Rental support leaves landlords in precarious position: advocate

Photo: Glacier Media

A B.C. emergency-response rental package that could balloon above $1 billion over the next 90 days will leave landlords exposed to huge losses, according to agents and LandlordBC.

Tenant advocates are openly wondering if it even makes sense to pay rent.

In a response to the COVID-19 crisis, the March 25 announcement by the provincial government will end virtually all rental evictions – including those currently in process – freeze rental increases, and pay $500 direct to landlords to help tenants battling job and income losses over the next three months.

Despite the good intentions, many say the unprecedented program is wide open to abuse.

The new rental supplement is in addition to federal and provincial programs announced to offer financial aid to those who lose income due to the health crisis.

Mark Goodman, a multi-family real estate specialist with Goodman Commercial Inc. Vancouver, estimates B.C.'s rental aid package could add up to more than $1 billion over the next three months, but argued it is landlords who could end up paying the most. The $500 paid directly to the landlord will not compensate for losses from the rental increase freeze, Goodman said.

This is particularly evident in Metro Vancouver, he said, where the average rent is now more than $2,300. 

While the $500 payment direct to landlords is welcome, David Hutniak, CEO of LandlordBC, said that, with no potential for evictions, landlords have little protection if a tenant refuses to pay the balance.

“This is wide open to potential abuse,” Hutniak said. He hopes common decency will keep abuses in check.

“Two-thirds of landlords in Metro Vancouver are mom-and-pop situations,” Hutniak said, which includes people renting out a basement suite or a condominium to help cover the highest mortgage costs in the country. These owners are also struggling during the current crisis, Hutniak said.

“We have heard advocates speak about landlords getting mortgage deferrals so they can 'pass those savings on to renters.' But a mortgage deferral by a bank does not constitute any savings to the landlord. It has to be paid back with compound interest on the deferred amount.  In other words, interest upon interest," Hutniak explained. Any deferred amount is added to the mortgage principal, whereas a landlord doesn’t have any security for deferred rent from a tenant, he noted.

"It is the government’s expectation that all renters, including those renters impacted by the COVID-19 crisis, who have the capacity to pay rent do the responsible thing and pay their rent,” Hutniak added.