Higher prop­erty taxes, util­i­ties have land­lords feel­ing the pinch

Regina Leader-Post - - CITY + REGION - CRAIG BAIRD cbaird@postmedia.com twit­ter.com/craig­baird

As op­tions for renters in Regina in­crease, land­lords are deal­ing with higher prop­erty taxes, but of­ten with­out the abil­ity to raise rents. A rental va­cancy rate of 5.5 per cent, a prop­erty tax re­assess­ment, two mill rate in­creases and a util­ity rate in­crease have com­bined to hit some land­lords hard.

“It re­duces your monthly cash flow,” said Brett Ack­er­man, owner of seven prop­er­ties in the city. “In the last three years, rents have de­clined in the city and then you start adding on ris­ing prop­erty taxes.”

Be­tween 2009 and 2016, the mill rate has in­creased be­tween 3.9 and 5.88 per cent each year. The mill rate in­crease of 6.49 per cent this year will re­sult in the av­er­age home­owner of a $350,000 prop­erty pay­ing just un­der $120 ex­tra a year. That in­crease is small in com­par­i­son to the $100-a-month in­crease Ack­er­man is see­ing on some of his prop­er­ties due to the re­cent prop­erty tax re­assess­ment.

“Prop­er­ties are be­ing ham­mered hard by that. I am ap­peal­ing a few be­cause they have taken so much of an in­crease on any­thing with mul­ti­ple units,” he said.

“As a land­lord, I have prop­er­ties go­ing up $100 a month in prop­erty tax. That is a whole dif­fer­ent is­sue. I don’t think the tax­a­tion model is per­fectly fair.”

Util­ity rates have also in­creased this year, up four per cent, which Ack­er­man says puts a fur­ther strain on rental prop­er­ties.

“The util­ity rates are out of hand, es­pe­cially wa­ter and sewer,” he said. “The wa­ter bill was $25 a month years ago, today it is $65 be­fore you use a drop of wa­ter.”

While the in­creased costs are making things dif­fi­cult for man­ag­ing rental prof­its, Ack­er­man said he does un­der­stand the sit­u­a­tion the city is in and its need to in­crease the mill rate to gen­er­ate rev­enue.

“I don’t think there is a lot the city can do. I think it is more the prov­ince,” he said. “The city is at the mercy of the gov­ern­ment. They only have so much to work with.”

Ja­son Hall, a land­lord with mul­ti­ple prop­er­ties in the city, is also try­ing to man­age in­creased prop­erty costs in a wide-open rental mar­ket.

“As much as you want to in­crease, if the mar­ket won’t han­dle that, you can in­crease it all you want but it will be empty,” he said.

“It is an ex­pense added on to what we al­ready have a hard time af­ford­ing.”

Hall agreed that since the mar­ket is favour­ing renters, it of­ten re­sults in land­lords un­able to raise rents.

“I think it would be crazy for a land­lord to pass this on to the ten­ant be­cause they can just go down the street to some­one who is not go­ing to raise the rent.”

An­other is­sue, ac­cord­ing to Hall, is the charg­ing of PST on con­struc­tion, which was brought in by the pro­vin­cial gov­ern­ment on April 1.

“Ev­ery time some­one moves out, there is a ren­o­va­tion hap­pen­ing,” Hall said. “There is one out of 10 where some­one moves out where we don’t have to do some work. A guy who was paint­ing for you be­fore now has to charge you PST.”

De­spite the in­crease, Hall agreed with Ack­er­man that it is not the city’s fault mill rates are in­creas­ing.

“I think it is the pro­vin­cial gov­ern­ment im­pact­ing the city ... the city is look­ing at ways to in­crease its rev­enue,” Hall said.

“It is not good news for any prop­erty owner or home­owner. If you have one house, it is prob­a­bly not as bad as some­one who owns 150.”

MICHAEL BELL

Brett Ack­er­man says some of his rental prop­er­ties are sub­ject to tax in­creases of $100 per month in an en­vi­ron­ment where land­lords can’t af­ford to pass on in­creases to ten­ants.

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