A landlord’s view

A landlord's view I am a landlord responding to Heidi Marion's open letter to landlords. Thank you for having the courage to share your views. I do respect the fact that you are speaking out, and I realize that it can be tough to make ends meet for the "

I am a landlord responding to Heidi Marion’s open letter to landlords.

Thank you for having the courage to share your views. I do respect the fact that you are speaking out, and I realize that it can be tough to make ends meet for the “working poor,” that is, most private-sector workers.

Being a landlord, I would like to share my own point of view in response to your letter.

First, nobody is “demanding” renters pay their full mortgage. Landlords offer their properties for rent at prices they arrive at for various reasons. They do not “demand” people rent from them and pay their full mortgage, (with a 15-year amortization, no less, as you put in your letter).

Some landlords want the maximum return they can get, which is generally how investments work, others give deals to people who they believe would make good long-term renters, others come up with a price that they feel is fair based on various values they hold. Same as any business.

You open your letter by making it sound like landlords are holding a gun to someone’s head.

You seem to be suggesting landlords should discount their price from market so that “single mom” can, “buy her kids skates, skis, camps, music lessons, concerts, plays.” This is asking landlords to assume the role of social services, which, for some reason, seems to be a common theme in the Yukon. Yet grocery stores, gas stations, restaurants, home heating oil companies, Yukon Electric, Northwestel and so on, are not expected to take on the role of providing welfare to customers who need to buy skates and skis for their kids. I want all kids to have skates and skis. As a landlord, however, I am not sure that I should be held uniquely responsible for paying for them for my tenants.

I do pay taxes, and would hope that kids who need assistance are taken care of by Social Services.

You also ask landlords to, “find a way to make an investment that is not on the backs of those who have less income.” Many landlords have lower incomes than the people they rent to. If you are talking about low income renters, again, you are talking about people who may need assistance, and it is unreasonable to ask private landlords to provide social assistance out of their own pockets.

I wonder if you make the same argument at the grocery store, that “single mom” should not have to pay full market price for food. Or that if the grocery store does not give her a discount, they are “making an investment off the backs of those who have less income.”

The same could be said for any business, yet for some reason you identify landlords as people who should be expected to subsidize your needs. I think you are trying to say that landlords are profiteering and being incredibly greedy, and that they should be ashamed of themselves.

As for any suggestion of price gouging or unreasonably high rents, yes, there are some people who are looking at the current market and are entering it as landlords with basement suites for $1,700, etc. I find that greedy and surprising, but that is what it is worth to them to share their home and it is their call. Furthermore, if enough enter the market, rents will come down. There are plenty who are charging the same as ever, and who are charging less than they could. I have a $650 one-bedroom place downtown, and another one-bedroom downtown at $675. They are the front and back of a house. The house is what you would call a tear-down in today’s market. If it were to be sold, in all likelihood the new owners would take it down and build something new and large.

I do not consider myself to be giving my renters charity or a particularly good deal. I simply do not want to invest in upgrading this old downtown house. Fix the heater, replace the window that fell out, replace the roof section that is leaking, yes, but upgrade it to current building code standards? No. Not interested.

The renters put up with the fact that the house is worn out, and I charge less rent, and we are all happy. This rent is significantly less than the $867 that you quote in your article as affordable for a $20-an-hour worker saying, “Good luck finding a basement bachelor for that right now.”

Most rental places in Whitehorse are built to standards that are a lot higher, and a lot more expensive to build. Especially the new places built to the current code. That is reflected in the rental rates.

Now, as for people “paying your whole 15-year mortgage,” here is the reality.

Say you have a three-bedroom duplex in Takhini with a mix of debt and equity totalling $275,000 (market value). My mortgage downtown is at 4.99 per cent and let’s say that a five per cent return is also fair for a landlord for their money invested, their risk, and the work involved in dealing with property ownership and renters.

Given that inflation is about 2.5 per cent and that one pays taxes on rental income at the same rate as any other income, the landlord makes practically nothing off a return of five per cent. So let’s just start there as “fair.”

On $275,000 that would be $13,200 per year that would have to be charged in rent, just to cover the interest on the mortgage and the landlord’s money, time and risk. There is no principle payment involved here. The renter is paying absolutely nothing toward paying down the mortgage.

You say, “Some landlords see maintenance as a cost.” Yes, when a place is used by a renter, it gets worn and needs maintenance. Sometimes insurance requirements change. Sometimes renters want improvements so the place will be warmer. And it “costs.” This year on one place I have, I replaced the oil tank, and am replacing the front deck and the front door. The renters also requested I replace the back door and the back deck Ð not going to happen. Total for the “maintenance” in 2011: $2,800. This is all stuff that does not increase the value of the home. It simply keeps the value from decreasing.

Taxes are $1,200 a year, and water and sewer and garbage pickup complete with recycling and composting programs, is an additional $920 a year.

Total: $17,920 per year to pay the interest on a $275,000 duplex, plus payments to Whitehorse, plus maintenance. Divide by 12, the cost of providing this rental unit is $1,475 per month.

In other words, $1,475 a month for a basic three-bedroom duplex in Takhini is a pretty fair price to ask of the renter. It is inappropriate to suggest that landlords are greedy for not discounting from these sorts of rates in order to provide social assistance.

Talk to the government about that.

Housing is somewhat expensive in Whitehorse, for everyone, including residential rental investors. Lot prices are high, and building costs are high. Standards have gone up, expectations have gone up and rents have gone up, too.

Thank you, again, for sharing your thoughts honestly and transparently, and I hope you appreciate considering mine as well. Dialogue is the first step to understanding.

In a healthy landlord-and-tenant relationship, both parties benefit from what the other provides.

Susan Rogan

Whitehorse