With income assistance rates frozen for over 10 years now, welfare recipients have a very small amount available for rent. With the province of BC providing a single person on welfare with only $610 a month, SRO landlords are very limited in what they can charge for rent. So they use the low rental revenue as a pretext for not being able to provide proper maintenance and upkeep. (If you don’t know what it’s really like inside an SRO, check out the recent excellent article in the Vancouver Sun by Denise Ryan here. It’s a nightmare!)
Here’s one major reason for the problem. The purchase price paid for SRO buildings is far too high. Once purchased, typically with a small down payment, the mortgage payments consume most, if not all, of the limited rental revenue. This leaves little, if any, money for much-needed maintenance and repairs.
The City of Vancouver could remedy this problem in an instant. It has the legal authority to perform all necessary maintenance and upkeep and put the costs on the SRO title as a charge. If the City were to start doing this on a regular basis, it would send what economists call a signal to the marketplace. Purchasers of SRO buildings would factor in the future cost of all necessary maintenance and upkeep costs, which would mean they would only be willing to pay a lower price. Purchasers would simply not be prepared to pay a price that would result in inevitable yearly losses.
With a lower purchase price, the mortgage taken out would be smaller and therefore the mortgage payments would also be smaller, leaving more money for maintenance and upkeep.
Don’t let it be said again by SRO owners that with SRO rents so low they don’t have money left over to pay for much-needed maintenance and upkeep. By paying too much for the SRO building in the first place, they are the authors of their own problem.