Carl wrote:
unfortunately this percentage increase applies to everyone including purpose built apartments. Individual home owners also caught in this but they cannot recoupe any additional interest payments as a result of increase in interest rates. Can they cap increase in interest rates?
You cannot continue to have a losing one which is draining more cash out. As a result the landlord has to resort to remove the existing tenants if they try to play landlord-tenant rule book or resort to sell the property.
If someone is choosing to invest in property in this way they'll likely have a longer term outlook and anticipate interest rate increases. Currently, they're still experiencing small increases and historical low interest rates. If a half percent interest rate is putting them in jeopardy they should probably be looking for different investment vehicles. It isn't a huge savings but increased interest payments also increases how much they can deduct (the interest they pay is tax deductible). It might be best for them to sell the property and invest in weed stocks if they're struggling that much.
Purpose built apartments often use a strategy of discounting rental rates. Your rent is $1500 but we'll only charge you $1350 because that's the market rate now. When there is a need they will eliminate that discount.
From a tenants perspective, their pay isn't increased with increased with interest rates. In fact 1.8% is above inflation and very likely above their annual wage increases.
There certainly are slimy tenants and we occasionally hear about some of the extreme stories in the news. I know some jurisdictions have registries for particularly bad tenants but that is fraught with all kinds of other issues. Those experiences are extremely frustrating but all too often the landlord doesn't do his or her homework. They're entering a potentially long term contract with someone and the most research they do is to note they're driving a Mercedes so they must be a good tenant. They have to consider that they could be renting this property to these people for the next 20 years (and with a contract that says I can only increase their rent by 1.8%/year).
While tenants can be crap the law is sided towards the tenants because the vast majority of the time it is the landlord being the slimy one. They have the power and money and some of they pull some horrible stuff.