Just like The Joker is to Batman or Dr. Evil is to Austin Powers, Rent Control is the enemy to a Landlord. I know the claims of many renters and government representatives: “Without rent control, people couldn’t afford to rent!” I ask, what happened to the basics of economics – the law of supply and demand?
I’m not an Economist, but I do understand that what the “market”, in this case a renter, is willing to pay for any particular unit is what that unit is worth. If you, Mr. Landlord, raise your rents too high then your tenant will leave and you will have a vacant property that you can’t fill.
Rent control is intended to protect tenants from bad landlords. And, I do understand the purpose it was intended for. What it effectively does is create run down properties through the handcuffs it puts on landlords. Instead of putting money into property improvements, landlords of rent controlled properties find themselves paying more for utilities, taxes, insurance, etc. and not being able to recover the costs through rent increases. This means less money for improvements.
Have you wondered why developers no longer build new apartment buildings? Developers choose to build condos instead because it’s very difficult to make money on a newly developed apartment building these days. Rent control is one of the biggest factors why.
In B.C. where we hold a handful of rental properties, the maximum you can increase your rent to a current tenant within 2008 is 3.8%. On all of our B.C. properties, taxes alone on these units increased at least 5% over last year – and that’s just taxes! Insurance on our properties goes up at least 5% each year and I don’t want to even get into what’s happening with hydro and garbage costs. If our rental income can only increase 3.8% each year there is no way we keep up with the costs of owning the rental until the tenant moves out and we can move up the rent at that time – IF the market will bear it. Which is my point, why can utility companies, gas companies, retail companies, etc. all increase their costs to customers when it’s necessary, yet landlords can’t follow suit? When the vacancy rate is at an all time low of sub 2% in much of Vancouver and on Vancouver Island, and housing costs are at an all time high, why must a landlord pay for increasing costs while the tenant keeps paying the same, low amount?
One final point about rent control, if rent control was abolished and landlords in their greedy ways started jacking up rents by 10% or 20%, many tenants would simply relocate. Thus, leaving the landlord with an empty unit and having to spend money to place a new tenant. This would force the landlords to maintain their properties in better condition, and a wise landlord would quickly adjust their practices. It’s much better to keep a good tenant at their current rent than risk losing them because you are increasing their rent too much.
Supply and demand, the market (renters) should decide what your rental unit is worth, not the government.