LandlordBC has produced a white paper, UNDERSTANDING BC’S HISTORY OF RENT CONTROLS AND TAX POLICY, intended to demonstrate that the “success” of the mid-80s Multiple Unit Residential Building (MURB) program was less about the deferred taxation benefits and more about the fact that these purpose-built rental (PBR) buildings were stratified. The program thereby removed huge risks for investors and created an asset that, in effect, was a condominium which they could subsequently sell by individual unit. Much has been made by various stakeholders about how the MURB program was the panacea for new PBR construction. Our white paper is designed to dispel that myth and point to the fact that in BC, between the 50s and mid-70s, when there were no rent controls, we were building secure purpose-built rental housing to meet the demand of current renters and the steady flow of immigrants to our province. The MURB program, in fact, promoted construction of condos in disguise as rentals, and condos have dominated the multi-residential space for the past 40 years.
We are never going to solve the rental housing crisis as long as we have persistently low vacancy rates. If you are a rational investor, you will not build purpose-built rental in BC. You’ll build condos; the situation has been exacerbated by an increasingly restrictive legislative and regulatory environment. Furthermore, all levels of government have made it abundantly clear that they are not prepared to use taxpayer dollars to incent or support the building of market purpose-built rental. So, we’re perpetually stuck.
LandlordBC, as a housing advocate, has a bold solution and we feel it is our responsibility to try to break this logjam. We understand the social benefit in shielding renters from short-term market speculation, but beyond this short-term shield, these interventions harm renters, as we are witnessing today with the dearth of secure purpose-built rental housing. That is why we feel it is essential that the Provincial Government exempt all new secure purpose-built rental housing from price/rent controls, effective immediately, so that developers and lenders will once again regard BC as a jurisdiction where they can confidently invest and build secure market purpose-built rental housing at the scale that it is needed. The stakes are very high if we don’t implement this policy change.
In early February 2019, LandlordBC advised the Minister of Municipal Affairs and Housing that we are undertaking this study and that we will be recommending this policy solution to her. The Minister has the report and our background information, and we are providing her with an opportunity to digest the study and our recommendations. Our recommendation will help both current and future renters. There is no risk to the Province and there is no cost to the Province or taxpayers of BC. The worst that can happen is we see a huge surge in the construction of new secure purpose-built rental housing and vacancy rates move from near zero to a more balanced 4% or 5%. That would be a good thing for everyone.
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