An Okanagan landlord is cautioning others to think twice before choosing rental property as a retirement plan.
Biki Kochhar contacted Castanet recently to say it’s not just renters who are struggling with high inflation. He says his costs have soared, but he can’t raise rents to cover his added expenses because of the province’s cap on rent increases.
Under the Residential Tenancy Act, the government has set the 2023 rent increase limit at two per cent, well below the February (unadjusted) inflation rate in BC of 6.2 per cent.
“Landlords are going negative every year as inflation is higher,” says Kochhar, who owns an eight-unit building in Penticton, 14 units in Oliver, and three rental houses in Kelowna and West Kelowna.
He says getting insurance coverage for his multi-family properties has been difficult. “I’m shopping around at the moment, but my rate last year was 29 cents for every $100 of insurance coverage. I just got a quote from another insurance company for 50 cents for every $100 dollars of insurance coverage.
“I may not go with them. I’ll keep shopping around, but the general trend is more than a 2% rate increase,” adds Kochhar.
Aaron Sutherland of the Insurance Bureau of Canada says, generally, premiums have been coming down in BC. However, factors like claims history have to be taken into account.
“I’d encourage anyone who has concerns to give us a call (1-844-2-ask-IBC). “We’re here to help. We don’t sell coverage. We’re simply here to help find more affordable coverage for consumers as best we can,” says Sutherland.
However, Kochhar says it’s not just insurance. He’s also being squeezed by income taxes, higher utility rates, a spike in repair costs, and rising mortgage rates.
“It’s hard to maintain profits or to make your investment work for you when you are subject to so many rules on the rental income side of things and there are no rules on the expense side of things.
“So, who is eating all these costs is the landlord. Not the tenant who is still paying roughly the same amount as when they moved in.”
He is considering leaving the market and cautions young families considering rental housing as an investment option to know what they’re getting into.
“Think twice because you can get caught in this vicious skate park where you can’t get out of the ramp. Where costs are going up and you’ve got a regulatory body that doesn’t allow you to pass the costs over,” cautions Kochhar.
“The BC Residential Tenancy Branch has to pick up their game in BC; otherwise, they are going to lose investors.”
