By Peter Mitham, Business in Vancouver
September 19, 2018
Apartment properties are among the assets with steady investor demand, as the Goodman team at HQ Commercial reported earlier this summer. Goodman numbers indicate that 89 purpose-built rental buildings changed hands in 2018’s first six months, versus 87 a year earlier. Total dollar volume was $1.4 billion, up 7% from a year ago.
The province’s recent announcement that the annual allowable rental increase for 2019 is 4.5% should encourage investors. However, it’s hardly welcome news for tenants, who last year faced an allowed increase of up to 4%, the biggest boost since a 4.3% increase in 2012. This year’s hike is even more dramatic, ranking as the biggest increase since the 4.6% allowed in 2004.
The increases reflect the annual rate of inflation plus 2%, which should ideally link rents to real-world pricing. However, the maximum rents Vancouver allows for new units built under its development cost levies-waiver program designed to encourage affordable rental housing have generally taken much greater leaps.
While maximum allowable rents for one-bedroom apartments declined 1% this year, allowable rents for studio apartments rose 10% after a 7.9% increase last year. Two-bedroom units increased a gentler 8.5% after rising 10.8% last year.
However the biggest gain was in three-bedroom unit rents, which increased by more than 11% in each of the past three years – including a stunning 16.3% increase last year.
The monthly rents for units in projects approved in 2018 are capped at $1,242 for studios, $1,561 for one-bedroom units, $1,972 for two-bedroom units and $2,338 for three-bedroom units. The caps for rents for west-side apartments are 10% greater.
Metro Vancouver defines an affordable rent for Vancouver, based on the median monthly income of city residents, as $1,256 a month.
Vancouver bases its maximum allowable rents for new units on the average Canada Mortgage and Housing Corp. reports for all residential units built in the city since 2005 in its annual rental market report. •