Rents may slip behind market rates over time as allowed annual rent increases are often not given to existing tenants. The rents may be kept stable, or the increases are below the maximum that are allowed. An analysis of the C.M.H.C. annual rental market reports supports this observation. The allowed rent increases over the past few years has been in the region of 4% per year, however, the CMHC Rental Market Report survey results indicate that the rents in the West End have increased by a lesser extent.
Rent increases are often not given as landlords may decide that they would rather accept a lower rent than risk losing a good tenant, incurring the expense of renting a unit, and potentially having a unit sitting vacant. On turnover, the unit may have deferred maintenance that requires attention, and the rental potential of the unit may not be maximized until the deferred maintenance is corrected. Holding the unit off the market until the deferred maintenance is corrected will likely result in higher rents, however, there will be a loss of income while the unit is being renovated and during the leasing period. Many existing tenants would be willing to pay a higher rent if the units
|
