A provincial promise kept. Now what?
Recently, B.C.’s provincial government made good on the campaign promise to freeze residential rental rate increases for the rest of 2021. On March 1, the government started the process to make that happen in the legislature.
With this move, by the close of 2021, rental housing providers will have faced two full calendar years of 0% rental rate increases. Not only that, but once increases are allowed again, owners will also presumably be at least two years behind in compounded increases lost.
Against this backdrop, here’s an actual example of what one of our clients has faced in expense increases from 2019 to 2020 for a 20-suite building in the City of Vancouver:
- Property taxes: +24%
- Insurance: +36%
- Heat and light: +16%
- Water and sewer: +10%
- Cleaning and sanitation: +6%
Many people have suffered greatly in the last 18 months, physically, financially and mentally. There’s certainly good reason for some to have a break from increased rents. Yet those who may actually be better off financially, and who are able to pay their increases, should be expected to pay their share of the burden of costs, as they would in normal times.
So the NDP made good on its promise. Yet if increasing the availability of rental housing is also really a goal, what’s next? As we all know, you can’t create a barrage of negative (even if well-intentioned) policies in rental housing without decreasing the likelihood of construction.
What you can do
As we write this, the City of Vancouver is proposing to downzone by changing C2 zoning and will be holding a public hearing on March 11, 2021. This is yet another example of a policy that does the opposite of what is intended.
We call on the City to enable a drastic increase in purpose-built rental stock. In the meantime, please send comments here or request to speak if possible!
With respect to their goal of 114,000 units built over 10 years, we note we are 35% through this period with only 2.6% of units constructed. How are we going to enable a drastic and meaningful increase in the purpose-built rental housing universe? CMHC demonstrated the increase was only 896 units in the City of Vancouver in their Fall 2020 report.
If rents go down while costs and vacancies go up – which has happened during COVID – less rental housing will be built in the future. These factors, along with an ongoing blanket freeze on rental rates with nothing to balance out expenses, will further exacerbate the decline in rental housing starts. Add to the picture increased demand for condo projects, and it’s only a matter of time before developers turn their attention back to building what’s tried, tested and true.
So, what’s the plan?