The Official Moncton, NB Project Thread

[Nashe]

I got out of rental business (I only had 4 units @ 2 properties) for that reason.
My options were 1) let my property get slowly destroyed while keeping rents low or 2) price myself nearly out of the market to generate enough cash to properly keep them up. Property taxes, utilities, insurance and maintenance are all much higher than for a building you are living in yourself.

"But you're making $500/month on the building!"

Not really. Not even close. I'm happy to break even, over the year. In 2019, one big repair at one property put the whole building in the red for the year. If you DO turn a profit, you get it clawed back in income taxes. You also get to fight with tenants (via Rentalsman) over damage deposits. One tenant didn't even both asking for theirs when they left... and rightly so. It took 3 days and a 40 cu. yard dumpster to clean out what they left behind ($1,000+ expense to me).

"But you get all your equity back when you sell, and THEN some!"

Heard of capital gains? We liquidated our properties this year and made just enough to pay off all debts associated with the units and put only enough in our pockets to do a modest renovation of our own place. Definitely not worth the hassle of the past 4 years.

[josh_cat_eyes]

The solution: public housing that looks like this

[MonctonRad]

I don't think anyone is arguing in favour of the creation of "projects", tenements or slums.

The solution (as usual) is multifactorial.

The "double taxation" assessment rates have to go. With the appreciation in real estate valuation in the last couple of years, the tax burden on landlords is becoming untenable. They have no choice but to pass the cost of property taxes to their residents, significantly increasing rents, and forcing low income residents out onto the streets. Higgs should address this situation immediately.

At the same time, ways should be found to prevent (or reduce) the sale of rental properties to out of province entrepreneurs from Upper Canada who then "renovict" residents so that they can increase rental prices by 70,80 or 100%. This could be managed by putting on "reasonable" rental controls. Of course, one cannot do this without also tackling the "double taxation" problem. The issues go hand in hand.

I am not against the idea of legislating a certain percentage of affordable housing units in new residential buildings above a certain size. Some developers of course might object to this for a variety of generally legitimate reasons, and I would allow them to get out of this requirement by having them instead construct affordable housing elsewhere in the neighbourhood (not on the fringes of town). Affordable housing should be available downtown.

For the truly indigent and the homeless, I like the new tiny home initiative that they have started in Fredericton. This gets people off the street, and gives them some personal dignity and a secure place to stay.

So, in essence, my solution would be:

1) - eliminate the double tax on non owner occupied residential units.
2) - have the province and municipalities tightly control the residential tax rate in order to prevent tax windfalls due to rapidly increasing assessments.

In return for this tax relief:

3) - institute reasonable rent controls on the rental properties (no more than several percentage points above the cost of living, with the right of appeal for extraordinary circumstances, such as unanticipated major property repairs)
4) - mandate the inclusion of a certain percentage of affordable housing units in any new multi residential project above a certain size or
5) - in lieu of this, allow property developers to pay a fee towards the creation of government provided social housing units in the neighbourhood.

[OliverD]

The problem is that inclusionary zoning often doesn't yield the results that are hoped for, and it increases the cost of other housing.

See here what Portland ME did: https://boulos.com/multifamily-the-effec...effects-of-portlands-inclusionary-zoning

In 2020, prior to the new IZ provision, 756 units were put on the books. Since passing the IZ provision (at the time of writing this article), only 139 units have been put on the books across three projects—a decrease of 81.6%.

Per Christine Grimando, another strategy deployed by developers to skirt the new IZ provision is to reduce the scope of their projects. For example, one multifamily project originally slated for 20+ units is being redesigned as a nine-unit project, just below the threshold that triggers IZ. This trend is resulting in less housing overall and no additional affordable housing being built in Portland.

[Nashe]

I can't see how there'd be any money in it for a developer, unless they were subsidized.

[MonctonRad]

Originally Posted by Vorkuta

I can't see how there'd be any money in it for a developer, unless they were subsidized.

The units would likely have to be subsidized, yes.

The only other way for the developers to recover their costs would be to increase the rents for their other tenants, which doesn't really seem fair.

[josh_cat_eyes]

I was merely making a joke because 40 years ago that is how they would fix the problem. This is an area where an immediate solution doesn’t come to mind. I have lots of opinions on how to improve different things but this isn’t one of them lol.

[JHikka]

Originally Posted by MonctonRad

The only other way for the developers to recover their costs would be to increase the rents for their other tenants, which doesn't really seem fair.

I mean, the alternative is people living without housing. Seems more unfair, IMO.

