It's a rather common belief out there that allowing rental units in a Condominium project means a decline in value compared with a project that restricts or prohibits rentals. Every time a Strata Corporation tries to implement such a restriction, this argument is placed front and center as justification. It seems to be common sense that renters do not care about or look after a property like an resident owner would so how can anyone argue in support of allowing rentals? The argument against is repeated so often in the real estate community that it has taken on the status of urban legend. But like other urban legends, where is the proof?
After nearly 23 years of experience in the real estate industry I have NEVER seen an actual study that proves having renters causes a decline in market values. This urban legend appears to be nothing more than a theory that has been repeated so many times it's now accepted as fact.
There is a contrarian theory that supports rentals with the following logic. If a project does not allow rentals, an owner has a smaller pool of prospective buyers to access. Investor buyers are not able to buy the unit, only a future resident owner need apply. With a smaller pool of potential buyers, a lower sales price could be the result. Sounds unlikely? There is no scientific study to back that theory up either!
All too often, resident owners scapegoat tenants and blame them for all of the ills in the building. My experience is that bylaw infractions and careless maintenance of a property are also committed by resident owners. The solution is proper bylaw enforcement and education so that residents realize that maintaining a high level of compliance benefits all, regardless of whether the residents rent or own their unit.
Anyone reading this blog who has any material that supports either theory please email it to me and I will gladly post it here.
© Marc Haslam 2009