Today, I bring your attention to recent developments regarding the operating expense benchmarks for the multifamily asset class in Canada. 

The Canada Mortgage and Housing Corporation (CMHC) has recently announced an upcoming change in the operating expense benchmarks, which will be effective for all applications received on or after June 19, 2023. This change coincides with the CMHC premium increase.

While there are no alterations to the program itself, operating benchmarks have been revised. These changes will have a direct impact on the financial calculations related to your property’s operating expenses and overall profitability.

Let’s delve into the specifics of the revised operating expense benchmarks for the 2023-’24 period:

Wood Frame Buildings:

R&M/Salaries/Appliances: Increased by $120-$150 per unit per annum (PUPA)

Additional Costs (Wall pump/AC/Elevator): Increased by $60 PUPA

% EGI (Management Fee): Increased by 0.25% of Effective Gross Income (EGI)

Concrete Buildings:

R&M/Salaries/Appliances: Increased by $155-$185 PUPA

Additional Costs (Wall pump/AC/Elevator): Increased by $40 PUPA

% EGI (Management Fee): Increased by 0.25% of EGI

These adjustments will inevitably impact your property’s financial performance and, consequently, your investment returns. Acting swiftly in response to these changes will help you mitigate potential risks and ensure the continued success of your real estate investments.

The CMHC will also be updating the application and review processes. These include stricter guidelines for changes made post-approval, restrictions on rent roll modifications, and the necessity of new application submissions for significant alterations that affect overall risk.

Therefore, I strongly advise you to take proactive measures and evaluate the impact of these changes on your portfolio’s profitability. Engaging with your professional broker, reviewing your budgets, and assessing the viability of adjustments to rental rates or expenses are essential steps to consider. By acting sooner rather than later, you can position yourself for success and ensure optimal returns on your investments.

Remember, accuracy in submitting your files to CMHC is crucial. Be mindful of the new guidelines and restrictions to avoid unnecessary complications and delays in the application process.

As always, Votre Equipe Immobilier is here to assist you in navigating these changes and provide guidance tailored to your unique investment goals. Feel free to reach out to us for a detailed analysis of how these benchmarks may impact your specific property.