Metro Vancouver landlords, facing soaring assessments and property taxes, may be forced to develop their sites or sell out, according to experts.
A study by Altus Group of BC Assessments for 2017 revealed that rental apartment buildings have seen valuations increase up to 60 per cent to 70 per cent.
One 39-unit low-rise apartment building on Burnaby Street in Vancouver’s West End was assessed at $15.1 million in 2016, but BC Assessment valued it at $25.4 million for 2015 (more than $650,000 per door). In Burnaby, a 45-unit apartment building on Kingsway Avenue is now assessed at $8.1 million, up 68 per cent from a year ago.
Each $1 million increase in assessed value equates to a $3,400 property tax increase, provided there is no change this year in the average mill rate across 13 Metro municipalities surveyed. However, landlords can increase rents by only 2.9 per cent in 2017 under provincial rent control legislation.
“For some, this [higher assessments] will be the last straw,” said appraiser Jeremy Bramwell, principal of Bramwell & Associates Realty Advisors. He noted that fixed costs for landlords, such as taxes, utilities and insurance, keep increasing but annual rental increases are capped.
Phil Gertstman, executive vice-president of Altus Group, said most of the assessment increase is due to rising land values, often based on an expectation of higher-density development, not on rental income.
“When assessments shoot up because of land values, you are basically forcing owners to redevelop the property,” Gertsman said, cautioning that this will mean the end of some older, affordable rentals.
David Hutniak, CEO of LandlordBC, which represents 3,300 landlords in the province said the real trend may be the exit of many landlords who have owned apartment buildings for years. “We have already seen a lot of that over the past two years.”