Keeping it Real

Ep 27 Navigating BC’s New Rental Rules: What Landlords and Tenants Need to Know

• Jacquie McCarnan • Season 1 • Episode 27

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Curious about how new rental regulations in British Columbia might redefine the landlord-tenant relationship? This episode of Keeping it Real promises to enlighten you on everything from prohibitions on rent hikes when minors move in to the introduction of a unique identifier system for landlords and tenants. Learn about the extended notice periods and the stricter one-year commitment requirement for landlords claiming personal use of their property, plus the significant $5,000 fines for rule violations. We aim to uncover how these updates could potentially curb bad faith evictions while spotlighting the persistent challenge of bad actors in the rental market.

Ever wondered how new tenancy rules might impact first-time home buyers and landlords? Through the real-life story of Jim and Sally, we shed light on the complexities they faced in purchasing a tenant-occupied condo amid fluctuating mortgage rates. Understand why these regulations might deter potential investors and how they could influence the broader real estate market. Discover why some buyers might now prefer vacant or owner-occupied units to avoid the intricacies of tenant notices and financing challenges. Tune in to grasp the full scope of these changes and their implications for both renters and property owners.

Residential Tenancy Act: https://www.bclaws.gov.bc.ca/civix/document/id/rs/rs/96406_01

Key Changes to the RTA: https://www.bcrea.bc.ca/legally-speaking/landlords-take-notice-recent-amendments-to-bc-tenancy-legislation-574/

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Speaker 1:

Hey everybody, welcome back to Keeping it Real, the Vancouver and area residential real estate podcast that aims to cut through all the baloney you hear around. I always like to say water cooler, but then that just totally ages me. Last week I tried a new cold opening and nobody really loved it. So we're back to the original. My name is Jackie McCarnon and I am your host for Keeping it Real. I am a North Vancouver and West Vancouver realtor. I work in Squamish, I do residential and some commercial leasing stuff and so if you ever have any questions about that sort of thing, you can always ask me. But this is not an ad or a call for business, just so you know. This podcast is designed entirely to provide information about the market that we all live and work in and to really help you understand any of the new stuff that's happening as we go To that end.

Speaker 1:

This podcast, this episode, is about the new residential tenancy branch rules, new rules to the act, and I chose to do this topic because I did a little video last week and linked to it in my High Five Friday newsletter and it was the most viewed page on my website all last week. So that kind of tells me that you're all really quite interested in what all these new rules mean. So, without further ado, let's jump right in. Okay? So for those of you who didn't watch the video last week, I'm just going to recap some of the new rules there. I can't put them all here because we'd be here all day, but so the ones that are making waves or highlights are you cannot. A landlord cannot add to the rent if a minor moves into the unit. So if somebody has a baby, the landlord can't say well, now you have more people in there, you have to pay more rent. And if the person moving in was a minor when the tenancy started, they also cannot be added to the rent. So the only way you can increase the rent for another person is if that person was an adult at the time the tenancy agreement was signed. Time the tenancy agreement was signed.

Speaker 1:

Another rule, a new part to the Act, is that there is now an authorized portal for giving notice. All notice has to be given through this portal and each landlord and tenant are given a unique identifier, which I guess is good, because, if I mean, I'm going to get into the minutiae of this after I tell you the new rules, but having a unique identifier means that bad actors who are reported through the portal will be reported over and over again, I think. I mean, I hope that's how it works. Notice for landlord use. It's currently up until the 18th of July. Notice for landlord use or for new owners is two months, but that is going to increase to four months.

