Rental Housing Code Red….Hell Yeah

By David Hutniak for Generation Squeeze

One cannot pick up a newspaper or peruse online these days without finding an article or commentary from a diverse group of stakeholders and interested parties discussing the current rental housing supply challenges in Vancouver, Victoria and other cities and municipalities throughout British Columbia. 

We are seeing unprecedented coverage of this issue from national and regional publications, weekly blog opportunities asking “Renters of Vancouver” to take an intimate look at how they are dealing with the housing crisis, organized public protests, both YIMBYs and NIMBYs speaking out at public hearings for and against new purpose-built rental projects and, Generation Squeeze proclaiming a “Code Red” housing crisis.  The impending provincial election in BC and the extensive National Housing Strategy Consultation process initiated by the Federal Government, have only heightened the attention and divergence of opinions on this crucial topic.

LandlordBC is the industry association representing owners and managers of the rental housing industry in BC.  Our organization has been leading the call for more purpose-built rental housing construction, both new and enhancement of the existing stock, so that we can return to a healthier rental market which we would define as between a 2% to 5% vacancy rate.  We cannot sustain the current vacancy rate in markets like Victoria, Kelowna and Vancouver (significantly less than 1%), particularly in light of the continued growth of our population especially as it pertains to our urban centres.  Metro Vancouver alone estimates the need for in the order of 6,000 units of rental housing in each of the next 10 years to catch up for unmet demand and to accommodate demand from growth.

To those of us in the rental housing industry, it is no surprise that we have this severe shortage of rental housing. This is a problem that has been slowly creeping towards us for decades due to such a short supply of rental having been built since the 1960s and 1970s. Much of our existing supply, particularly in a market like Vancouver where more than 50% percent of residents are renters, is reaching the end of its life and, even though recently there’s been a more viable business case for the private sector to add rental stock, building rental continues to be extremely difficult to build despite what one would think are very favourable conditions due to the low vacancy rates.

Purpose-built rental housing is designed and built as long-term rental accommodation. It is not the same as renting a condo, basement suite or laneway house which does not provide the same security of tenure for the resident and may be removed from the rental universe at any time by the unit’s owner. This secondary market, as it is termed, in the absence of meaningful purpose-built rental development over the past three to four decades, has become the predominant form of new rental housing.  An over-hearted real estate climate such as we have been experiencing for the last few years provides owners of secondary market units with many temptations and incentives to sell or demolish these units, or more recently, convert them to short-term rentals.  The only thing that will cure this is more purpose-built rental housing.  The more of these purpose-built rental units that are built, the better off renters and our communities will be.

Our industry has been advocating for many years with the Federal (and where applicable Provincial Governments) to revisit successful incentive programs that encouraged the building of new purpose-built rental housing.  More recently, we are encouraging the Federal Government (and the Province of British Columbia) to facilitate raising repayable construction capital via a 35-year development bond for the construction of affordable rental housing that the private sector will build, lease and manage.  We’ve also told cities that they need to fast-track the building of purpose-built rental and seriously consider incentives in exchange of housing and non-stratification agreements for 60 years or life of the building.  The incentives could take the form of Development Cost Levy waivers, Community Amenity Contribution waivers, parking reductions, relaxation of unit size and, density increases.  It is encouraging to see a progressive albeit small cohort of cities demonstrating leadership in this regard.

Clearly not all purpose-built rental projects are well conceived or appropriate for the neighbourhoods they are proposed.  We get that.  In addition, it is critical to understand and appreciate that social housing is an essential component of the overall solution if we are going to meet the needs of our citizens across the socio-economic spectrum.  This is why in addition to LandlordBC actively supporting the need for social housing, we have long advocated for increased renters supports, most notably Portable Housing Allowances.

Portable Housing Allowances provide direct financial support for households without being tied to a specific unit of building.  Portable Housing Allowances provide many advantages including:

  • Allowing recipients choice,
  • Allowing flexibility to address local needs, and
  • Better labour-market attachment than with rental subsidies attached to units of buildings

Portable Housing Allowances enable lower income people to move to take jobs which are good for them, for businesses and for taxpayers, because it will drive economic growth.  While previously not seen in Canada, it is exciting to see that Ontario just announced $20 million of provincial and federal funding over two years and 22 communities for a Portable Housing Allowance pilot project.  The program will focus on survivors of domestic violence but, nevertheless, is huge validation of the value of Portable Housing Allowances in Canada.

The bottom line is this, what will help improve the current situation is the continual approval and development of multiple rental projects, including market rental and subsidized options, year-after-year, thus adding to, and in some cases replenishing todays aging rental housing stock. This is the only way a meaningful supply of rental housing can be added to the province, impacting affordability by alleviating the price pressure on a limited existing supply, and increasing the range of housing options suitable for families, baby-boomers and everyone in between.

Continued collaboration between the private and public sectors and the public at large, in planning, approving, permitting and building additional purpose-built rental housing is the only way to create a long-term fix.

Generation Squeeze is a campaign driven by the evidence.  It has its origins in the research of Dr. Paul Kershaw, a University of BC professor, who is a leading thinker about generational inequality in Canada. With the support of early funders like the United Way, Vancouver Foundation, Vancity Credit Union and the Social Sciences and Humanities Research Council, It became an awareness campaign. Read more about Generation Squeeze here.