Beware the wolves just outside the city limits

The pitfalls of the current, and future, Kitimat rental market

“I hear the housing market is pretty hot up in Kitimat right now! Should I buy a rental property or sell what I have? What do you think I should do?”

My response: “I am not qualified to advise you on selling your home, but I encourage you to contact a local realtor to discuss your options. Personally, if I owned rental property here, I would sell it as fast as I could and never look back.”

Many people are shocked at my response, but the reality is that Kitimat has a serious problem related to the rental housing market and the issues are not what most people think they are.

A mere six months ago on October 1, 2018, LNG Canada announced the Final Investment Decision to continue with the construction of a natural gas processing plant in Kitimat.

This would be the second time within a short period that Kitimat would be thrust onto the global, industrial and political stage.

The first time was during the Kitimat Modernization Project (KMP) during which the District of Kitimat grew by approximately 5,000 workers over the course of a four-year term from 2011 to 2015, essentially doubling the size of the town.

Many valuable lessons were learned during KMP, especially when it came to how Kitimat dealt with the initial and immediate housing crisis caused by the promise of inflated rental prices with minimal effort.

While every business owner deserves to increase profits, the process by which that happens affects human lives often with long-term negative effects for the consumer and the community.

During KMP, many long-time Kitimat residents were wrongfully evicted from their homes and rent skyrocketed, which caused immeasurable long-term pain and suffering, for both the people who were wrongfully displaced and the community, which now had to figure out where to put people that could not necessarily afford higher rents.

This is not a scenario any person wants to see repeated with the onset of the various projects happening in town over the next 10 years.

Thankfully, during and after KMP, the efforts of Shell and LNG Canada, with many partners and sponsors including the Haisla Nation, the District of Kitimat and Tamitik Status of Women documented and prepared an informative and valuable road map of things that were done in a positive way, along with those things that cause detriment to the community and had long term negative effects.

‘This time’, the people vowed, ‘things would be done differently!’ The reality is that it took less than 24 hours for Kitimat to be in the exact same housing boat with LNG as it was with KMP.

Kitimat had five years to prepare for LNG Canada to arrive in full force – so what happened?

In an article published online by the Globe and Mail dated January 7, 2015, updated May 12, 2018, by John Lehmann titled, LNG Fuels housing price boom in northwestern B.C. reads the same today as it did in 2015.

The housing prices reported are approximately the same as they are now (up 124 per cent) into the $300,000 range for an existing single detached home.

While this is fantastic news for people or companies that currently own private or rental property in Kitimat, the side effects of a hot realty market are coming down hard and fast.

Currently Kitimat is faced with high home sale prices, an influx of workers starting to enter the town, many four-month notices to vacate becoming effective on April 30 and a serious shortage of trades and services.

April 2019 will see a flood of tenants and companies looking for rental properties that are already in short supply. Renovations are in full swing and rental property owners are struggling to keep up with the demand.

Firstly, there is a serious shortage of skilled trades and workers in Kitimat. Needing repairs and maintenance to fix up or maintain a property for sale or rent is an essential service right now.

Trying to find a skilled individual or a company that can address the work needed within a reasonable timeframe is proving to be very challenging, even for longtime residents.

The main issues seem to be that even the largest and long-standing businesses in town are either overwhelmed with demand and do not have enough workers to meet that demand.

Many local companies may have been awarded one or more construction projects and have committed a significant portion of workers and resources to those projects.

Somewhere along the way the local companies seemed to have forgotten about the needs of the rest of the community that require vital services and repairs.

Added to the increase of project-related construction work is the fact that valuable and trained employees are ‘company jumping, enticed by the lure of increased wages, better working schedules and additional benefits. The effect of this is there simply aren’t enough skilled people in Kitimat available to perform needed work such as cleaning, repairs, maintenance, plumbing – the list goes on.

Secondly, many people in the neighbourhood will say they are skilled, but they are not. They know just enough to get the job and then cause immeasurable pain and suffering to employers or property owners because they can’t walk their talk.

If employers or homeowners do not know how to conduct a proper reference check, they are leaving themselves open to hiring people that have less than good intentions but are desperate for a paycheque.

Be wary of the ‘jack of all trades’ who promises the moon, shows up and gives a lowball estimate, does an inferior job and then expects full pay without fixing what didn’t get done correctly in the first place.

This is turning into a costly and painful epidemic for many in the Kitimat community. Unfortunately, this is a situation that is getting worse by the day and does not look like it can be quickly remedied any time soon.

Should a property owner be fortunate enough to have found someone to fix the property and that property is now ready for a tenant, who do they call for professional rental advice and direction?

Kitimat has one licensed property management firm, one firm to handle the majority of the community’s rental property needs with that number increasing by the week.

It is obvious they have more business than they can handle by openly admitting to not being able to respond to calls or inquiries for a minimum of two business days with that number expected to increase as demand increases. There simply are not enough professionals to go around – the choices are bleak and there are no easy answers.

Property owners can take their chances with an unlicensed, albeit experienced person, but this comes with a different set of challenges. Should a rental property owner decide to retain services with a licensed company that is struggling to keep up with the overwhelming demand or take their chances with unlicensed individuals who could unintentionally or inadvertently affect the property and the tenants in a negative manner?

It is a lose-lose situation for many property owners and it will get a lot worse before it gets better as Kitimat is facing a critical shortage of experienced and licensed professionals.

In an effort to ease some of the stress now faced with the current challenges surrounding the rental property business in Kitimat, here are a few helpful hints:

References

Checking the references of every single person who wants to occupy or perform work within a property is vital now more than ever. Along with proper application forms and reference checks, social media can also be a wonderful tool to research a potential tenant or independent contractor.

If a property owner wants to see just what type of people are moving into or working on their property, Instagram, Facebook, Twitter, and many other social applications have proven to be wonderful soft reference tools.

Quality vs. price

Hire a licensed professional – no matter how long the wait is. Now is not the time to be a freelance property owner. The use of a licensed professional rental property specialist and skilled trades are needed now more than ever.

Do your homework

Research property management firms that are available. Ask around for what local community members think of the services they are currently being provided with. A decision for renovations or property management based on desperation will inevitably cause problems down the road. Take the time to do the research.

What the law says

For those brave souls who choose to rent their properties privately, familiarize yourself with the current laws under the Residential Tenancy Act and make use of the forms and advice provided on the Government of B.C. website. A link has been provided at the end of this article for ease of reference.

For now, Kitimat is running out of available and affordable properties while the wolves are hungrily pacing outside the city limits. For those that are brave or truly have more money than brains and insist on entering the Kitimat rental market during 2019, I bid you good luck. You are going to need it.

Should tenants or homeowners have questions about renting a property or how to properly vacate a rental property under the Residential Tenancy Act, please visit the Government of B.C. website at www.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies, call 1-800-663-7867 or visit a local Service BC branch.

Sarina St. Germaine writes from her experience as a property manager.

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