Neil Sharma, Canadian Real Estate Magazine
July 27, 2018
If Gregor Robertson’s legacy as Vancouver’s three-term mayor is marred by the city’s housing crisis, it won’t bother David Goodman.
While homeownership grew out of reach under the outgoing Robertson’s mayoralty, Goodman, the principal of HQ Commercial and founder of the Goodman Report, believes Robertson also exacerbated inefficiencies in Vancouver’s rental market.
“Gregor has been warned repeatedly about what’s happening and did nothing about it,” said Goodman. “As a mayor for 10 or 11 years, you can’t rule out his presence here, but when it’s come to the high cost of housing, he has not addressed the key issues, and those are the approvals process, land use and the high cost of doing business in Vancouver.”
Vancouver’s vacancy rate is staggeringly low while rents are jarringly high. Goodman takes particular aim at a moratorium the city imposed against tearing down old rental apartment buildings; he charges that they’re low density and adhere to outdated zoning requirements that are incompatible with a growing metropolis like Vancouver.
This puts landlords in a bind because they cannot sell their asset to a developer who would tear it down and build a modern high-rise with vastly more units. Moreover, in the unlikely event that they find a buyer, the building would need significant upgrades from the new owner.
Fat chance, says Goodman.
“It’s all politics, all about retaining power, because tenants will typically support a municipal government that protects rentals. It’s a fanciful idea to protect old rentals. These are 50-, 60-, 70-year-old rentals sitting, for the most part, very low density on zoning from 50 or 60 years ago that’s archaic when you look at the population crush and lack of land. Buying is out of the question, but so is renting because the city believes owners should maintain the cost of very low density, well-located sites, and upgrade and modernize them as much as possible, even though they’re past their shelf lives.”
Consultations on amending the Residential Tenancy Act are ongoing, but, because of mobilized tenant organizations, the outcome looks bleak for Vancouver landlords.
“Let’s keep in mind that for every 40 tenants, there’s one apartment owner,” said Goodman. “Tenant organizations are well organized; they have numbers and are dealing with a left-of-centre government. They’re able to promote their cause and they have eager supporters within the ranks of government, as opposed to landlords, who are often painted in a less than desirable light.”
The RTA consultations have landlords worried, added Goodman. He says that many have owned their apartment buildings for decades and are saddled with low yields, high expenses, and no control over the fate of their assets.
Jason Turcotte believes Vancouver’s municipal government under Robertson adopted a narrow view by preserving old buildings. While protecting the odd building, block or neighbourhood would have made more sense, the moratorium as it is disrupts the greater market.
“By not allowing redevelopment, should someone have been willing to redevelop those buildings into more dense rental housing, the greater market has been impacted because you’re no longer supplying it,” said Turcotte, Cressey Development Group’s vice president of development. “You have fewer units to rent and that filters down the ladder to the rental price points and makes everything more expensive. It does hurt affordability on the rental side because you’re constraining supply.”