At the beginning of June, the Calgary Herald reported that rental property vacancy rates are high in Calgary right now, which is good news for renters, but not so much for landlords. The fact that there are fewer renters is because of both COVID-19 and the economic downturn in Alberta, and is what experts are calling a “twin hit.” Students have lost their summer income and are most likely either moving back home or staying there. People are taking on roommates in order to save money. And some people have even moved on to other cities.
It had been predicted that the rental market in Calgary would improve for landlords in 2020, but that was before a global pandemic began dominating the news and our lives.
At the very beginning of the year, the rate of vacancies for rental properties in Calgary sat at 3.9%, which is actually the same as October of the previous year. But, although the overall percentage didn’t change, there was an increase in the number of properties being rented out, so the number of renters had also increased. The cost of rent was also up, with both indicators representing an uptick in the market.
Of course, a lot has changed since January. The Calgary Herald article points to comments made by the national rentals website Rentals.ca’s content director Paul Danison, who says there is a “growing supply,” noting that several short-term or vacation rentals are now listed as long-term rentals. This is likely because far fewer people are travelling for work and/or for pleasure. In addition, there are a number of brand-new, purpose-built rental units coming on the market. Canada Mortgage and Housing Corporation data states there have been 371 new units come on to the market so far in 2020, with 2,655 under construction.
All this points to a lot of competition in the rental market, and landlords may begin seeing their properties become vacant for longer periods of time.
Vacant Property Insurance
Insurance companies think of properties that are vacant as more of a risk than those that are occupied. This is because there is nobody there to watch for small issues that could easily turn into big problems. If your rental property is untenanted for 30 days or more, it more than likely will be determined as a vacant property by your insurance company, which then nullifies your coverage. Your provider may not provide coverage for broken glass, weather damage, and water damage, and if something were to happen, such as theft, vandalism, an accident, or an act of nature, your current insurance may be considered null and void.
If you are having trouble finding tenants to occupy your property, be sure to contact your insurance broker or provider. Inquire or look for parameters around vacant properties. You may need to be able to provide proof that the property is being visited regularly and tended to in order for your insurance to remain valid. Or, it may be that you need to purchase vacant property insurance.
What is Vacant Property Insurance?
Vacant property insurance is also often referred to as a “vacancy permit,” and this must be provided by your broker or provider. Vacant property insurance offers very basic coverage for fire, lightning, explosion, windstorm, hail and vehicle impact, but won’t provide coverage for vandalism, theft, glass damage, water escape or other perils. A vacancy permit or vacant property insurance will also likely cost more than your regular tenant insurance, and will more than likely also require that someone be on hand to check the property regularly.
To reduce the risks associated with your vacant property, be sure to:
- Turn off the water supply and run taps until dry. Don’t forget to also flush the toilets.
- Install a security system to alert you if there is anyone on your property who shouldn’t be.
- Hook your security system up to your smoke detectors and carbon monoxide detectors to send you a warning should either or both go off.
- Change the locks so that previous tenants can’t gain entry.
- Install water sensors to trigger an alert should there be flooding or a sewer back-up.
- Ensure your property does not appear vacant by keeping the grass mowed and the sidewalks shoveled.
- Install automatic lights both inside and outside to appear as though someone is home.
How to Attract People to Your Rental Property
If you are having trouble attracting people to your rental property, here are a few tips to drum up some interest.
- Have a professional photographer come in to take pictures when your property looks its best for your listing.
- Advertise on a well-known and respected platform such as Rentals.ca or Rentfaster.ca.
- Crowdsource prospects through your friends on social media (a friend of a friend is always the best kind of contact!).
- Offer short-term incentives for signing a lease, such as no damage deposit (or a free month’s rent), free cable for a year, or a gift card.
Trust Lane’s for All Your Insurance Needs
The experienced brokers at Lane’s Insurance excel at educating customers, answering questions and explaining coverage, so you know you have the best insurance for you and your family. As brokers, we work for you, not the insurance companies, and will always do our best to ensure you get the best possible coverage at the lowest possible rate.