Nearly one-half of British Columbia renters pay more than 30 per cent of gross income on rent, the threshold deemed unaffordable by Statistics Canada. What’s more, 25 percent of tenants in the province currently pay more than 50 percent of gross income on rent, according to a recent study.
That study, conducted by the BC Non-Profit Housing Association, reveals the tough decisions renters must make in an increasingly tight rental market.
The report also confirms that affordability is not only a big city issue, but affects small communities as well. For instance, 30 percent of renters in Duncan and Sooke, British Columbia are spending more than half of their income on rent.
While increased competition for rental units may appear to benefit landlords tasked with filling vacancies, these statistics also foreshadow potential problems. A strong rental market does not necessarily translate into more qualified tenants.
In fact, landlords should take a close look at the problem of rising rent to income ratios when screening tenants. While most landlords don’t apply strict income ratio calculations when choosing a renter — and some can’t apply ratios by law — it’s the tenant’s overall financial history that counts. Applying a rent to income ratio should not take the place of running a tenant credit check to flag individuals who habitually spend beyond their means or pay bills late.
These statistics also highlight the importance of verifying income along with other information in the rental application. Sometimes tenants unintentionally overstate (or understate) their income because they don’t know how to convert their pay into the monthly or annual income figure requested in the rental application. Make it easy for tenants by allowing the flexibility to report weekly, twice per month, or monthly pay periods. Ask for a copy of a pay cheque stub or other documentation to confirm the figures.
Income is one factor to consider when qualifying a tenant, but don’t stop there. Run a credit check, and evaluate the person’s rental history by contacting previous landlords.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
Click Here to Receive Landlord Credit Reports.
Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.