VANCOUVER, BC – It is generally agreed that British Columbia is currently challenged by a rental housing supply and unaffordability crisis, particularly in the province’s large urban centres. Understanding that approximately one-third of British Columbians are renters, the magnitude to this current rental housing crisis is widespread and negatively impacts the province’s entire economy.
LandlordBC has produced a report entitled Understanding BC’s History of Rent Controls and Tax Policy to Improve Today’s Rental Housing Crisis to analyze the history of rent controls and tax policy to understand how the province came to be challenged by the rental housing crisis now impacting British Columbia. The objective is to understand the lessons that can be learned from this history to improve the rental housing environment today and into the future for the benefit of British Columbians.
LandlordBC is a vocal and passionate advocate for the building of purpose-built rental housing to alleviate our persistently low vacancy rates and provide British Columbians with an adequate supply of safe, secure and sustainable rental housing. While all levels of government say that they appreciate how challenging it is to build market purpose-built rental, and they all emphasize the need to partner with the private sector to address this crisis, it has become abundantly clear that there is no appetite for taxpayer funding in the form of robust incentives or tax policy for the constructing of new market rental housing. While on the one hand we get that, what this report demonstrates is that benefits of past tax policy, specifically the MURB program, were of far less value than believed.
There is however a proven policy solution for British Columbians that can solve this supply crisis without taxpayer subsidies. This policy successfully accounted for the steady flow of new rental supply in BC in the 1950s, 1960s and into the mid-1970s, and it can do so again in 2019 and beyond. The policy solution is to exempt newly constructed secure market purpose-built rental housing from all rent controls.
“We need to find new solutions if we are to have any hope of getting out of this rental housing crisis, and exempting new, secure market purpose-built rental housing from rent controls is the only viable solution that does not require tax-payer funding”, said LandlordBC CEO David Hutniak
Hutniak adds, “The fact is British Columbia has a robust and growing economy with many renters, both current and those arriving here every day, making good incomes. Unfortunately, we are simply not providing them with the rental housing options that they need and deserve. This is unacceptable.”
Increasingly, LandlordBC is concerned, and we are hearing this concern from various stakeholders as well, that current government policies, and those policies that seem to be gaining traction, are failing renters, especially new renters and future renters. At the same time, all levels of government are touting the need for partnership with the private sector if we hope to solve this crisis. The harsh reality is that the private sector is unlikely to build this needed supply under an increasingly restrictive legislative and regulatory environment. Rental developers, and the pension funds and financial institutions who lend them the money, are simply not prepared to take the risk. The money is and will continue to go to other jurisdictions, or it will end up as more condos.
The stakes are very high. We believe that the time for action is now!
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Highlights from the report:
- The Strata Titles Act of 1966 and 1974 gave multi-family residential developers a lucrative alternative to building rental housing: building condominiums
- Economic studies have demonstrated that rent controls have failed to prevent increased rents and rental housing affordability
- The “success” of the MURB program depended heavily on the critical legal nuance that they were really strata condominiums that could be individually sold into the ownership market at any time
- Investors are making a 60 to 100-year decision when deciding to construct new rental housing and need assurance that their ability to recover profits won’t be usurped by government
- To create the necessary supply to meet the need of the existing and growing demand across British Columbia, without taxpayer subsidies, the Province needs to immediately exempt newly constructed purpose-built rental housing from all rent controls. The exemption would only apply to newly constructed market purpose-built rental buildings constructed after this proposed exemption policy was implemented by the Government. Furthermore, it will only apply to those buildings which will be maintained as secure purpose-built rental housing into perpetuity. The exemption would be guaranteed for a minimum of 20 years.