N.S. Landlords Representing Thousands Of Units Consider Selling Properties
HALIFAX – An advocacy group for landlords and investment property owners is warning Nova Scotians that there could be an upcoming reduction in rental stock. That’s because a recent survey suggests 51 percent of landlords were selling or considering selling their properties.
The survey sought input from more than 100 property owners.
According to IPOANS, which conducted the survey, the landlords who are considering selling represent 5,400 multi-residential unit buildings and 3,600 in duplexes and single-family homes.
Kevin Russell, the director of IPOANS, says there’s a perfect storm of issues causing landlords in Nova Scotia to consider leaving the market.
Inflation has caused expenses to skyrocket, especially in areas like insurance, furnace oil, building materials, and even snow clearing contracts. Then there is the contentious, two percent rent cap. With all the rising expenses, landlords are arguing they are legally forbidden from recouping costs.
It’s been a difficult couple of years for smaller landlords who run on thin margins, says Russell.
“The two percent cap is not sufficient to cover double-digit operating expenses,” he argues. “It’s putting a lot of properties at an operating loss. To have an operating loss for two years, it’s a little bit daunting when you don’t have the financial capacity to carry that.”
“[Landlords] don’t think the cap’s going to be removed in 2023. They don’t have any confidence it’ll be removed at all… It’s uncertainty in the market and business doesn’t like uncertainty.”
There is also a longstanding issue that many landlords and tenants happen to agree on: the Residential Tenancies Act makes it difficult and time-consuming to resolve disputes.
“It’s just one thing after another. They’re starting to get tired of the residential tenancy act. It’s an onerous process. It doesn’t appear to be working for the landlord or the tenant. Right now, it’s taking two months to get a hearing.”
Russell says that if a tenant appeals an eviction it could take up to six months to resolve. That could mean six months of unpaid rent and stress.
To add fuel to the fire, the real estate market is hot, which may convince many to sell while the fire’s still burning.
“When you look at the property evaluations, it’s a good time to sell,” says Russell. “They’re taking all these facts into consideration.”
Russell says the biggest concern for people should be the landlords selling off duplexes and single-family dwellings (3,600 units represented in the survey). In a lot of cases, a new owner may choose to move into the building themselves rather than keep them as rental properties.
There is already one example of this happening, in Digby. Huddle recently spoke to landlord Kim Newsome, who sold off three duplexes. She told Huddle that, in at least one of the duplexes, the new owners were moving in, taking a rental unit off the market.