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Hundreds of luxury Vancouver mansions being rented for cheap (ctvnews.ca)
131 points by mji 13 days ago | hide | past | web | favorite | 91 comments

Seems like the housing tax is working as intended.

The most interesting part is how this is one of the few serious sources of backpressure on rent. Normally landlords are so loathe to reduce rents that they'll let a property sit vacant for months, but this tax makes that extremely painful so they're forced to instead meet the market on rent prices.

> Normally landlords are so loathe to reduce rents

What's the reasoning here? I've tried to talk landlords down by less than a month's rent when taken over the course of a typical year lease, been told to shove off, only to watch the unit go unrented for months until they finally drop the price.

AFAIK, at least for large residential complexes, the reason is that you can borrow against the base rent, mostly regardless of the vacancy rate.

So if you are renting 60% of your units at $4k per month, you can borrow against the income you'd make if you had all 100% rented out. But if you had to lower the rent on the other 40% by $1k to get 90% occupancy -- you'd have a larger income, but be able to borrow less money.

If your goal is to use leverage to borrow as much as you can and cash out before the cycle ends (which I think is what most people are doing in RE) then this is how you do it.

Something I've heard a landlord argue was that if he lowered his rent that would mean his property value would go down which would mean his loans/mortgages would not be covered. He would rather take a couple months of losses than devalueing his property.

I have no idea if the math works out for that, and he was negotiating, but he didn't budge a cent and we took our business elsewhere so it did seem like his hands were tied the same as your example.

I have heard similar arguments from developers in Sydney. They will give you a car, or guaranteed rental income for x months, rather than dropping the price of the property.

As the other reply mentioned, the value of commercial rental property is a multiplier of the rent you can charge. If you lower your rents then not only are you lowering your cash flow but you’re lowering the value of the property overall which can impact resale value and the ability to take out loans.

The cap ratio is based on base rent, rather than rent times occupancy. Especially if you have multiple properties, lowering the rent on any of them will negatively affect the rent on the others.

This is especially true in commercial real estate, where your other tenants (e.g. in the same mall) sometimes have a "most favored nation" provision - if anyone else gets lower rent, they do too.

Landlord’s are much more likely to kick money back, but keep the rent the same.

I’ve even seen it in SF lately - sign a 12 month lease and your first month is free.

I got out of the landlord game a couple years ago because I was tired of the drama, but my biggest source of resistance to lowering rent was the constraints on raising it. Beyond that, I never had a single unit go unrented for more than a single month, and in that case it was because we had some hiccups around upgrades to the unit. That may be unique to the Vancouver market though.

Conversely, I have never had any problems negotiating rent down by pointing to comparable listings for units at lower prices. It's a hassle to find another good tenant, and there's a decent chance of losing a month's rent to vacancy.

The flip side to it is that I'm actually willing to move if they say no. I would rather not, because moving is a pain, but if you're not willing to take the other listing, it wasn't really comparable.

edit: However, I have only negotiated with individual landlords in AB. I have not tried in BC.

Was it in a multi unit building? A guy renting out one condo has an incentive to avoid letting it sit. But a person renting 100 units in a building would rather have it sit than rent it out for $100 less and then having every future (and perhaps existing) tenant expect to pay that new rate.

BC has rent control so to some degree that landlord could be locked into that lower rent regardless of market changes.

If they can report it as "lost income" then there could be tax benefits

Yes - this seems like it might be an interesting avenue to take for high cost of living cities with a lot of foreign owned condos like New York City.

> Seems like the housing tax is working as intended.

Yep, the more of a mansion you have, the more you are hit, and the less likely you can get a renter who will be ready to pay the premium rate.

Moreover, "antislum" rules in some parts of regional district may prohibit subdividing the property for rent. Ironically, they were said to be passed under the influence from NIMBY people.

For good reasons ask nonstudent residents what happens when you get a lot of houses subdivided out in this way.

Not really:

> While most owners contacted by CTV News said they don’t want groups renting out the homes, the rentals present a cheaper housing alternative for students and young professionals.

Huge mansions rented to a single person.

> But these rentals offer a single room in a multi-bedroom house for anywhere between $700 and $1,500

I read this with your quote as saying they don't want to rent to groups of students who already know each other, presumably because they don't want their luxury mansion turning into a frat house cum party pad and possibly getting trashed. They are renting rooms out to multiple individuals who are sharing the properties however.