Speaker 1:

Now, this one's a bit tricky In a rental building where there is only one owner and there are more than five units. Weird, oddly specific the tenant cannot be evicted for any reason. By the sound of things. Um, tenants now have 15 days or 30 days to dispute a notice to end tenancy, whereas it used to be 30 days. Uh, another one if the landlord ends tenancy, uh, the current rule is that the tenant gets one month's rent back, but under the new rule the tenant can withhold that last month's rent and if it's less than the and I'm making air quotes prescribed amount, then the landlord has to make up the difference. All right, guys, I looked everywhere. What is prescribed amount? I have no idea. Is there a prescribed amount of how much the landlord and the tenant agreed to pay back for one month's rent? I don't really know what the prescribed amount is and I was not able to find out. So if you know, if you're an expert on the RTA, maybe just let me know.

Speaker 1:

Another one of the new rules is if the landlord gives notice and states that they or a close family member or the new owners themselves are going to move in, that has to be true. So that is the circumstance for ending tenancy. That circumstance has to be true and it has to go on for at least a year. Now, previously it was six months. So a landlord who had a grossly under-rented, let's say, two-bedroom apartment rented for $1,000 in Vancouver, they could end the tenancy, move in themselves for six months or put a child or a parent in there and then move out at the end of that six months and rent it for $3,000 a month. So now it has to be a year, which is good, I guess, because it's going to discourage people from doing that. Another one if a landlord tries to charge more for the kids or fails to use the property in the stated circumstance that they used to end tenancy, there is now an additional $5,000 fine from the RTA on top of what they would have to pay to the wronged party, which would be the tenants. I'm not 100% sure that that is the case. I don't know if that $5,000 is it or if that actually goes to the RTA. But again, government website super hard to read. I'm just digging through it and finding almost as many questions as I'm answering David Eby, the minister for housing here in BC. I mean, this guy is busy, he's doing a lot of stuff, man. But he said that these proposed changes, or these changes, they're not proposed anymore, they're happening on July 18th. They are to eliminate or at least cut down on bad faith evictions, which you know what. That would be great if that's what's going to happen.

Speaker 1:

You've heard me mention unintended consequences of new legislation a number of times, particularly when we're talking about the province purchasing land for development or transit-oriented density, that sort of stuff. So there are lots of unintended consequences that are coming with these new changes to the Landlord Tenancy Act. But I think one of the things the elephant in the room, I guess is that the bad actors who got us here in the first place are probably going to continue to be bad actors and just wait to get caught. There are not enough staff at the Landlord Tenancy Branch to police all this. I guess they're hoping that that portal will flag things, and I hope that that's the case. But you know you're going to need a lot of people on the ground, boots on the ground, to make sure that these things are being adhered to, and I don't know that that's the case. I mean, I hope so.

Speaker 1:

In my video last week, the first line is this is why we can't have nice things, and that's the truth. If the majority of landlords in the lower mainland in British Columbia are great, they're great people. They work within the rules of the RTA, they do the inspection before and the inspection after and take the damage deposit, and you know they do all the things that they're supposed to do. They fill in all the forms and they behave in an ethical manner. The problem is there are some bad actors and those bad actors as with anything, you're always going to hear a whole lot more about the baddies than you are the goodies, and that's just the case here.

Speaker 1:

So what's happened in the past is that landlords are kicking out people for having a new baby or trying to add $500 a month to the rent to get their rent up to what they think it ought to be, and that's just shitty. I mean, I don't usually swear on this podcast. I do in my real life a lot, but I've been really good about not swearing here. But that, honestly, is the only word that would describe that kind of behavior. Another thing that those bad actors do is they move in a family member I'm making air quotes and that person maybe is not a family member, right? And they're charging them rent From the side of the people who are renting here in British Columbia. I think that these are probably really great rules. They protect the tenant considerably more than the tenant has been protected in the past. But again, if that tenant is in an apartment or a house with a really horrendous landlord that doesn't follow the rules, and if that tenant doesn't know the rules which is a whole other part of this podcast this is just going to continue to happen.

