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Vancouver tenants feeling crunch of sky-high rents

Danny Delgiglio has come to terms with the fact he may never own a house in Vancouver, where he was born and raised. The 36-year-old computer technician and his partner have been content to rent a one-bedroom in an older West End apartment tower.
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Laurie Edie and her boyfriend Adam Payne are among many renters struggling to find affordable housing in Vancouver's red-hot housing market.

Danny Delgiglio has come to terms with the fact he may never own a house in Vancouver, where he was born and raised. The 36-year-old computer technician and his partner have been content to rent a one-bedroom in an older West End apartment tower.

Danny Delgiglio has come to terms with the fact he may never own a house in Vancouver, where he was born and raised.

The 36-year-old computer technician and his partner have been content to rent a one-bedroom in an older West End apartment tower.

But after learning the owner plans to tear down the building within the next two years to construct a proposed 42-storey highrise, the couple has started combing Craigslist and Kijiji ads and pounding the pavement for a new home. Their budget: about $1,200 a month.

They’ve sent out dozens of inquiries, but rarely hear back. They’ve had potential landlords cancel viewings because the unit was suddenly taken.
 
“You feel like you’re not even given a chance,” said Delgiglio.

The apartment hunt has strained their relationship. “It’s been an emotional drain,” he said. “You feel that you have no control. Being born and raised here, you feel a bit of anger, I’ll be honest with you.”

Delgiglio is just one of the people who make up the 51 per cent of people in Vancouver who rent. Much attention has been paid to home ownership being out of reach for locals, but skyrocketing house prices also affect the city’s renters, who are squeezed by high rents, limited supply and a near-zero vacancy rate.

A Vancouver City Savings Credit Union report released last week put the spotlight on the acute problems facing renters in a city where the average rent was $1,233 a month and the vacancy rate was 0.6 per cent.

Vacancy rates are similarly tight in other Metro municipalities. They range from about .4 per cent in North Vancouver to 1.9 in Surrey (experts say a healthy vacancy rate is about three to four per cent.)

“It’s a crisis,” said William Azaroff, the vice-president of community investment for Vancity. “It is dire. More people rent in our neighbourhoods than we think, and a third of those people are millennials.”

The report found rental rates in Metro Vancouver have outpaced salary increases by nearly double — jumping 11.4 per cent between 2011 and 2015, while weekly wages grew by only 6.6 per cent in B.C.

“There’s an assumption that for people who can’t afford to buy, or don’t want to, there’s always the rental market,” Azaroff said. “But when you look at the level of affordability we are at, you find that’s not true. The rental market is not a viable alternative to owning in a lot of cases.”

Competition for rental units is fierce. On apartment-wanted ads, prospective renters put their best foot forward. No parties, they promise; no pets and no drugs.

Good credit. Very clean. Others have more creative offerings: Can do maintenance work. Can plant veggie garden. A single dad looking for a place in Surrey posted a link on his ad to a Vancouver Sun story on how he saved his previous landlords from a fire. Yes, even heroes are having a difficult time finding a place these days.

Laurie Eadie and Adam Payne were recently told by their landlady that their East Vancouver basement suite, near Trout Lake, required major renovations and they would have to move.

During a two-month search for a new home, they looked at 25 to 30 places across the city and what they found was a market that’s gone bonkers. “It’s ridiculous out there,” said Eadie, 42.

Cancellations were frequent and open houses common. “Forty to 50 people,” recalled Eadie of one open house, a 900-square-foot condo in Olympic Village listed for $2,800 a month. “Everyone’s just on top of each other because there’s nothing out there. It’s awful.”

Still, Eadie and Payne are among the lucky ones. Both work in the film industry and can afford higher rents to get what they want. But many — those on income assistance, those who have pets, are younger or new immigrants, or lack credit history or employment — struggle even more.

And the hot real estate market, which saw benchmark prices for homes in the city soar 54 per cent in the west side and almost 64 per cent in the east side over the last five years, has exacerbated the rental crunch.

With housing prices outpacing income, many people have to take out huge mortgages to buy and may be looking to charge higher rents in secondary suites to help offset the cost. The soaring prices could also encourage owners to cash out right now, displacing tenants in the process.

While last month was the highest-selling June on record for residential sales in Metro Vancouver, rental buildings also exchanged hands at a frantic clip.

According to the Goodman report, which tracks purpose-built rental apartments in the region for apartment building owners and developers, sales of rental buildings in Vancouver have increased by 108 per cent in the first six months this year compared to the same time period in 2015.

An increasing number of developers purchase the properties based on their land value, rather than rental income, noted the report — propelling a 47 per cent jump in the average price of unit from $332,513 in 2015 to $448,715.

And that means higher prices for renters, said report co-author David Goodman.

“Investors who buy buildings are now having to pay more for the buildings, so they’re saying we’re in it for the long haul, and if there’s any vacancies … they are less inclined to leave it at $900 a month (and will) want to rent it out for $1,200 because there’s 100 people lined up to rent the suite and there’s virtually no supply of rental suites,” he said. “It’s simple economics 101.”

This business-like mentality permeated Eadie’s viewings and interactions with prospective landlords and agents. “It was cutthroat,” she recalled. When landlords agree to meet with tenants in person to ensure a good fit “it’s ‘how much can I get?’ Not ‘what kind of tenant am I getting?’ ”

For Ruth Kozak, her three-month ordeal to find a new place was a soul-crushing exercise.

