictions, and the backlog of applications at the Landlord Tenant Board.
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Shane Haskell: CERB has helped residents to
keep on top of their rent payments, and there are lower turnover costs as there are fewer moveouts. However, we’re seeing lower net rental income, as a zero per cent annual rent increase is in place for 2021. We have higher utility costs as more tenants stay at home. More tenants do not want to move out due to higher market rents, so it’s cheaper to stay put. LTB hearings are significantly delayed, and no eviction enforcements were allowed during the lockdowns.
Kevin Russell: There’s a 2 per cent rent cap in
place for tenants who renew, and the government might extend the cap. The cap does not cover expenses. We’re seeing dramatic increases in construction materials, maintenance expenses, and so on, and landlords are losing money or treading water. With rising property values and higher demand, smaller landlords are taking the opportunity to sell their properties. Purchasers are converting some to single-use dwellings, which is reducing the availability of rental properties.
John Dickie: Federal government relief
payments for COVID-19 supported rental housing demand and tenants’ ability to pay their rents, even though the relief was not targeted at rent payments. The negative government impact on rental housing providers has come from the rent freezes and eviction moratoria imposed in different provinces for different periods of time. In Ontario, the Landlord and Tenant Board was seriously backed up when COVID-19 struck, but the Board is now reducing its backlog, and processing applications less slowly than it was.
RHB: What do your members need to move forward and return to normal? David Hutniak: We’d like increased certainty in
terms of revenue so that we can make investment decisions in terms of capex expenditures for existing rental and the construction of new purpose-built rental (PBR). This means no more rent increase freezes. Also of assistance would be the introduction of the promised Additional Rent Increase process this summer, which was originally promised in early 2019.
Donna Monkhouse: We need people to start
renting again. Our costs of running buildings did not stop and there was no relief for the rental industry from any levels of government. Any reductions in costs would be welcome. We still need staff to clean and maintain the buildings and
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we still have to pay utilities. We need the economy to recover so we can get more tenants and reduce the vacancy rates. Getting students back to school and people back to work will help boost the economy and get more tenants in buildings.
Cameron Choquette: Our members need the
new income assistance program in Saskatchewan to be amended to allow for direct payment to landlords. We’re proud to provide housing to low-income families, but we need the support of our government to provide stable housing with consistent rent payments.
Tina Novak: We operate for-profit businesses.
While housing is an essential need, so is food, but governments do not dictate to grocery stores how much they can charge for the food they sell, and yet they tell us how much we can increase our rent and when we can increase it. No sensible rental housing provider is going to do put their investment at risk by outpricing their building in the market, or operating a dirty or unsafe building that no one wants to live in. Empty buildings do not make money. Sound businesses decisions make this all happen, not continued bureaucracy that makes being a housing provider very frustrating.
Shane Haskell: The future will never be what
we considered normal previously. It will be a combination of what we once knew, what we’ve learned, and what we will continue to learn, as we adapt to the new way of operating. Members should have plans in place for potential future pandemics, lockdowns, recovery, and revitalization.
Kevin Russell: Getting rid of the temporary 2
per cent rent cap will return some enthusiasm for the rental market. Ending the shutdown will also help to reopen the economy and help to remove uncertainty from the market.
John Dickie: Rental housing providers need
several provincial governments to allow their rent freezes to expire when each government has said they will end. New limits on rent increases need to be removed, and not re-imposed. A return to in-person shopping, personal services, and dining out would also restore the incomes of many service workers, who are struggling financially. Those changes would take us all as close to normal as we will be able to get.
RHB: Thank you for your input.
RHB, RHB Magazine, RENTT, Rental housing associations, LandlordBC, ARLA, SLA, HDAA, LPMA, IPOANS, CFAA
Published on Jul 9, 2021
RHB, RHB Magazine, RENTT, Rental housing associations, LandlordBC, ARLA, SLA, HDAA, LPMA, IPOANS, CFAA