Why Tenanted Condos Stopped Selling in the Fraser Valley

Why did tenanted condo and townhome sales drop so much in the Fraser Valley?

Sales of tenanted condos and townhomes across the Fraser Valley fell from 563 in the first half of 2024 to 178 over the same stretch this year. That is a drop of close to 70%. Total sales in the same window fell about 25%, from roughly 7,900 down to 5,850. The distance between those two numbers is the whole story. A stack of BC rental rule changes, the biggest of which landed in July 2024, made a home with a tenant in it far harder to sell than an empty one.

Two years ago I sat in this same chair and said these rules were going to break something. A lot of people told me I was being dramatic. So rather than argue about it, let me walk you through exactly what changed, show you what the numbers did afterward, and then talk about the part almost nobody says out loud, which is what all of this eventually does to renters.

What actually changed in BC’s rental rules

It did not happen in one announcement. It happened one rule at a time over about seven years, and each one on its own sounded reasonable.

It starts in December 2017, when the fixed term lease with a vacate clause went away. Before that, an owner and a tenant could agree to a one year term, and at the end of the term the agreement was finished. Both sides had signed it knowing that. After the change, almost every tenancy rolls into month to month once the term expires, and it keeps rolling whether the owner wants it to or not. A lot of owners I talk to still do not know that rule changed.

On the surface that reads as stability for the renter, and it is. What it also did was remove the owner’s ability to reset the arrangement.

Next came what you are allowed to charge. For years the annual rent increase cap was inflation plus 2%. In 2019 the 2% came off. In 2020 and 2021 rents were frozen outright at zero. Then inflation spiked past 5% while the allowable increase sat around 2%. Meanwhile property taxes, insurance, strata fees, and maintenance all kept climbing with no cap on any of them. The math flipped for a lot of ordinary people who owned one rental, not for institutions.

Quick Stat: Fraser Valley tenanted condo and townhome sales went from 563 in the first half of 2024 to 178 over the same period this year, while the market as a whole fell about 25%.

Then July 18, 2024 arrived, and two changes landed on the same day.

The first doubled the time an owner, or a buyer who purchases from that owner, has to actually live in the property after ending a tenancy for personal use. It went from six months to twelve. If the Residential Tenancy Branch decides anyone acted in bad faith, the penalty can be a full year of that tenant’s rent.

The second is the one that broke it. Notice to end a tenancy for landlord use went from two months to four. For a buyer purchasing the unit to move into it, notice went from two months to three. Watch this part at 4:26 for the full walkthrough.

On paper that is more time for the tenant, which is a real benefit. Here is what it did in practice. Say you find a tenanted condo you want to live in. You cannot take possession for three months. Your mortgage approval is typically good for 90 days from the date it was issued. The waiting period the rules created runs right up against, and often past, the financing you need to complete the purchase. If rates move in that window, you are carrying that risk yourself.

Reality Check: A standard mortgage commitment holds for about 90 days. The purchaser use notice period runs three months. Those two clocks do not line up, and the buyer absorbs the difference.

So buyers started offering less on tenanted units to price in the risk, and then most of them stopped offering at all. If you are weighing whether a condo or a townhome fits you better, this is one more variable in that decision now. For the wider view of how provincial policy has moved this market, I went through BC’s housing market reforms separately.

I want to be fair here. Every one of these rules was written to protect renters, and in the short run each one does. The problem is that none were tested against what they would do to rental supply three years later. You can read the Province’s tenancy pages for the current notice periods, because these rules do get amended and you should confirm against the source before acting on any of it.

Why fewer landlords means higher rents later

Let me get out of the policy and into what actually shows up on my phone.

I get calls from owners who did everything right. They bought a rental, treated their tenants well, kept the place in good shape. Now they want out and they cannot get out, because the moment they list it, buyers look at a tenanted unit and pass. They do not want the wait and they do not want the risk. So the listing sits. Watch this part at 6:17 where I go through the sales data behind that.

Values are also down off the peak, so a lot of these owners are underwater every month just holding on. I have people carrying $1,500 to $2,000 a month out of pocket after the rent comes in, once you stack the mortgage, taxes, strata fees, and insurance. If you bought a rental at the peak, you already know the feeling.

You would think a buyer would step in and pick up a deal. Put yourself in that buyer’s shoes. We have some of the highest inventory this market has seen in 30 years. Why wait three months and take on the risk when you can walk down the street to a regular resale listing, no tenant and no restrictions, and close on a normal timeline? They would not, and they do not.

So the owner’s only remaining move is to empty the unit out. Except the second the tenant leaves, the rent stops too. Now they are bleeding more, sitting on a vacant unit, trying to sell into a soft market with no guarantee it moves. Keeping the tenant and eating the monthly loss is often the lesser of two bad options. That is the box these rules built.

Did You Know?: When a tenanted unit is sold to an owner occupier, that home leaves the rental pool permanently. Multiply that across hundreds of properties and the rental supply shrinks rather than grows.

Now here is the part I need renters to hear, because I know how the above sounds. Watch this part at 9:38 if you want it in my own words.

Every rule I described was sold to you as protection, and in the short term it works. If you are in a unit right now, you are paying less and you feel more secure. That is real and it matters. Watch what comes next, though. When owning a rental means losing money every month in a unit you cannot sell, people stop being landlords. They sell into the resale market, that unit becomes somebody’s home, and it never comes back as a rental. At the same time, nobody new is stepping in. Ask yourself who is buying a rental in BC today, looking at negative cash flow and a rulebook stacked against them, and saying yes. Almost nobody. And investors are the people who fund new rental supply before it ever gets built.

Fewer rentals today because owners are leaving. Fewer rentals tomorrow because nobody is buying or building them. When supply shrinks and demand does not, price goes up. The rents come back harder than before, and the people these rules were written to protect get hit worst. For how the province is trying to patch supply from the other direction, I wrote about it buying up empty condos across Metro Vancouver.

Let me give the counterargument its due, because it is a real one. If landlords sell and those units become homes people can actually buy at lower prices, is that not a good outcome? Fair point. What it misses is that not everybody can buy, and I do not say that as a knock on anyone. Some do not have the down payment. Some do not have the income to carry a mortgage. Some are at a point in their life where buying is not on the table, maybe not yet and maybe not ever. Those people are your neighbours, your kids, and your parents. Turning every rental into a home you are forced to buy locks them out. We need rentals.

The good news is that a problem created by policy can be undone by policy. Every rule I walked through was a choice, which means reversing it is a choice sitting right there. And there are early signs of pressure building. Prices have flattened out over the last few months, and policymakers across the country are asking out loud how to bring buyers back to the condo market. The starting point is admitting that these rules pushed the exact people who create rental housing out, and giving them a reason to return.

If you own a rental in South Surrey or White Rock and you are trying to work out whether to hold, empty it, or list it as is, I am happy to look at your actual numbers with you. Same goes if you are thinking about selling and you are not sure how a tenancy changes your timeline. The right answer depends on your mortgage, your carrying costs, and your timeline, not on a headline. Before you decide anything, it also helps to know what homes actually cost in your specific pocket right now, and the Fraser Valley Real Estate Board publishes the local benchmark and active listing counts every month. Call me at 604-670-7052 or send a note through my site and I will give you a straight read on where you stand.

Watch the full video above for the complete breakdown, including the board data behind the sales numbers.