Surging Property Taxes Mean Surging Rents

Each January, B.C. property owners receive an updated assessment of the value of their properties. Spoiler alert: the values mostly go up.

These letters can make a lot of people giddy – but for rental property owners and managers, they usually mean a big increase in property taxes.

And this year, that situation is even more frustrating. Last fall, the province cut by two per cent the annual rent increase that landlords can charge. The maximum increase is 2.5 per cent. David Hutniak, the head of LandlordBC, says this will fall far short of what most landlords will need to keep up with increased costs.

The result, Hutniak says, will be a slide in maintenance of rental properties and an increase in renovictions . When rental properties see an increase of up to 13 percent in property taxes year over year, something has to give.

“The challenge is, B.C. Assessment bases the value on landlords being able to charge market rent. But with rent control, that’s just not the case.”

Daniel Greenhalgh, ENM’s co-founder, thinks the assessments ultimately hurt the ability of developers like us to take on the risks of building purpose-built rental properties.

“These assessments, and the increase in property taxes that come with them, mean that over time, the returns may no longer keep up with the costs. When your only source of income is rent, and there are restrictions put on that, eventually, it’s not going to make economic sense.”

Meanwhile, the most pressing need for addressing the province’s housing crisis is an increase in rental housing. But when politicians who advocate for affordable housing do nothing to address inflated assessment increases, that need will be harder and harder to meet.

“We want to work with the provincial government to help them meet their goal of building 114,000 new affordable homes over the next ten years,” says Dan. “But when we’re hit with so many new taxes and fees, new DCCs, on top of this unprecedented annual increase in property taxes – it’s a dire situation for developers of rental properties. Unfortunately, the cost will ultimately be paid by tenants through annual maximum rent increases and a reduction in investments in maintenance and repairs.”

LandlordBC has reached out to the province to address their concern about assessments.