Being a property owner can be extremely rewarding, both personally and financially, but it’s definitely not always easy.
With evolving laws and regulations and a market that is constantly changing, things can get a little complicated. The past few months have been no exception, with some important changes to the BC Residential Tenancy Act Regulations and taxes for property owners.
Do the recent changes in the BC Residential Tenancy Act Regulations affect me as a property owner, or future property owner?
“Absolutely! If you intend on leasing out your property the new legislation can penalize landlords who violate the new regulations far more severely than in the past. So ensuring you are compliant with these regulations has never been more important.”
I have tenants living in my property, which I’ve decided to renovate/demolish and rebuild. What are my options? What should I be aware of?
“One of the most recent changes to the BC Residential Tenancy Act (RTA) has severe consequences if the new regulations are violated. As a landlord you are, of course, encouraged to maintain your property and that includes major renovations.”
“If, during these renovations, the tenant cannot live in the residence you must now provide them with four months’ notice to vacate before the demolition can begin. While this formal notice must be given once all demolition and renovation permits are approved by your local municipality, we generally give our tenants notice well in advance.”
“Our practice is to estimate the permit timeframe and notify our tenants right when the homeowner decides to do the work – which is typically before they receive the permits. This way the tenants may actually start looking for a new home and give us notice, which is far more favourable to our clients.”
“Another aspect to this regulation is that once the renovations are complete you must give the current tenant first right of refusal to re-occupy the property, which can be a higher rental rate because of the upgrades.”
“Any violation of these new regulations can result in compensation of 12 months' rent payable to the tenant by the landlord, which could be a devastating financial penalty for a property owner. This is where being compliant with these new regulations is more important than ever!”
“And a special note: a month is typically seen as a clear month. Notice should be given before the 1st of the month. If you give notice on the 1st of August, it is the same as giving notice on the 31st of August. Both instances mean that September would be the 1st clear month.”
I am planning to sell my property to a new owner, but it is currently occupied by tenants — what should I be aware of?
“You can sell an occupied residence, however, you must disclose if there are tenants in place and what the terms of the lease are to the potential new owners. An existing lease will stay with the property and must be honoured by the new owners.”
“Should the new owners want to use the residence for their own use they must provide two months’ notice to the existing tenants that coincides with the end of the lease term. For example, if there is six months remaining on the current lease the new owner will have to wait 4 months to provide the required notice to end tenancy for their own personal use of the residence.”
“Again, while giving two months’ notice is the regulation set by the RTA, good practice is to give the tenants as much notice as possible. If you are planning to sell your property, let your tenant know right away. Not only will they appreciate your transparency, but it will also give them more time to look for a new home.”
I’m a property owner who doesn’t live in my BC home full-time — is there any way that I can avoid paying the Speculation Tax?
“There are exemptions to the tax, as well as ways to minimize your tax obligations should your property qualify. If your second property falls within the speculation tax regions (Kelowna and West Kelowna in the Okanagan) and it has an assessed value of less than $400,000, you will not be assigned this tax.”
“Should the property be assessed above the $400,000 threshold, you can avoid paying the speculation tax by renting it out long term (a tenancy of 30 days or more) for at least three months in 2018 and at least six months of the year in 2019 and beyond.”
“So there are definitely ways to enjoy your secondary property yourself, as well as minimize your tax obligations. As an added bonus, renting out your secondary property for part of the year will generate a revenue of cash flow for you.”
“One concern many out-of-town property owners struggle with is the difficulty of being a diligent landlord when you are long distance. Hiring a licensed property manager will ensure your property is taken care of. This includes finding reliable tenants and keeping on top of all potential maintenance issues.”
If you have questions or concerns about your responsibilities as a property owner, or you need assistance with managing a property, consider talking to Real Property Management Executives, which has just recently opened and office in Kelowna. Give them a call at 250-878-0012 or visit their website for more information.
Real Property Management is North America's largest residential property management company. Real Property Management helps property owners protect their investments and maximize their returns through tried-and-true processes.
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