Nenshi stirs up a hornets nest with his landlord gouging comments

[Regular_John]

Originally Posted by photon

He should be telling those people to call Service Alberta about their landlords breaking the law without correct amount of notice.

And there's reasonable reasons for a large increase, if a place hasn't had a rent increase for a decade, someone buys it, and has to increase rent by 30-40% just to bring it up to cover the mortgage. Or the owner was okay with low rents because they bought it 20 years ago but brings it up to market value because they pulled some money out.

But like Slava said, how much profit is ethical to make? I don't think having the government decide how much rent is reasonable would go over very well here.

Pretty much this. But there's a ton of confusion/bad information out there about landlord/tenant rights in this province. Add into this the major hassle of moving and dealing with housing and much of the action/energy gets directed into the wrong channels.

I'd also speculate that many tenants with a genuine grievance with their landlord are likely to choose not to rock the boat with their landlord by going the Service Alberta route. They either accept their lumps, or choose to move.

It's the basic "don't **** where you eat" scenario. Even if my landlord is 100% in the wrong, it's still a roof over my head in a tight rental market. So complaining to the mayor/city hall about it seems less likely to result in blow back then going to Service Alberta.

I haven't rented in a few years now, but the last place I rented the landlord decided to sell the property and evict all the tenants, which guess what, is illegal and against the Service Alberta laws about selling rental properties. But given the situation I could either spend my limited time/energy towards fighting my landlord (who's in the middle of a real estate deal) or finding a new place to live. Guess which avenue I took?

[rohara66]

Just to clarify but if the lease is ending the new lease rent can be raised as high as the landlord wants.

At the end of the day its supply and demand.... if Nenshi has a problem with the demand than maybe he should get council/planning/city on board with expediting development approvals and construction in the City to create more supply.

[itcrossedtheline]

The one thing that makes me laugh is what happens if the situations were reversed and there were plenty of rentals available. Would renters be willing to pay extra in order to keep landlords whole? Probably not.

As said above it does suck balls if you're renting now and rates are high, it also doesn't help that people are constantly moving here all time. The only part of Nenshi's comments i agree with are raising rents without the right amount of notice and stuff like that should be dealt with.

[FlamesAddiction]

Originally Posted by rohara66

Just to clarify but if the lease is ending the new lease rent can be raised as high as the landlord wants.

At the end of the day its supply and demand.... if Nenshi has a problem with the demand than maybe he should get council/planning/city on board with expediting development approvals and construction in the City to create more supply.

I agree. The City has the power to try and change things through zoning and incentives to developers.... but of course, then they are not maximizing profits either.

[CaptainYooh]

Originally Posted by Huntingwhale

I don't see anything wrong with what Nenshi said. He's just saying what thousands of renters in this city feel... .

I see a huge wrong in Nenshi saying that. That's the problem with Nenshi on and on and on again. Populism is not good government, never is. Provision of subsidized housing options is up to the City of Calgary with the funding assistance from the Province. Period. He has ZERO stance criticizing landlords, not in the anecdotal sense nor in general, as he did last week. The City does not help landlords, nor does it help renters; therefore, it has no right to offer opinions on what's fair and what's not fair. Especially, so blatantly wrong and broad brush opinions.

Most landlords are buying properties with a 25-yr mortgage and returning 5% on their investment capital after all expenses paid. This is not gouging anyone. They are just trying to keep up with the market and costs of property holding. Are there bad landlords? Yes, just like there are bad teachers, doctors, lawyers, engineers, developers, city workers etc. It is not Mayor's job to profess casual accusations against industries. His job is to lead City Council in achieving good municipal governance, which he has not been very good at so far, unfortunately.

[llwhiteoutll]

Originally Posted by FlamesAddiction

The problem is that when rent is priced at the maximum that the market can bear, it means that most people can't afford adequate housing. I understand the desire to make the most profit possible and I would probably be doing the same thing if I was a landlord. But as someone who rented most of my life, it was pretty frustrating to be paying almost what a mortgage would be in rent, but not being able to ever save up a down payment because I was at the that "what the market can bear" threshold. Lucky for me, my fortunes changed, but I still feel for people in that situation.

Affordable housing is probably one of, if not the biggest factor in the social health of a city. It affect the health of the population, crime, development... pretty much everything. I think Nenshi is right to be concerned about gouging.

Pricing at a market rate is not gouging. Investors are not in business to minimize their return and any investor that does is total moron. You can't honestly say that if you had place where renting it for a $1000 covers your cost with a small profit (maybe $100) could be rented for $2000, you wouldn't rent it for the higher amount. At the same time, if the landlord had to rent it out at loss, the same people complaining right now would be laughing about how the greedy landlords are getting what they deserve.

Right now the market rate is high partly because of policies that Nenshi himself and city council are pushing. If they approved development permits and didn't try to push a higher density kind of living only, there would be more housing available on the market.

Basically Nenshi wants landlords to help him run a social program at their detriment. Why isn't he telling people to live where they can afford to or life within their means?

