Victoria Coun. Geoff Young is proposing a change to rules governing rent increases that would see them go up directly as a result of rising municipal property taxes.
In a motion going to councillors on Thursday, Young recommends that council advocate for a change to provincial rules governing annual rent increases that would allow landlords to tie a portion of a tenant’s rent to property taxes, increasing that portion directly as municipal taxes change.
Young said he’s motivated by a concern about the level of spending being proposed by council as the city moves through the 2022 budget process. Property owners tend to show more of an interest in municipal elections and budget decisions, and he sees the proposal as a way to encourage renters to participate in municipal decisions and elections, in turn increasing the overall number of residents engaging with the city’s budget process, he said.
“People do want to participate when they see it impacts them, and I think it’s better if those impacts are clear and visible to people,” Young said.
When Victoria held an online budget engagement survey for 2022, 41 per cent of respondents identified as renters. That was down from 57 per cent the previous year but up from 35 per cent two years earlier.
Young is suggesting that the province determine an average percentage of rent that represents the costs of a landlord’s property taxes for the unit and that portion would increase according to municipal property tax changes, while the rest would remain governed by the province’s annual allowable rent increase. The maximum increase in 2022 is capped at 1.5 per cent, following a rent freeze in 2021 as a result of the pandemic, but has been as high as four per cent in 2018.
The proposal likely wouldn’t affect rents by a significant amount, but would show renters the direct impact of property tax increases, Young said.
David Hutniak, CEO of LandlordBC, said the proposal sounds “a little complicated,” but he’d like to see the city pursue the idea, because property taxes are one of the main factors driving costs for landlords.
“If there was a mechanism for rents to more accurately reflect our costs specific to the property taxes, in terms of rent increases, etc., I think that would be a conversation worth having,” he said.
Tenant and affordable housing advocates, however, see problems with the proposal.
“It’s about as misunderstood a policy as you can possibly put in terms of affordability in housing,” said Douglas King, executive director of Together Against Poverty Society.
Landlords have options to apply for loans and grants to pay for property tax increases, and they sit on the value of their asset, while tenants rarely have options if they can’t afford rent, King said. “I just don’t understand how you could possibly push forward a motion that would increase rent at a time like this. It makes no sense.”
Jeremy Schmidt, a contributor to Homes for Living, a group of homeowners and renters dedicated to making Victoria housing more affordable, said the proposal seems like “an absurd way” to increase civic engagement among renters.
Renters are already indirectly paying property taxes through their rents, he said, and there are better ways to engage renters in municipal decisions, such as a more scientific budget engagement survey, rather than a self-selecting survey.
“From a housing policy perspective, it doesn’t really solve a problem. It exacerbates an existing problem.”
Councillors are expected to discuss the proposal Thursday.