Many have roommates.

From the article: "these rentals offer a single room in a multi-bedroom house for anywhere between $700 and $1,500"

It's a start. I doubt this is the steady state. I would expect fewer restrictions and higher rents as word gets out, the owners get more comfortable renting, and they find tenants they like.

Vancouver has extremely tenant friendly rental laws. I’m not as familiar with them when it comes to sfh, but these tenants may not be easy to evict when the owner wants to move back in or sell.

If it’s Arab or Chinese money, that’s not likely to be any time soon.

Speaking as somebody who works in tech and can't afford to live in the city... this is hilarious. If I could afford rent at $6k/mo, I'd just buy myself a 3br fixer-upper for a million bucks. Are these investers going to hold out for unicorn "stupid rich" renters?

Related: "What can/do governments do to address house prices being driven up by foreign investors?" on the Politics StackExchange:


I have been following https://twitter.com/mortimer_1 for a bit. He paints a pretty crazy picture with data of what is happening in the Vancouver housing market. People asking millions over assessed value, people selling at massive losses, and mansions renting for pretty cheap.

An example: Bought 2013 $2,275,000 now asking $6,888,000, Bought 2016 $5,200,000 now asking $4,888,888, Bought 2016 $3,590,000 and sold for $3,250,000, etc.

https://twitter.com/vanreflipflops is also great for this.

Doesn't matter what people are asking. Ok I just listed my one bedroom apt in Duluth for $55 million. Is the Duluth housing market now crazy?

I once rented a $1.6m mansion apartment in Shenzhen for $500 a month. I guess, Chinese influence...

For some locals, the math behind earning money from property in other ways than resale don't tell them anything. They got too used to the idea of flipping properties at six digit gain every few years.

Naturally, the "measly income" from rent doesn't look much in comparison to that to simply bother thinking about.

Do you mean "Chinese influence" like you got the apartment because of guanxi? Or like the situation in Vancouver now is influenced by what you saw in Shenzhen?

The second one, and not only Shenzhen, but all of big cities in China.

I often went into long discourses with recent immigrants about that. Their idea of how market work is long pass the level of sane, and rational.

I keep telling them about "investing into a bubble is dumb thing to do" only to be greeted back by some bizarre "economic conspiracy theory."

Most do that on advises of some "esteemed economic gurus" from China.

That looks silly, but only until you you begin to think just how many thousands of multimillion buck properties were bought thanks to such "gurus"

Investing in a bubble can be great, as long as you're early enough and not the one holding the bag a† the end.

It's one of the quickest and easiest ways to make money, actually. I wouldn't always call investing into a bubble foolish.

If you do well investing into a bubble, it just means you were a lesser fool, rather than the greater one that holds the investment when the bubble pops.

Maybe it's more important to them to find someone who isn't going to wreck the place and seems like a nice person? Could that be it?

If it was the case, owners themselves would've taken more care to take care of their apartment.

It was in quite bad shape for just a year old apartment.

I have a question though. The pictures with the article list the rentals as $1000/room not $1000 for the entire house and the article says that many owners do not want to rent to groups. So this is useless to the single renter. I don't know how the housing activist got his 800 results.

I believe what they're saying is that they don't want to rent to you and a bunch of your friends as a group but as an individual you can rent a room and you will be sharing the house with other individuals to whom they rent individual rooms. I'd guess this is because they don't want a big group of students renting the place together and turning it into a frat house.

There was a ton of anti-Chinese bashing because they were seen as being the cause of empty homes, and this issue was linked to the housing crisis in Vancouver. But looking at the examples of empty homes, I doubt that the South Surrey place for example was owned by a Chinese owner. It would be interesting to see statistics.

Also, a few hundred or even thousand homes rented to non-groups is hardly going to ease the tight vacancy rate in Vancouver. The housing issue has more to do to poor urban planning.

This sounds close to a land value tax. If you look around most US cities you will see a lot of land not being used for housing as compared to European cities. Land used for parking, lawns, roads, and vertical space not filled with bedrooms all contribute to higher rents. True, there are zoning laws that restrict these housing uses, but there is also no encouragement from the tax code. Land value taxes encourage more efficient use of valuable space.