Speaker 1:

Which really brings me to the point that a lot of people do not understand the Residential Tenancy Act of British Columbia. I would think that if English is not your first language, it would be even more daunting. It is huge. I'm going to attach a link in the show notes because it's crazy and it's all in legal speak and I think, honestly, even for somebody who has. I only know how to speak English, which is very evidence when I try to speak French. Even for somebody who understands the language of that sort of language, it's a difficult act to get your head around, and so I think a lot of people might be overwhelmed by it, might not understand the rules. I think there ought to be a simplified version of this, without all the legal speak, that's translated into a way that people regular people can understand it. But I think that is a also a much bigger issue and I'm not holding out much hope that that's going to be managed.

Speaker 1:

We've gone through why this is a good thing for tenants. What we haven't talked about is why it's a good thing for landlords. I believe that the hope is that this will get rid of a lot of those bad actors and allow for the good landlords to shine through. I don't know if that's the case. I cannot find out any real reason why this is a benefit for landlords. And since it's not really a benefit to landlords, I think what we're going to see now are some unintended consequences, consequences, consequences of this new of these new rules. Let's talk about those. This new of these new rules, let's talk about those I'm going to talk about them in a story. Okay, all right. So we have. Let's say what names haven't? I used Jim and Sally because I'm a hundred years old. I guess those are the names I picked.

Speaker 1:

Jim and Sally are first time home buyers. They want to buy a condo, a one bedroom condo in North Vancouver for around $500,000. They're super excited. They have worked really hard. They've put together a down payment, maybe had a little help from mom and dad. They have spoken to a mortgage broker and the mortgage broker has them pre-approved for 80% of the purchase price for a mortgage because they're going to put 20% down to avoid the CMHC premium. So Jim and Sally, off they go. They're looking at places and their realtor is showing them anything that falls in their price range with very few parameters, anything that falls in their price range with very few parameters. So what ends up happening is Jim and Sally absolutely fall in love with a one-bedroom apartment that has a tenant in it.

Speaker 1:

Like many new homeowners, and particularly people who are looking for a place to live for themselves, they have an emotional connection now to this place. They really, really want it. They love it. It suits their needs. Lower Lonsdale, whatever, I don't know, I don't know, jim and Sally, I just made them up. But uh, so they, they make an offer on the place. Now they have, they've got their uh uh mortgage broker approval. They got it on, uh, july 1st.

Speaker 1:

Let's say they make an offer on this place July 15th but they want it vacant because they want to move in when they get there. Makes sense, right, they want to move in. It's their new home. They write up the offer with their realtor and they take the paperwork to their. It gets accepted and they take the paperwork to their mortgage broker. Paperwork to their. It gets accepted and they take the paperwork to their mortgage broker. Now they were given their mortgage pre-approval on July 1st and generally you get three months of a rate hold. So that's going to run out October 1st. However, if they make, they get an accepted offer on this place on July 15th and they want it to be vacant when they move in, that means that they cannot give the tenants notice until August 1st and since it's four months notice, they cannot move in until December 1st. Do you see the problem here? Their pre-approval only lasts until October 1st. December 1st is when they're going to need the money, so they will have to get pre-approved again on October 1st so that they will be able to afford the place when the time comes for possession and completion of the deal.

Speaker 1:

Now, in an economy where the mortgage rates are not going up and down, this probably would not be a big deal. But in an unstable economy where rates are going up, for example, they might be in big trouble because you know that three months could see a significant rate hike. Who knows, even a point or a point and a half it could happen, and we've seen it happen. So if that happens, if the rate goes up and they cannot get approved for the mortgage, they are either going to have to come up with more of a down payment or somehow get out of the deal, which is gosh. I don't even know how you get out of a deal at that point. I'm sure there's a course for that at the real estate board and I should probably take it, because I think we're going to find some people in situations like this.

