Are ren­tal by­laws good for a strata?

Penticton Herald - - OPINION - TONY GIOVENTU

Dear Tony: Our strata is con­sid­er­ing a ren­tal by­law that lim­its the num­ber of rentals to 10 out of 100 units. We are slowly see­ing the num­ber of rentals and Air BnB’s in­crease to the point where less than 50 per cent of the res­i­dents are own­ers and their fam­i­lies.

An owner brought a re­al­tor to our last gen­eral meet­ing who ad­vised ren­tal by­laws would harm our prop­erty val­ues and pre­vent buy­ers from look­ing at our prop­erty. On a side note this per­son also acts as the agent for a num­ber of the rentals so his opinion was en­tirely self­serv­ing.

Is there any data that in­di­cates rentals have an im­pact on prop­erty val­ues or use of prop­erty? — Neil Mil­lar

Dear Neil: A ren­tal by­law re­strict­ing the num­ber of rentals may not by it­self im­pact value or use of prop­erty ei­ther pos­i­tively or neg­a­tively. Like all hous­ing af­ford­abil­ity is­sues there are lay­ers of con­di­tions that com­bined may re­sult in ei­ther a neg­a­tive or pos­i­tive out­come.

In my ex­pe­ri­ence, re­gard­less of the type of by­laws and re­stric­tions, if your strata cor­po­ra­tion is well man­aged, well main­tained, well-funded and op­er­ates un­der an en­force­able set of by­laws, your com­mu­nity can be as­sured of the best prop­erty val­ues and de­mands. CHOA has many mem­bers across the province that meet those con­di­tions with buy­ers on wait­ing lists.

Be­fore you adopt a ren­tal by­law, look at your dis­clo­sure state­ment. Your strata was filed in Au­gust 2010 so I sus­pect there is a ren­tal dis­clo­sure ex­emp­tion on your strata lots any­how.

In 2016 CHOA un­der­took a di­rect survey of 16 build­ings in Van­cou­ver to iden­tify if there was any im­pact on hous­ing af­ford­abil­ity, oc­cu­pancy and ren­tal by­laws.

Eight of the build­ings were con­structed since 2010 with no ren­tal re­stric­tions and 8 build­ings were con­structed be­fore 2010 with 7 out of eight with ren­tal by­laws. 2010 was se­lected as the leg­is­la­tion changed per­mit­ting the de­vel­oper to adopt a ren­tal dis­clo­sure that es­sen­tially pre­vented ren­tal by­laws.

The re­sults were rather sur­pris­ing. The build­ings con­structed since 2010 or with no ren­tal by­laws had the high­est va­cancy rates be­tween 19 and 39 per cent and the high­est turnover of sales.

From the in­for­ma­tion vol­un­teered by own­ers, they also boasted the high­est ren­tal rates and the high­est use by Air BnB and other short term ser­vices.

The build­ings con­structed be­fore 2010 that had ren­tal re­stric­tions and lim­ited the num­ber of rentals (none pro­hib­ited rentals) had the low­est va­cancy rates of 1-4 per cent.

They pro­vided sta­ble af­ford­able hous­ing to both own­ers and ten­ants and had the low­est turnover of own­ers of mar­ket sales and the low­est use by Air BnB and short term ac­com­mo­da­tions.

From the data it was ev­i­dent the dif­fer­ence was ren­tal by­laws are lim­it­ing real es­tate spec­u­la­tion in com­mu­ni­ties with ren­tal by­laws.

In com­par­i­son to mar­ket sales for both clas­si­fi­ca­tions of prop­er­ties, nei­ther type of prop­erty ex­pe­ri­enced neg­a­tive im­pact on prop­erty val­ues or mar­ket sales. A 2017 up­date of the data has not in­di­cated any sub­stan­tial shift in the data but there is one sig­nif­i­cant im­pact that sev­eral strata coun­cils iden­ti­fied.

By main­tain­ing their ren­tal by­laws they have built com­mu­ni­ties with lower tran­siency in both ten­ancy and own­er­ship and have been ca­pa­ble of main­tain­ing the in­tegrity of the na­ture of their com­mu­ni­ties.

As one coun­cil also pointed out, “the ren­tal by­law dis­cour­aged an investor spec­u­la­tor from drop­ping in and buy­ing out 25 per cent of our units as they would not be able to rent while hav­ing to main­tain the ex­penses on va­cant units.”

Do ren­tal by­laws af­fect prop­erty val­ues? Pos­si­bly, but they may also pro­tect your prop­er­ties from spec­u­la­tors and en­sure pre­dictable af­ford­abil­ity.

No two strata com­mu­ni­ties in B.C. are iden­ti­cal. Adopt by­laws that are rel­e­vant to the in­ter­ests of your com­mu­nity, and don’t be pres­sured by ex­ter­nal self­in­ter­ested par­ties.

Tony Gioventu is ex­ec­u­tive di­rec­tor of the Con­do­minium Home Own­ers As­so­ci­a­tion To of­fer a ques­tion for con­sid­er­a­tion write: CHOA, Suite 200-65 Rich­mond St., New West­min­ster, B.C., V3L 595 or email: tony@choa.bc.ca.

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