I’m sure the fact the Vancouver housing market is rolling over helps in addition to the occupancy tax.

Vancouver sfh prices are down 20% from peak and even more at the top end homes.

In the past you could take the hit from leaving it empty when you were seeing $100-200k appreciation per year.

Not any more!

We need to tax foreign-owned, non-owner-occupied properties in the San Francisco Bay Area. Some sort of scale:

Foreign Owned, Non-Owner Occupied - 10% Per Year of Assessed Value

Foreign Owned, Non-Occupied - 25% Per Year

Foreign Owned, Owner Occupied - 0% Per year

Your percentages are a bit extreme, but in general, I think this policy would do a world of good toward moving housing back from an investment vehicle to primarily being treated as functional places to live. I think the percentages should apply to domestic non-occupied as well.

A vacancy tax is so obvious that there must be some political reason that it's not being discussed in SF. I'm not sure I'd restrict it to foreign owners, holding empty property is a negative externality no matter where the owner lives.

Or, you know, start taxing all properties based on fair market value.

True, phasing out prop 13 would help a lot.

Agreed! Prop 13 needs to die.

Or we can just start companies in places other than the Bay Area.

How can governments identify which properties are foreign owned when companies incorporated abroad can buy real estate via local arms and byzntine holding structures?

Why should it? Owner proves to be US citizen (and not a legal "person" aka fictional entity incorporated in Delaware), or pays the tax, simple.

Or how about levying State income tax on them?

That would be a great start as well.

Title should be anti-speculator legistlation has intended side effects.

It's extremely common for "too good to be true" listings like this on Craigslist to be scams, where if you inquire they'll try to get you to wire money for the rental. The person behind the listing doesn't have any connection to the property, they take the photos/info from legitimate listings on other sites (often real estate listings, not rentals at all).

I'm sure it's possible that some of these listings are legitimate, but finding a bunch of listings on Craigslist isn't proof of anything and I think it's strange to base a story on it.

They have an interview with a person that actually moved into a unit, so that helps. Scams can easily be thwarted by asking to see the place in person.

Did you even read the article? This is because vacant properties in Vancouver are subject to an extremely high tax. The property owners are desperate to rent them out in order to avoid paying a very large tax.

Anyone have a list of these mansions that are being rented, google searching isn't showing anything?

Sounds like a place to go for the summer now.

> The city of Vancouver is facing a crisis in housing affordability, with one bedroom units averaging about $1,730 per month.

I'll take that any day over SF. That's a crisis I can sign up for.

Would you take that at half the salary as SF or even worse? Because salaries in Vancouver are super low compared to the major US tech hubs.

Not to mention good luck finding anything decent quality with a 0.6% rental vacancy rate, competition is fierce.

That’s exactly what I thought. My immediate reaction was, if that’s a crisis, then what is San Francisco?? (Currently paying 3700 for a one bedroom in sf)

Yeah, and how much more are you making in SF. Average software dev salary in Vancouver is $65k CAD ($48k USD) vs $113k USD in SF.

Where do people get these numbers? I signed up an account just to comment on this buffoonery.

I’m making almost $200K and haven’t been pitched a senior role under $130K in years...

How can your data be soooo far off?

Both numbers seem low but the ratio seems plausible. I continue to hear about friends and acquaintances leaving Vancouver for the Bay Area or Seattle because the offers are double what they can get in Vancouver. People being offered $150K CAD base in Vancouver are being offered $250K USD base often with more generous stock based comp.

Overall cost of living in Vancouver (including healthcare) is still quite a bit lower than the Bay Area but there's no doubt most engineers with some experience end up significantly better off financially taking offers in the US.

I certainly made a lot more in California but it’s not that great a spread with costs considered relative to the dramatic improvement in quality of life living in Vancouver.

$200K is a lot of money. I save most of it because I literally have nothing to spend it on. In turn I get access to facilities and lifestyle opportunities that were simply not available in the valley. 100K more still wouldn’t get me that in the valley.

Edit: my tax rate is also very comparable. BC income tax at 200K is very similar to California. Also, I eat out a lot and sales tax is only 5% on restaurants. Good restaurants are also cheaper here.

Vancouver is really not the engineering wasteland people seem to think it is.