[Handsome B. Wonderful]

Originally Posted by Slava

At what point is it gouging and at what point is it just business? If I buyback property to rent it out and want a profit, how much is it ethical to make?

You'll know you're gouging when you can't find tenants. Otherwise I say take as much as you can get. You're not running a charity.

[Dion]

Originally Posted by llwhiteoutll

Pricing at a market rate is not gouging. Investors are not in business to minimize their return and any investor that does is total moron. You can't honestly say that if you had place where renting it for a $1000 covers your cost with a small profit (maybe $100) could be rented for $2000, you wouldn't rent it for the higher amount. At the same time, if the landlord had to rent it out at loss, the same people complaining right now would be laughing about how the greedy landlords are getting what they deserve.

Right now the market rate is high partly because of policies that Nenshi himself and city council are pushing. If they approved development permits and didn't try to push a higher density kind of living only, there would be more housing available on the market.

Basically Nenshi wants landlords to help him run a social program at their detriment. Why isn't he telling people to live where they can afford to or life within their means?

I don't think it's always that simple. Other places may have more affordable rentals but no jobs. People will gravitate to places where the jobs are.

As for living within their means, many working Calgarians are living in homeless shelters while others are struggling just to pay food, rent and utilities. Wages for the most part have not kept up with the high cost of living in Calgary.

Another factor is that gap between those who are profiting off the oil and gas and the rest of the population has widened. House prices are rising faster than alot of peoples incomes making a home purchase beyond thier reach.

[Dion]

Klassen: Nenshi forgets it's his job to create affordable housing

Let's instead talk about what the city has done, or better yet, undone, on the affordable housing issue. It sold the Cecil Hotel, which - like it or not - was home to some 55 low-income rental units, to East Village developers who are further displacing an entire low-rental district that has nowhere else to go. Ask any agency trying to put up low-income housing and they will tell you how city permitting has ground to a halt, nearly paralyzing development of anything but the chi-chi kind. For ritzy development that serves its density agenda, the city will go to extraordinary lengths - like selling a public street in Eau Claire for the sake of yet another 1,000 schmancy "units."

Ask home builders what the city's policy of increasing urban development at the expense of suburban growth has done, and they'll tell you it's created the housing crunch they predicted long ago. No matter how much the city may try to force condo living on the masses, people will want yards. Without new development farther out, this increases the cost of the houses that already exist (or moves people to outlying areas where they don't pay for Calgary city services). This further puts lower income homeowners into the condo market, which takes away from the rental market, putting people into the Drop-In Centre.

Whose fault is that? That's a planning issue.

And then there's the Calgary Housing Company, our subsidized housing units, which constitute perhaps the most egregious policy abuse of all. Maybe Nenshi could focus his attention on how to turf the 837 families who live in subsidized housing we all pay for, who now make beyond (and some well beyond) the threshold of low-income earners it was meant to serve.

http://www.calgaryherald.com/busines...873/story.html

[rohara66]

Originally Posted by Dion

Klassen: Nenshi forgets it's his job to create affordable housing





http://www.calgaryherald.com/busines...873/story.html

Amen!

[Knut]

Yeah ... Nenshi is in the wrong here and usually i find myself agreeing with him.

I took a loss on my rental condo for 3 years and now i have a very small gain based on the market value of my area. My rent in 4 years has gone up on average $50 / year.

Is this gouging ?

[GP_Matt]

Originally Posted by Resolute 14

All things being equal, tax increases amount to a few dollars a year. It's the appreciation in value of your house that causes your bill to jump, and that is beyond city council's control.

That isn't how property taxes work.

The city sets a budget for the year and divides it by the total value of all the property in the city then multiplies it by the value of your individual property.
If every house in the city doubled in value the property taxes would not double. Any tax increase is due to the cities rate increase and any change in the value of your property relative to the whole city. ie. If your property doubled in value but the rest of the city remained unchanged then your taxes would double.

[Dion]

Originally Posted by Slava

At what point is it gouging and at what point is it just business? If I buyback property to rent it out and want a profit, how much is it ethical to make?

It's also a cyclical thing. When the economy crashed in Alberta during the 80's rents were very cheap with landlords suffering losses. The economy recovers years later and the same landlord tries to recoup his losses via rent increases and is accused of gouging.

[Mathgod]

Originally Posted by albertGQ

Maybe he and city council can help out a bit and stop gouging home owners with large property tax increases.

Aren't our property tax rates some of the lowest in Canada?

Originally Posted by Hesla

Yeah ... Nenshi is in the wrong here and usually i find myself agreeing with him.

I took a loss on my rental condo for 3 years and now i have a very small gain based on the market value of my area. My rent in 4 years has gone up on average $50 / year.

Is this gouging ?

I don't think he was referring to all landlords categorically.