Speaker 1:

As I was editing through this episode just now, I realized that this isn't the only time this sort of thing happens. When somebody buys at pre-sale, they put a you know, maybe a 5% down payment and over the couple of years that it takes to build the pre-sale, to build the actual units, they add more and more to that down payment and then at the time of completion they have to get their mortgage. And in some cases, particularly in the last few years, when somebody has got to the point where they have to get their mortgage, they can no longer qualify because the rate has jumped so much higher. So that's a real problem. But now it's going to extend to residential. For units that are tenanted, you anticipate a rate hike and then you adjust your budget accordingly so that if there is a rate hike you don't get caught. But that's kind of a drag for these poor, for poor Jim and Sally who are super excited about getting their first home. So it's important to know that, particularly if you buy and sell real estate.

Speaker 1:

I've had a few colleagues say to me that if somebody has a condo that is grossly under-rented so back to that example of a two-bedroom condo in Vancouver that's rented for $1,000, it's actually better for them to sell it and buy something else. But again, whoever buys that, the rent remains at $1,000 until for the next four months that person owns it, until they're able to move in. So I don't know like this is gonna. I think. I think this is there's going to be some upheaval with this. I can tell you right now that for my buyers that are looking for either an investment property or a first home, I am looking only at vacant or owner-occupied units, because having the tenant in there is going to make it so complicated for them, and these are people who don't want to wait four months or longer even, or who maybe even can't wait that long. Now I've been a renter and a homeowner in British Columbia and I can tell you that it certainly is easier on your stress levels if you are the owner of the home, because in the past the landlord was able to boot you out, to sell the place or a number of other reasons. So I mean it will allow for some renters to have a bit more peace of mind, that's for sure, if they know the act, if they know the recourse if their landlord doesn't follow the rules. But from a buying and selling real estate perspective, I think that and I'm not the only one who thinks this I think that it is actually going to cause some havoc and this would probably be a really good time for me to put in my disclaimer that anything you hear on this podcast is my opinion, based on my research and my experience. There are going to be lots of different opinions about this. Some of them are going to be very strong. The shakeup in our housing market is incredible these last couple of months, with a bunch of new rules for zoning, a bunch of new rules for transit oriented density, all the new Residential Tenancy Act rules Residential Tenancy Act rules. It's just it's. They've been really super busy over there in Victoria. I hope David Eby is going to be able to have a vacation soon because he must be working 24 hours a day at all this.

Speaker 1:

I always ask for feedback on the things you hear on this podcast and I have been getting some great feedback from a whole bunch of people. One of the major things, the major reason that I decided to do this as this week's podcast, was because I got a lot of attention on that video and people really wanted to know more. So that's what this is all about, and I hope that if you have some opinion about this, you would feel free to either email me or it's actually better if you leave the comments on Spotify or on the website, but you can email me just maybe not a ton of emails all on a Sunday afternoon, which has happened in the past, but I'm very interested to hear your opinions about this and obviously, depending on whether you own a rent, you're going to have a different opinion. Um, obviously, depending on whether you own a rent, you're going to have a different opinion. Next week we're going to dig into a little bit deeper about how these new rules are going to affect investment in real estate in the lower mainland, particularly Vancouver, squamish, north Vancouver, that area Um, because I have had people ask me about that and I'm going to spend the next week researching some more information about that. Thanks for joining me again. This has been awesome. This has been a good one. We definitely a lot of information in here.

Speaker 1:

I'm really enjoying doing the podcast and providing you guys with just my insight into what's going on. It's really good to help educate me as well, because I really have to dig deep into these subjects. You can get Keeping it Real on Spotify or Apple Podcasts or anywhere you get your podcasts really, or you can get it at NorthVanHomeSalescom under podcast. Usually, I like to add a little bit in about a local business or something I'm reading or doing, but I'm just going to leave it here today. If you have a recommendation for a local business or something I'm reading or doing, but I'm just going to, I'm going to leave it here today. If you have a recommendation for a local business you think deserves a shout out on the keeping it real podcast, please let me know. I'm more than happy to do that. If you believe in them, I will also believe in them. Have a wonderful weekend everybody. Thank you.

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Jacquie McCarnan

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