B.C. Assessment's rising property valuations on Prince George residential rental properties and other increased expenditures has been causing stress to my small business and tenants.
The main problem in Prince George's housing rental industry over the last few years is that overhead is dramatically rising faster than net rent income.
Landlord costs - such as city taxes and fees, utilities, maintenance, insurance, bank interests, labour, heat, electricity and replacement costs - are rising much quicker than the legal rent increases. The business has developed into a value trap.
The banks are unenthusiastic to lend to buyers of small residential rental properties at a reasonable price and down payment because of the low net income. Likewise, banks charge a high short term loan interest rate to the owner, due to the liabilities of an aging building with low revenue.
Insurance premiums have more than doubled on buildings 40 years and older in the past few years. Many insurance companies refuse to insure older buildings. Three years ago, my building coverage was refused by my longterm insurance company, solely based on the age of the structure.
The municipality's tax and other fee rates on residential rental properties have climbed significantly. Not surprisingly, B.C. Property Assessment notices on rental units such as my residential fourplex, have also dramatically gone up.
My assessment notice, city rental property tax, utility notice, business license and other city fees, have gone up over 75 per cent in the last five years.
Two times in the last four years, B.C. Assessment validated their dramatic assessment increases to me by saying I have a strong business at a low assessment value.
Ironically, however, my banks and insurance company declare the opposite to justify their higher charge. As a landlord and building manager for many years, I know the banks are right.
A residential rental building is only as valuable as the net cash it brings in, after all it's only a small business. As it stands right now, most small Prince George domestic rental units could not support a large mortgage at the value of their B.C. assessment.
My bank, insurance company, and some of the renters know that the tenant rental industry is not sustainable, but do the many layers of government understand?
Mark Clements
Vancouver