I worked in Vancouver at a well-regarded company making under $100k CAD ($70k USD). I shopped around the job market there and didn't find anyone willing to pay over $110k. Everyone I talked to seemed to think my salary was competitive.

I expanded my search to Seattle (2 hours' drive south of Vancouver) and received multiple offers over $200k USD. I'm making over three times as much as I could have in Vancouver. And my taxes are significantly lower.

That said, I wouldn't mind moving back to Vancouver someday. Curious who is paying $200k in Vancouver, and also whether you are at the high-senior level that would net $400k+ at e.g. Google in the US.

Interesting that we apparently saw two very different sides of the job market in Vancouver. Thanks for your perspective.

I live in Vancouver too and it's a conscious choice of the lifestyle here over more money in the Bay Area or Seattle but I'm aware that it's quite a lot of money to give up. I think there are some indicators that salaries here are starting to rise due to the size of the gap but not enough that I don't still know plenty of people who have either left or are seriously considering it.

From my perspective your numbers seem off. I graduated from UBC in 2012.

Most of my peers working in Vancouver as engineers (including software) all make between 60-100k (most closer to 60) with the exception of 2 at about 150k.

Note: All numbers are in CAD, and are total compensation (i.e. they include the value of any bonuses or stocks)

I talked about average software dev. Google (payscale.com) says 64-66k, glassdoor says 70k. You do know that average also counts new grads right? Maybe next time try to actually comprehend the comment before using some adjectives.

Tech salaries are not even close to SF levels. The average pay for a software engineer in Vancouver is $70,000. Many new grad jobs average around $35,000/year.

I've seen people offered that little, but it's hard to believe anyone would take a company up on it. I started at a modest $50k, in 2010, in Vancouver, and was barely getting by at that salary. I can't imagine putting in 40 a week for $35k in 2019, that's highway robbery.

Has San Fransisco not been in a housing crisis for decades now?

No, it used to just be an expensive city. Over the last decade it has become the most expensive city. Rents have literally doubled.

That’s Canadian dollars, too so $1289 USD. My rent was higher in Boulder 5 years ago.

That only helps if you live in vancouver and get paid in USD.

Sure, but the problem in SF is that the units don't exist, right?

Yeah this one area where SF and Vancouver aren't comparable.

Vancouver like any city has its yimby tinges, but it has always built lots of housing. Multi-unit development at the moment is at all time highs.

You'll likely get paid $50-$100k USD per year as a developer in Vancouver.

Yeah but salaries are far lower than SF.

Precisely. Many of my peers reacted to the news of Amazon coming to Vancouver with "yeah, but at Vancouver salaries".

Who cares about a bigger salary if most of the difference gets directly deposited in your landlord's bank account?

Having 1/3rd of $100k is more spending money than having 1/3rd of $50k. Prices for things that aren't rent, don't change by market. You can buy more smartphones, donate more money to charity, whatever you want.

Because after paying local expenses, you're left with more money to buy things that aren't priced according to the local market. Same reason it's worthwhile living in a rich country versus a poor one. I pay far more in rent and for food than someone in, say, Ethiopia, but what remains allows me to purchase more things anyway.

> most of the difference

Well this varies from person to person, but in my experience most senior tech employees in the Bay Area are making much more than they would elsewhere, enough to offset the difference and put a lot more in their bank account each year.

I currently make several times what I was making in the last city I worked.

For whom? The people threatened by a dysfunctional housing market aren't the the people pulling 100k+ wages as information workers. Vancouver's minimum wage is $13.85 CAD, so like 10USD? That's not 3x lower than what a service sector employee is making in SF.

> a single room in a multi-bedroom house for anywhere between $700 and $1,500

And that's called cheap?

This article is a clickbait ad, IMHO.

For Vancouver? Yes, that's cheap. You may only get one bedroom, but you also have shared access to the rest of the luxury mansion. It's not $1500 for one room.

It is cheap compared to what you get for 1500 in a condo.

have you seen the rest of the house?:)

Yes I suspect the article is being loose with the facts.

I wonder if it has to do.with the new speculator tax in BC for empty homes? Tax season's here. Seems like they're trying to avoid the fairly hefty new tax that would be levied on them for having an empty mansion.

The end of the article confirms exactly that point.

Yeah...it's pointless though. As soon as they're able to they'll raise the rent or kick them out. That's how shit works here.

I think so too, very very likely.

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