The Landlord Registry: More Red Tape Won’t Solve The Housing Crisis
Michael Currie is an author and landlord. The following piece was originally published on his Landlord By Design blog.
I can see the headlines now: “More red tape solves housing crisis,” or “Halifax City Council regulates its way to a world-class solution to affordable housing,” maybe even “Landlord registry makes housing affordable.”
I often wonder if expensive rules, regulations, and policies really distract enough people from the reality of what is going on in relation to a housing shortage in a fast-growing city like Halifax.
I would not dispute the fact that we have a shortage of housing in Halifax and the surrounding area. I am also in the business of providing housing for people in exchange for money, so for some I am part of the problem and for others I am part of the solution.
The challenge I have digesting the latest stunt by the municipal government is that it does not do anything to add housing to the market or make housing more affordable.
In fact, it does the opposite. For small-timers like me who are arguably middle age (I turned 50 this year), it makes me think about selling my small portfolio. When purchased by a new investor, older tenants will likely be part of the renoviction movement, where long-term tenants (who are all currently paying below market rent) will be displaced and my properties will be brought back on the market at a substantially higher monthly rent.
For smaller landlords with 12–30 unit buildings that decide to sell, these will likely be sold to mid-sized property companies with systems in place to renovate and charge more when people leave. Those that stay will be subject to annual increases and multiple (intrusive) inspections per year.
In addition, they have a maintenance component that will make it easier for owners of older buildings to have them condemned, rationalize selling, or taken offline completely. This opens the door to more older units being replaced with new, much more expensive units, rather than looking at ways to keep these older buildings going.
My suggestion for our city council would be to look at ways to encourage people to become landlords. I could write a book on ways that the government could encourage people to become landlords. Perhaps they could form a committee (free of charge, just council members brainstorming in city hall) about ways to address the primary concerns of landlords and why they either have to build high-rent housing or look for ways to cut expenses to make the business model work for older properties.
I doubt that raising property taxes, threatening landlords with fines, administering a registry, and providing zero protection for landlords against vandalism from bad tenants are the best ideas to encourage landlords to get in and stay in the business.
This is also combined with higher maintenance costs for materials and labor, increasing utility costs, and don’t get me started on insurance. I am not sure that it is general knowledge that insurance companies ask about your tenant profile before they will insure a building; many will not insure or charge additional premiums for buildings occupied by certain tenant profiles.
Some may read the news coming out of city hall and think this is a victory for the unhoused or those renting substandard housing. But if a building is condemned because the revenue model does not support the upgrades, what do they think happens to the building or tenants? If it is taken offline and boarded up, all the tenants will be displaced. When, eventually, someone sees value in the boarded-up property, it will be purchased, renovated, and brought back to life at much higher rental rates or torn down and much more expensive rental units will take its place.
But what if the government offered financial support to the building owner to keep the building in good, livable condition at the current rent level? I have not been around all that long but I have been around long enough to watch buildings that have been boarded up for years come back to life once property values increased in the area. I have also recently watched rundown rental units get sold and torn down by the hundreds because they were not worth fixing and the land was better suited for another purpose.
If you are reading this from a landlord or tenant point of view, please read with an open mind and realize that a free market is better than a government-run market. Question the reason for policies that do not enhance positive change. Question why the government that is supposed to represent you would want to put policies in place that do not benefit either side. Question why more regulation and squeezing out small landlords is a solution to a better housing situation.
This past week, Kevin Russell and others shared some thoughts about the latest gimmick. You can read their thoughts in full here, here, and here.
Huddle publishes commentaries from groups and individuals on important business issues facing the Maritimes. These commentaries do not necessarily reflect the opinion of Huddle. To submit a commentary for consideration, contact our editor, Trevor Nichols: [email protected].