We own a rental property and just had a long-term tenant move out. Can we increase the rent? – LONELY LANDLORD
DEAR LONELY: The quick answer is yes. As a residential property owner, the loss of a long-term tenant can actually be a good thing. When a client tells me their rental property has a long term tenant, I generally interpret that to mean that their rent is below market value. This can be problematic if they want to sell, since investment property values are tied to the income they generate.
Here in Kitchener-Waterloo, our rental vacancy rate is typically quite low — it tends to sit at about 2 percent. Since vacancies are hard to come by, the going rate for rent has gone up dramatically.
With very few exceptions, residential rent increases for existing tenants are governed by tightly controlled provincial guidelines as outlined in the Residential Tenancies Act. The rent increase guideline is currently set at 1.8 percent for increases between January 1 and December 31, 2019. In a region like ours where property values have risen close to 40 percent in the past four years, this guideline falls far short of market value. When a long-term tenant vacates, it gives the owner an opportunity to raise the rent to current market levels.
This is a great opportunity to freshen up your newly vacant unit. A few hundred dollars invested in paint and repairs can help attract a premium tenant who is willing to pay market rent.
Pro Tip: Virtually everything in real estate can be compared to dating. When it comes to choosing a tenant, “Mr. Right” is almost always better than “Mr. Right Now”. Take your time and choose wisely, this could be a long term relationship.
We made three offers on a house, then the seller took it off the market. Can they do that? – FRUSTRATED
DEAR FRUSTRATED: We currently have a shortage of inventory in the K-W area, as we have over the past three spring markets. This creates some inevitable frustration in the buying front, as you have discovered. I’m sorry to hear you’ve been through the offer process three times and been unsuccessful. However, until the seller and buyer establish an agreement in writing, the seller is at liberty to do whatever they choose with the house — it is their own. They can put the price up, bring the price down, or take it off the market as they wish. Life changes for people, and until they’ve made a firm commitment, they sometimes head unexpected directions.
Pro tip: As frustrating as it is for you, sometimes it’s better to put a property out of your mind and just move on. Just like with busses, something better will inevitably come along. As a Realtor, it’s my role to help my clients find it. #AskDavid