Despite the Mayor’s hyperbole that Vancouver’s decision to allow 4 story rental apartment buildings in residential neighborhoods is a “big deal,” it actually isn’t.
In a best case scenario, this decision would add about a 1,000 rental units a year for the next 7 years.
In the city of Vancouver, which had about 310,000 dwellings (about half were rental households) in 2016, that change will not even make a dent in the under 1% rental vacancy rate.
In addition, property developers may balk at building the four story apartments due to increasing construction and labour costs, permit processing delays, increasing municipal fees, rising property and provincial taxes, utility cost increases and rent controls.
For example, the maximum rental increase for 2019 in BC according to the Residential Tenancy Branch is 2.6%.
The city of Vancouver however, has just approved a tax increase of 7%.
Recent news stories have indicated that massive insurance cost increases of 50-300% will be hitting condo owners in the not too distant future, which will doubtless translate to increased condo fees. Landlords cover the condo fees and property taxes out of the rents they collect.
Thus, when you put a lid on what landlords can charge, but none on their operating expenses, the net result is generally less purpose built rental buildings, not more.
This is reflected in the miniscule 7.3% increase in purpose-built rental stock in the city of Vancouver SINCE 1990! despite Vancouver’s population increase of 38% during the same time period.
However, the socialist ideologues on city council and in the provincial government, many of who have never run a business or been landlords themselves, obviously feel that landlords have unlimited resources to finance their less than stellar performance in handling the population’s housing needs.
©Pazder Law Corporation (2020)
Questions? Call Kenneth Pazder or Melissa Valana (604-682-1509) at Pazder Law Corporation anytime for a free consultation.