Ask home builders what the city's policy of increasing urban development at the expense of suburban growth has done, and they'll tell you it's created the housing crunch they predicted long ago. No matter how much the city may try to force condo living on the masses, people will want yards. Without new development farther out, this increases the cost of the houses that already exist (or moves people to outlying areas where they don't pay for Calgary city services). This further puts lower income homeowners into the condo market, which takes away from the rental market, putting people into the Drop-In Centre.

Whose fault is that? That's a planning issue.

It's a catch 22 because if you keep growing the city outwards it becomes increasingly expensive to serve a city with government services over such a spread-out area. Condensed population centers are less expensive to serve since the people aren't spread out over such a huge area. Plus, denser population growth reduces the number of new cars on the road which makes a big difference in terms of how much money needs to get poured into building new roads and widening existing ones, etc.

[Resolute 14]

Originally Posted by GP_Matt

That isn't how property taxes work.

The city sets a budget for the year and divides it by the total value of all the property in the city then multiplies it by the value of your individual property.
If every house in the city doubled in value the property taxes would not double. Any tax increase is due to the cities rate increase and any change in the value of your property relative to the whole city. ie. If your property doubled in value but the rest of the city remained unchanged then your taxes would double.

I wasn't arguing how property taxes work in the macro sense. I was speaking to an individual's situation.

The city's property tax increases would be mere dollars if all other things were equal.

Where people see big jumps in their tax bill is from their assessed value rising significantly. We both know that the entire city doesn't rise at an equal rate, so I stand by my argument that the people most likely to complain about huge property tax increases are simply those living where their assessed value is rising rapidly.

[Regorium]

I'm a bit surprised at Nenshi here. Generally he makes very smart statements and will show very strong understanding of whatever topic he's trying to talk about.

But this is just absolutely crazy. Doesn't understand how his own policies have created a housing shortage (I agree with those policies - I'm a latte-sipper). Doesn't understand a market economy.

And he also admits that he's a horrible businessman with no understanding of costs and markets.

He's built an insane level of political good will with me that he can spend on garbage statements like this, but it still makes me think twice.

[getbak]

Originally Posted by Hesla

Yeah ... Nenshi is in the wrong here and usually i find myself agreeing with him.

I took a loss on my rental condo for 3 years and now i have a very small gain based on the market value of my area. My rent in 4 years has gone up on average $50 / year.

Is this gouging ?

No it's not. So, he wasn't talking about you.

Just because you're not the type of landlord he was talking about doesn't mean that those types of landlords don't exist.


The thing is, if you are an "ethical" landlord, you should be standing behind his statement as much as anyone because those "unethical" landlords are the ones who cause stricter laws to be implemented. Stricter laws are not necessarily in your best interest.

[Knut]

^ I think the market will self-regulate though.

The real issue here seems to be with the existing laws not being followed and people not aware of who they should be contacting if there are issues.

[CaptainYooh]

Originally Posted by getbak

...
The thing is, if you are an "ethical" landlord, you should be standing behind his statement as much as anyone because those "unethical" landlords are the ones who cause stricter laws to be implemented. Stricter laws are not necessarily in your best interest.

No, he shouldn't. It is not Nenshi's prerogative to accuse any landlords, when the City has absolutely no hand in their business. The City owns Calgary Municipal Housing Corporation that does a pretty mediocre job of managing subsidized housing for people that really need subsidized housing. The City also owns Attainable Housing Corporation that does a pretty mediocre job of helping people get into the home ownership, when they shouldn't be in it yet.

There is a good reason purpose-built rental communities have not been built en-masse in the past twenty years despite the huge market demand. The economic feasibility is not there for capital providers even at today's rental market rates.

Rent controls never worked well, anywhere. There are ways for the City to help build more rentals - give city-owned land away in exchange for rental commitments from builders, build more subsidized housing, implement more blanket density land-use re-designations in the inner-city and suburban areas near popular rental locations (schools, shopping centres, transit). Then things will start moving along. Slowly.

[OldDutch]

I don't have a lot of experience renting, although many of my friends rent their units out. Seems like they prefer to rent at the average rate as opposed to gouge as long as the renters are good. Bad renters are not even worth gouge rates is what I see.

My only experience with renting is when my wife and I tried to rent our Eau Claire condo out during the downturn in 2009. At that time we were asking $1800/mo for a 1 bedroom. On its face, that is a lot. However after mortgage (which was $1100), condo fees ($500/mo), taxes we barely cleared any profit. God forbid a repair was needed and we would lose money.

I just remember the entitled perspective renters we got in the first week. One asked if there was a gym in the building, I said no, and she demanded we throw in a membership or she'd walk. Plus free cable and phone too boot.

Ya, once she left we pulled the rental ad, and put it up for sale. Never looked back. Renting is just not worth it to us.

So maybe Nenshi is speaking of the skezzy land lords who buy a bunch of property and rent it out as their business. Who knows. All I know is many people trying to do it on the side are not making a lot if anything, many do charge a lot on the face but being a PT land lord is not a easy gold mine by any means.