Rental Disclosure Statement
The nearly comatose condominium development industry could soon breathe new life as a result of recently passed provincial legislation. The once hot condo market has been cooled lately, a victim of over capacity and the global economic meltdown.
As of January 1, 2010 the Strata Property Amendment Act has changed the rules governing rentals. Since the creation of condominium corporations a tenuous, two tier housing arrangement has coexisted between rental property and home ownership.
Developers and investors were attracted to condominiums as an investment to provide rental units to produce income. On the other hand, an entire segment of the market viewed stratas as a convenient, affordable means of housing.
The former Act tended to restrict rentals and newly elected councils and the majority of owners would pass bylaws to limit the number of rental units allowed. Developers were required to file a Rental Disclosure Statement, outlining the number of rentals allowed in the strata and for how long. Often the ability to rent ceased when the original owner sold the property and the rental option was not allowed for subsequent owners.
“Now, with new strata developments and new RDS…greater flexibility is afforded to owners, tenants and buyers”, says Kelowna lawyer Christy Lovig. “The number of subsequent owners of the strata lot is now irrelevant and the ability of all subsequent owners to rent continues until the date the rental period set out in the RDS expires. The amended Section 143 of the SPA therefore provides that a new RDS will benefit every subsequent owner of that strata lot rather than just the original purchaser from the developer. All future owners will be able to rent the strata lot without being subject to any rental restriction bylaw for as long as the rental period disclosed in the new RDS allows them to.”
For residential strata lots where the RDS was filed before January 1, 2010 the former rules apply meaning that rental restrictions take effect the date the strata lot is conveyed by the first owner to a new owner, or the date the rental period on the RDS expires.
Clearly the new rules will provide more rental housing, making condominiums a more attractive investment. Currently in the Central Okanagan there are stratas in receivership and several major development projects on hold. It will be interesting to see if an economic rebound takes place as a result of this change. Just as interesting will be the impact the rule change will have on the day to day life of condominium communities.
StrataSphere is intended for general information purposes only.
Gunnar Forsstrom is a licensed strata manager with Coldwell Banker Horizon Realty.
Send your questions to: gforsstrom@coldwellbanker.ca or call: 250-860-1411