“I can’t tell you how many places I was diligently applying for and not getting anywhere,” said Kozak, a fit 82-year-old who goes for daily walks and works as a freelance writer to supplement her retirement income. “I think being a senior was going against me, even though I have really good references.”

In January, her landlord said he was going to sell the Grandview unit she had lived in for 10 years near Victoria Drive. She loved that place, a $945 one-bedroom with her own washer and dryer, balcony and lots of storage space. Early in the search, she resigned herself to paying up to $1,100, even though it would leave her “practically penniless.”

At one garden suite, Kozak was about to ask for an application form when she learned 300 people had visited the place. Intimidated, she walked away.
She applied to three places, including one in Metrotown she felt positive she was going to get. The rejections left her despondent.

“I was desperate. I was lying awake at night, thinking: What am I going to do? Time was ticking by. I thought I was going to have to get into a shelter.”

In the gleaming towers of downtown Vancouver and the Olympic Village and newly built condos along Cambie Street, or in trendy Mount Pleasant, many units are available for rent. For example, ads for units at the brand new Telus tower were plentiful on Craigslist last week, ranging from $1,800 for a one-bedroom place to $3,300 for two bedrooms.

But, as Azaroff noted, availability is one thing. Affordability is another. “Those two things have to work together. If there’s rental stock but you can’t afford it, that’s a problem.”

Sarah McMillan has a well-honed strategy that’s worked for her in a competitive market where she has been asked to pay above the asking price three times in the last five years.

Every time she goes to see suites, she brings a “rental resume” that includes a blurb about her, her work and education history, written landlord references, photo, hobbies and reason for moving.

She brings a cash deposit and a deposit receipt form. If she thinks it’s going to be a hot property, she brings a bottle of wine or flowers — “something to make me memorable.”

When Zack Mosley and Amanda Mombourquette’s lease on their 650-sq.-ft. two-bedroom apartment on the main floor of a 100-year-old house in the Commercial Drive area expired in July they thought they’d carry on with the standard month-to-month term. They got a nasty shock when their landlord said they can only stay if they pony up $95 more a month in rent, an increase of seven per cent to $1,475 a month.

“He basically let us know he puts all his tenants on fixed-term one-year leases and they negotiate every year,” said Mosley.

The couple refused, mostly on principle, even if they don’t feel they have a legal leg to stand on as they had signed the fixed-term clause. Added Mombourquette:

“The idea of living in yearly fear of our rent getting kicked up to a point where we have to move was too much.”

The couple, who have since moved, want to warn other prospective renters of the practice.

While fixed-term leases are helpful for parties who know they only want to rent out or rent a place for a specific period of time, in the majority of instances, “it’s a loophole,” said Mosley.

“You’re really leaving it up to the landlord to regulate themselves and why would any landlord choose to do that except out of the goodness of their hearts?” asked
Mosley, a touch cynically. “They have tenants over a barrel, especially in this landlord’s market.”

There are glimmers of hope on the horizon, said Azaroff.

The city of Vancouver’s Rental 100 program, which incentivizes the construction of purpose-built rental housing buildings, is starting to bear fruit. Construction of 358 affordable homes by the Co-operative Housing Federation is underway on four sites owned by the city.

“The pipeline is improving,” said Azaroff. But if you’re someone who has been renovicted or is struggling to find a place, these projects are cold comfort, he added.
“It’s not going to help you today. It’s going to take a little time.”

Goodman said the new units created by the Rental 100 program are only a drop in the bucket compared to the number of rental units the city should be adding to make a difference.

“There’s just meagre increases in supply of 500 to 600 units a year when it should be 2,000 to 3,000 a year,” he said.

For now, many renters are making compromises and concessions.

Eadie and Payne are moving into a house in East Vancouver for $3,300 a month. They had to pay rent for two places for two weeks in order to make the transition work.

“To pay that just about killed us,” said Eadie. “It’s so much money. But if we want to be in this neighbourhood this is what we have to pay for what we need. Or else we move to Surrey.”

Their former suite, where Payne had lived for 14 years, was listed on Craigslist for $1,895, almost $500 more than what they were paying.

Kozak thanks her lucky stars every day that she managed to find a new apartment within her budget, thanks to a friend who knew about her predicament.

Her new place, a three-storey walk-up near the PNE, is located at a noisy intersection and has no elevator or storage space. But there are bonuses. It’s $15 a month cheaper, slightly bigger, and has new appliances. “And the stairs are not as difficult as I thought. I’ve lost 10 pounds since I’ve moved in.”

Delgiglio still scours Craigslist every day, and emails or calls prospective landlords when suitable units come up, but is not optimistic they can find a place before the fall.

Landlord's perspective

A one-bedroom unit in Kitsilano, blocks from the beach, was listed on Craigslist two weeks ago at $1,495 a month. A 30-minute open house on a summer afternoon drew 12  interested parties, including some who put in applications. A week after the viewings, the apartment was still available for rent.

Despite the belief it’s a landlord’s market, good tenants are tough to find, said the landlord, who asked his name not be published.

“We want the best people. It’s a nightmare trying to get decent people,” said the man. The last tenant, he noted, was evicted for listing the unit on Airbnb and compromising the safety of other tenants.

At the viewing, he met a young couple who would have made great tenants, he said, but they objected when the application form asked for their driver’s licence and banking information. He acknowledged neither item of information is mandatory, but feels he should be allowed to conduct due diligence on tenants.

“For a $1,500-a-month unit, that’s an $18,000 transaction we’re making. You’re going to be living in a multimillion-dollar facility. We’re talking big dollars. We get to select just like they get to select.”