[MonctonRad]

Originally Posted by JHikka

I mean, the alternative is people living without housing. Seems more unfair, IMO.

I'm not sure what you're getting at. I am presuming the other tenants of the building would be relatively normal folk, probably young urban professionals, currently childless, or elderly couples downsizing from the suburbs and living on a pension (in other words not the hated and reviled one percenters responsible for all the ills of the world).

Assuming this, the other building residents would be concerned about their rental costs, and probably would be worried about paying a premium of an extra few hundred dollars per month on their rent in order to make up for the cost of the affordable housing units downstairs.

The deal should be for the developer assuming the responsibility of building the affordable housing units, but in return, the government partially subsidizing the costs of these units in order to keep the rents low. This would have no net effect on the rental costs of the other tenants of the building.

[Feneant]

How about they remove double taxation on non owner occupied units -only- when the owner resides in NB? Keep it for out of province so that it pushes tenants towards NB owned units so we support our own people instead of allowing all these faceless numbered companies to price out the locals.

[Ifyoubuildit]

Originally Posted by MonctonRad

I don't think anyone is arguing in favour of the creation of "projects", tenements or slums.

The solution (as usual) is multifactorial.

The "double taxation" assessment rates have to go. With the appreciation in real estate valuation in the last couple of years, the tax burden on landlords is becoming untenable. They have no choice but to pass the cost of property taxes to their residents, significantly increasing rents, and forcing low income residents out onto the streets. Higgs should address this situation immediately.

At the same time, ways should be found to prevent (or reduce) the sale of rental properties to out of province entrepreneurs from Upper Canada who then "renovict" residents so that they can increase rental prices by 70,80 or 100%. This could be managed by putting on "reasonable" rental controls. Of course, one cannot do this without also tackling the "double taxation" problem. The issues go hand in hand.

I am not against the idea of legislating a certain percentage of affordable housing units in new residential buildings above a certain size. Some developers of course might object to this for a variety of generally legitimate reasons, and I would allow them to get out of this requirement by having them instead construct affordable housing elsewhere in the neighbourhood (not on the fringes of town). Affordable housing should be available downtown.

For the truly indigent and the homeless, I like the new tiny home initiative that they have started in Fredericton. This gets people off the street, and gives them some personal dignity and a secure place to stay.

So, in essence, my solution would be:

1) - eliminate the double tax on non owner occupied residential units.
2) - have the province and municipalities tightly control the residential tax rate in order to prevent tax windfalls due to rapidly increasing assessments.

In return for this tax relief:

3) - institute reasonable rent controls on the rental properties (no more than several percentage points above the cost of living, with the right of appeal for extraordinary circumstances, such as unanticipated major property repairs)
4) - mandate the inclusion of a certain percentage of affordable housing units in any new multi residential project above a certain size or
5) - in lieu of this, allow property developers to pay a fee towards the creation of government provided social housing units in the neighbourhood.

When we talk about “affordable living,” why does society put all the responsibility on landlords? Why don’t we then talk about putting caps on food prices, car sales, OR force employers to pay higher wages. Why does this responsibility all fall on the hands of landlords? This unbelievable tax height can only lead to the following outcomes: 1. Average monthly rents approaching $2000/month, 2. A halt on new construction because development becomes unprofitable (plus think of the jobs loss: construction, engineering, supplies), 3. Slum apartments. All of which will only serve to make the housing crisis worse. If the government wants to make a positive impact, they should reduce tax not increase it, as this will result in more housing stock and competition to keep rents in check. They should also develop programs subsidizing developers to build affordable projects. As it stands now, with the cost of building construction and TAXES, it is simply not possible to build affordable housing. Let’s not forget the cost of construction has risen 30% over the last two years, plus a sudden 30%+ tax increase, this is not a good scenario for more housing. Also, what happens as we come out of the pandemic with much needed immigration and hosing needs to fulfill the worker shortage this province is critically facing?

[Bishop2047]

Originally Posted by Feneant

How about they remove double taxation on non owner occupied units -only- when the owner resides in NB? Keep it for out of province so that it pushes tenants towards NB owned units so we support our own people instead of allowing all these faceless numbered companies to price out the locals.

I could get behind this! I have been both a landlord while live in and out of the province. Anything that would encourage local ownership groups rather than large corps would get a thumbs up in my book.

[adamuptownsj]

Why not instead just put a cap on the number of units you can own, and beyond that a double tax kicks in? If the goal is to prevent rental consolidation and keep ownership local, this is a good fix. No double tax on say 40 units, and use a different formula for large building owners. Somewhat helps with pricing. Big fan of maintaining double tax on properties owned outside NB.

