Rental licensing and how it impacts investors? (Specific question)

[tonyla]

The specific question I have with rental licensing is to do with illegal and legal non-conforming properties. Since there have been several cities that have implemented it, I am wondering if anyone knows or has heard of how the cities have dealt with implementing rental licensing and all massive amount of rental properties that aren't legal and fully compliant.



Can anyone shed any light on this?

 

[Sherilynn]

Edmonton is a great supporter of secondary suites. The City knows there are scores of illegal suites and the City inspectors must act if a complaint is made. Once the suite is inspected and the list of deficiencies is presented to the home-owner, the home-owner then has the opportunity to either apply to have the suite legalized or remove the suite.



Obviously the City would prefer that the suite is legalized because the City wants affordable, safe housing options. Removing every illegal suite in Edmonton would have huge adverse effects. For this reason, the Cornerstones Grant program was created to encourage home-owners to upgrade and legalize their suites, thereby making the existing affordable housing much safer.

 

[Thomas Beyer]

The problem is widely known but frequently ignored by understaffed cities. The cities would lose far too many affordable rental accommodations and as such do not want to be too heavy handed.



Cities tend to follow-up on phoned-in or sometimes only on written requests. The most common issues neighbors have are: too many cars, too much noise and weird smells / drugs ! Thus: screen tenants accordingly !



Legalizing most suites is very costly due to fire code regulations, second meters for gas, electricity or water, and thus not frequently done. Only a few cities have embarked on licensing requirements, mainly in over-regulated and over-taxed Ontario, none to my knowledge in W-Canada where we tend to invest.



Thus, having an illegal suite is a risk that you must assess, like any other potential risks in real estate like rising interest rates, falling prices, ex-migration, structural issues, tenant issues, expenses ... as stated in my opinion it is one of the smaller risks but worth not taking for some, but for others.

 

[housingrental]

I would not touch any place that is not fully legal - ie meets all applicable fire / electrical / building codes and is registered with the city.

This especially applies to Ontario.

Certain area's are starting to proactively target non-licensed units.



Do not under-estimate the unfortunate prejudice of people against rental housing, renters, and rental housing providers.



To prepare yourself for this I would - and others thoughts will vary:



Do not purchase properties that are not, or cannot be with economical changes, licensed.

Take this opportunity to sell any properties that might have issues under a licensing regime.

Run your future pro-forma using increased expenses - these will be from: Rental licensing, ESA inspections, Criminal checks (for owner), diagrams, etc.

 

[MikeMcC874]

Here in London the licensing guy was driving all the student areas when the 'for rent' signs were up and contacting the ones that were not on the licensing list.



I got nabbed, paid my $25, and it was largely painless. They sent out a fire inspector and he gave me some tips but was really helpful.



Got the license in the mail a few weeks later.



Out in Woodstock, as part of my due diligence, I tried to verify the legal non-conforming status and the city engineer gave me a nice little letter verifying that the property was indeed legal non-conforming based on a permit approved years ago. My lawyer almost died. He said London would never have admitted a property was legal non-conforming.



Point being, know your city. Mileage varies (even in Ontario Thomas ).



Mike