Addicted Renters, Inflation, and Mortgage Costs Trouble Landlords

A “for rent” sign outside a home in Toronto on July 12, 2022. The Canadian Press/Cole Burston

Rising inflation and mortgage rates as well as a proliferation of addiction issues have compounded challenges for Canadian landlords. Many tenants, meanwhile, are struggling to come up with the rent each month in a time of economic hardship.

In Regina, Saskatchewan, Kim Besler said it’s so hard to find decent tenants, she accepts a small loss to keep a good one.

“It’s mostly low-income that need to rent. I feel for families today. There is no way to pay rent and their bills and save for their own home,” Besler told The Epoch Times.

“I have a wonderful tenant that I know struggles now to pay her bills. I’m having to eat more of the monthly costs to keep her,” she said.

“Good tenants are hard to find. Right now I’m taking a $150 hit monthly. Her lease is up for renewal the same time the mortgage is. I don’t care how much the mortgage goes up, I will not increase her rent. She’s a good renter.”

‘It’s a Nightmare’

Other renters bring trouble. One landlord requested anonymity as her ongoing tenant problems remain unresolved.

“I felt so bad for the prospective renters who all were low-income and had no safe choices to rent. I’m talking about the ‘hood area’ in Regina. Not safe to walk at night,” said the landlord.

“But now I have a different perspective. I have a squatter in my home. So once I get her out, which will take the sheriff, the rent will go up to cover all of the damages. Blah.”

The landlord claims the woman is “unemployable,” lied about her income on the tenancy application, lied about how many dogs she had, and allowed her daughter to move in without permission.

“My shed which had personal belongings has been broken into. My big screen TV plus the 40-inch and the sound bar have been broken by the dog. This was a fully furnished house,” the landlord said.

“It’s a nightmare. ORT [Office of Residential Tenancies] created squatters. She knows the process and exactly how long she can stay [for] free.”

The landlord also doubts the tenant’s story about the dog breaking the television sets. “She sold the TVs, but I can’t prove it.”

Limits on Rent Increases Force Sales

Cameron Van Klei, a realtor in Chilliwack, B.C., said he has seen “a lot of houses” owned by landlords up for sale. Provincial laws limit rent increases to 2 percent per year for 2023, and increases were frozen during the pandemic.

“People that are calling me can’t get enough money for the rent anymore, so they’re having to sell their properties. Their mortgage has gone up. They can’t get more from the renter. And so they’re selling the property, and a lot of renters are losing their homes because of that,” he said.

Van Klei said the gap between artificially low rents and those closer to a true market value has left some properties on the rental market longer than usual.

“I have a beautiful house in Promontory [neighbourhood]. It’s been vacant for three months, and I haven’t had a vacancy in probably eight or nine years.”

Interest rates and inflation have had an effect. The Bank of Canada held a 0.25 percent policy interest rate for many months but raised it in March 2022. It upped rates to 4.25 percent on Dec. 7, and another increase is expected shortly. In December, Statistics Canada reported a year-over-year inflation rate of 6.3 percent.

Mortgage Rate Hikes

According to Canada Mortgage and Housing Corporation, a conventional five-year mortgage was 3.2 percent in August 2021, but it has risen every month since, reaching 5.89 percent in December 2022.

In Calgary, a rebound in oil prices allowed landlord MacKenzie Wilson to increase his rent last summer, but mortgage rate hikes nullified the gains.

“It is certainly challenging right now. I went and renewed a mortgage in November, and I went from 1.78 to 5.39 [percent]. So, I went from having a decent margin of cash flow to basically breaking even. It went up in interest and things—$480 a month on that one property,” Wilson said in an interview.

“I’m now actually in the midst of renewing my homeowners rental insurance. Those numbers have gone up, and I’ve seen year-over-year my utilities going up between 7 and 9 percent, depending on the property.”

Drug Addiction, Property Damage

Addiction problems have not receded to pre-pandemic levels. According to federal government data, the number of daily apparent opioid toxicity deaths in Canada grew from eight in 2016 to 12 in 2018, and to 20 during the six months from January to June 2022. Also during the first half of 2022, males accounted for 76 percent of those deaths, and 76 percent of the deaths involved fentanyl.

Another Regina landlord who had tenants with addiction problems spoke with The Epoch Times but requested anonymity. “This cannot have my name in the article anywhere,“ she said. ”These people will destroy me.”

The landlord said that in June 2021 she rented to a couple who paid the rent and damage deposit up front, but after they moved in, they could no longer be reached by phone and kept stalling on paying rent.

“They said that one of them lost their job because of COVID, and we come to find out he just is a big druggie, and that’s why he lost his job, and she ended up leaving him. But he used the whole COVID thing as an excuse to not let us come in to do walk-throughs. They just squatted for months,” she said.

After the tenant broke a window, the landlord secured a hearing by phone, which resulted in an eviction.

“It took me all afternoon to clean the bathroom because they smeared feces all over the floor. They vomited all over, garbage everywhere. It was so disgusting. Every room had at least two big holes in it. The drywall is destroyed,” she said.

Damage to a rental home in Regina, Saskatchewan, 2021. Handout

“The damage was too much and it’s just been sitting there for over a year because we couldn’t afford to do it. It’s just awful, absolutely awful.”

The landlord is awaiting an adjudicator’s ruling regarding their claim of more than $16,000 in damages and unpaid rent. The home, bought for $180,000, is now worth $80,000, as property values have dropped.

“The previous tenants right before them, he was great for a while. And he stopped paying out of nowhere and started acting crazy. We finally got in there, and every dresser drawer was just filled with used needles. There was just so much drug paraphernalia in there, it was incredible,” the landlord said.

Needles left behind by a tenant in a Regina home, May 2021. Handout

Linda Kormos rents out two properties in Melville, Sask., population 4,500, but faced a similar problem as her urban counterparts.

“[It’s] difficult to find a reliable renter that can cover the cost of the property mortgage, taxes, and repairs. There’s very little profit, even when a renter can be found,” she said.

“Those who cannot qualify are often tenants who cannot manage finances well, and there is no rent guarantee from any social assistance program to ensure that the rent is paid.”

Damage to both properties by problem renters is still being repaired, Kormos said.

“The cost of renovation is keeping us from re-renting both the properties, after extensive damage from clients with substance addiction. We are still repairing, six months later.”