by Todd Lewys
According to a recent report by the Canada Mortgage and Housing Corporation (CMHC), apartment vacancy rates in Manitoba are expected to inch above two per cent for the first time in over a decade.
On the surface, this appears to be good news for consumers. That’s not necessarily the case, said REALTOR® Mel Boisvert, co-chair of the Manitoba Rental Housing Supply Roundtable, which prepared a report on the rental market for the provincial government that was released in October 2012.
“Yes, the vacancy rate is increasing, but that increase is more in the area of high-end rental units,” he said. “Those vacancies are not happening nearly as much with lower-end units in the $500 to $750 price range. There’s definitely a shortage in those units, so the vacancy rate is misleading.”
Here’s why vacancy rate statistics are deceiving: more high-end apartment complexes have hit the market in the past several years. Examples include Dawson Trail Apartments in the city’s southeast quadrant, 800 Dovercourt in Linden Woods and Bridgwater Forest, to name a few.
Granted, the addition of such projects has added more units to the rental mix, but these units are renting for upwards of $1,000 and more per month.
Therein lies the problem, said Boisvert. “The average person just can’t afford to pay that much for an apartment. That said, you can’t blame the developers for charging that much. The problem is simply this: after building a solid complex with well-appointed suites, the rent has to be in the $1,200 range to cover costs.”
At the same time, dozens of existing apartment buildings across the city have been renovated to contemporary standards. The inevitable consequence of all that work is increased rental prices. Once again, that leaves those in lower income brackets on the outside looking in.
Meanwhile, smaller landlords are left wringing their hands because — unlike bigger companies — they can’t afford to upgrade their buildings.
“I’m a landlord myself on a smaller scale,” Boisvert said. “As landlords, we’re allowed to increase rents by two per cent in 2014. That’s not enough. I need double that increase just to cover my costs as a landlord.
“Insufficient rent increases then cause a catch-22 situation, where it becomes hard to attract investors,” he added. “The way things stand, it’s difficult to make a profit. At the same time, we have buildings in need of renovations, but we can’t afford to do them. For that to happen, we’d have to raise rent by $150 to $175 to cover costs, taking rent from, say, $625 to $800. Many renters just can’t afford that kind of increase.”
Instead, smaller landlords — their pockets not nearly as deep as larger companies — do patchwork repairs on their properties to keep them going.
That’s a losing battle in the long run, said Boisvert. “To maintain stock, you have to put something into it. Older rental stock is deteriorating. Just like your car, you have to maintain it to keep it functional. If you don’t, it eventually won’t work any more, and you’ll lose it. That’s what’s happening to our affordable apartment stock little by little.”
There is a solution to the dilemma, but to date, no one has wanted to talk about it, he added.
“Without question, there has to be more subsidies for those residing in low-end rental groups. As an organization, WinnipegREALTORS® has promoted the idea of hosting a four-province forum (Manitoba, Saskatchewan, Alberta, British Columbia) that would examine the merits of subsidizing rent for low-end renters. So far, the need to subsidize that group has fallen on deaf ears with cash strapped governments.”
Boisvert said it’s incumbent on government at both the provincial and federal levels to put the wheels in motion to help out low-end renters.
“Canada doesn’t have any provincial or national housing policies — governments not only here, but in other provinces aren’t dealing with the problem,” he added. “Rather, they’re just choosing to hide their heads in the sand.
“In two years of promoting the conference concept, nothing has happened, no one wants to talk about it. That’s why we’re working so hard to bring the issue into the public eye. It’s essential that we do what we can to provide more options to low-end renters, because there aren’t enough now.”