Landlords limited by rent increase legislation
“But I blame the often absentee landlords who do the bare minimum to keep the doors open and the rent flowing.” (Citizen, Sept. 22)
Actually that’s only a small part of the problem. The problem is legislative. If I own an apartment building that averages $700/month rent, each year I am legislated how much I can increase rents to cover additional costs. Next year it’s four per cent — so that means the rent goes from $700 to $728.
While renters may say that’s a big increase, take a look at the increase in costs to provide that rental to the tenant — insurance premiums go up as buildings age, utilities costs continue to rise, managers always want a raise (and if they’re good, obviously deserve one), repairs and maintenance costs increase every year and older buildings require more than newer ones, and interest rates are rising. So that four per cent increase likely doesn’t cover the owner’s cost of owning that building.
In comparison, imagine you have $10,000 in a mutual fund that earns you four per cent each year, but the mutual fund manager’s fees and their company’s operating costs are more, your mutual fund decreases. That’s similar to what happens above with being mandated to a legislated increase in rents — buildings can actually LOSE value (depending on turnover or other market conditions of course).
Most owners want high quality buildings and want to be able to spend on renovations and better repairs to their buildings, but when the costs outweigh the benefits, then that’s why older buildings continue to look old and owners look like they’re only doing the “bare minimum to keep the doors open”.
P.S. Yes I realize there are different ways landlords/owners can raise rents, but this is a direct response to that quoted comment in the editorial above.
Bruce R. Findlay, president
Lazarus Ventures Inc.