[josh_cat_eyes]

Originally Posted by adamuptownsj

Why not instead just put a cap on the number of units you can own, and beyond that a double tax kicks in? If the goal is to prevent rental consolidation and keep ownership local, this is a good fix. No double tax on say 40 units, and use a different formula for large building owners. Somewhat helps with pricing. Big fan of maintaining double tax on properties owned outside NB.

I like this idea. This would encourage local ownership.

[Ifyoubuildit]

Originally Posted by josh_cat_eyes

I like this idea. This would encourage local ownership.

Again, why are we suggesting policies for landlords that differ from other businesses? If we are talking about issues of affordability, then why shouldn’t we have limitations on how many grocery stores Loblaws has or double tax them? Or an out of province business of any nature, then shouldn’t we be saying that they should be limited and double taxed? Why do apartment owners have to abide by different rules? I would also bet that most of these reports of tenants rents doubling in a year (and being associated with out of province owners) is sensationalized by media. No one ever reports numbers or statistics from a credible source. What is the true percentage increase in rents this year across all rental units? And yes if someone buys a 1970-80’s apartment building that has had little upgrades, rent has to go up significantly (whether they are an out of province owner or not) to do necessary upgrades (at 2022 repair costs) or else you get apartment slum conditions. The solution is the government has to subsidize housing for those who can’t afford it.

[Taeolas]

I think what it comes down to, is the fact that housing is such an important necessity, and the supply is so constrained, that it may need some special rules in place.

That said, it would be good for the province to do some basic studies on rents and publish them so we do have firmer numbers of the state of housing in the province.

But ultimately, housing is the sort of thing that you have a very limited supply of, that is very difficult to increase the supply of, and in a growing population, is going to be in high demand which will lead to a lot of inflation.

Other markets like grocery stores or car sales, they still have a lot of options available for people and their prices (while inflating) don't seem to be seeing the spikes that rent increases seem to be getting. And food costs are certainly something StatsCan keeps an eye on regardless, and tries to highlight areas of concern with.

Solving the double taxation issue certainly seems to be something we desperately need; our market should be priced and taxed similar to other markets in the country.

Is there a need to solve the Out of Province Ownership "problem"? I don't know; at first glance it does seem concerning. So I would hope that there is legit pressure being put on the governments to watch that and take action on.

[Taeolas]

Hmm, a rather coincidental article posted today.

Basically, it's calling into question the double taxation claims due to the lower property values that are being taxed and claiming that (even with the value increases this year), that actual paid taxes are similar to other jurisdictions.

The article gives one example from Killiam, comparing a property in SJ to one in Halifax.

I do wonder if a proper study was done, looking at actual paid taxes, how NB actually compares to other cities and regions.

[Nashe]

The gist of the article is that lower assessments in NB offset the higher rates.
The problem with that is that that means that RENTS would also have to be the same, to cover them. Do we want rents to be the same in Moncton as Toronto?

[MonctonRad]

Exactly the point.

No one is arguing that lower assessments means that tax rates have to be higher in order to allow for a similar level of service provision on the part of the government.

If however assessments rise, then there should be a concomitant decrease in the tax rate to prevent a tax windfall to the government. The overall tax bill should remain stable so that the municipality can continue to fund fire, policing, sewer services, water and street maintenance.

If the tax bill remains stable then there should be no net effect on the rent paid by tenants. If the assessment increases by 25% however and the rate is not adjusted, then don't be surprised if there is also a significant boost in the cost of rent to make up the difference.

The landlords are not running charities. They are businessmen who are incurring significant financial risk by building and maintaining their rental properties. They expect and deserve a reasonable profit margin so that this risk is justifiable.

Otherwise, who would blame them if they took their money and invested in Google or Amazon instead, and watch their portfolio mushroom, rather than making their community a better place to live in...........

[BaseballFan]

Originally Posted by Vorkuta

The gist of the article is that lower assessments in NB offset the higher rates.
The problem with that is that that means that RENTS would also have to be the same, to cover them. Do we want rents to be the same in Moncton as Toronto?

Exactly. Even the comparison the story makes between Moncton and Dartmouth/Halifax for those two Killam buildings is a bit misleading, because the rental rates are substantially higher in the HRM. You can deal with ANY level of taxation as long as rents are high enough to cover it and the property owner maintains the same return on capital. The problem now is that people/journalists are conflating assessments, tax expenses, mill rates, etc. The bottom line is "tax expense as a % of revenue". Inflationary increases are fine, property owners just need stability and predictability