Rental-only zones in B.C. could result in lower land prices: experts

Older properties in areas are slated for higher density are attractive to buyers who want to profit

(Sardaka/Wikimedia Commons)

A proposal that would give cities in B.C. the power to zone land for rental housing could moderate the price of affected properties, experts say.

Port Coquitlam Mayor Greg Moore, who led a committee on housing strategy for the Union of B.C. Municipalities, said the legislation tabled last month by the provincial government would give cities the authority to protect existing rental properties and calm speculation.

Currently, older properties in areas that are slated for higher density are attractive to buyers who want to make a significant profit because they can be turned into high-earning condominiums or houses for sale, he said.

“They’re trying to sell the potential in the increased value. And that increased value doesn’t allow for rental to make financial sense,” Moore said, adding the return on rental housing in the short term isn’t as great as units that are sold to individual buyers.

Cameron Muir, chief economist with the B.C. Real Estate Association, said rental housing gets “crowded out” for other uses, which is often ownership-type properties that offer revenue for developers even as land prices rise.

“If you’re going to build any kind of development, you start off with what the end product is going to be and what the market can bear and then you work yourself back from all the costs and the residual value is in the land,” he said.

“If it’s zoned rental only, of course the value will increase … but it will only be limited to the sphere of the rental market.”

READ MORE: New mortgage rules still driving Fraser Valley home sales down: broker

READ MORE: New rental building in Surrey sees nearly 2,000 applicants for 97 units

Brian McCauley, president and CEO of Concert Properties, agreed the legislation would impact property prices, but added it isn’t necessarily an incentive for developers to build more rental.

Concert has just under 5,000 rental units across B.C. and Ontario, and plans to develop more.

Examples of better incentives include support from the province or federal government to finance new developments, McCauley said.

“You can’t get as high of a financing rate so you are investing more capital in building a rental apartment building,” he said.

For Concert, McCauley said financial gains are sought by increasing and maintaining a large portfolio of rental housing.

Funding that’s becoming available through the federal government’s new national housing strategy and B.C.’s promise for $6 billion toward housing development are also intriguing opportunities, McCauley said.

Cities can also create incentives by increasing density for new rental units but Moore said those opportunities only come along when a developer wants to rezone or change the designated us of the land.

Despite record housing starts in many communities, Moore said a continuing shortage of rental housing illustrates why cities need more financial and regulatory authority.

“As a city or as a developer, if you can pull all these (incentives) together … you can start to make rental and non-market rental a viable thing to build,” Moore said.

Muir said rental-only zoning is a good policy, but cautioned that it will be up to municipalities on how it is used and any new homes will still take years to be planned and built.

Linda Givetash, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Langley What’s On: Aug. 16, 2018 edition

Submit Langley events: LangleyAdvance.com/add-event or news@langleyadvance.com (subject: What’s On).

Serious collision in South Surrey

One to hospital with serious injuries; 16 Avenue remains closed

B.C. declares state of emergency as more than 560 wildfires rage

This is only the fourth state of emergency ever issued during a fire season

Painful Truth: Reading between numbers on tax stats

The Fraser Institute’s tax numbers don’t entirely add up.

Langley trampoline gymnast off to Peru for world qualifiers

The gymnastics club is holding an open house this Saturday, Aug. 18, with free drop-in sessions.

Average Canadian family spends 43% of income on taxes: study

Fraser Institute’s consumer report shows taxes accounting for larger chunk of income each year

Farmers ponder impact of alternatives to pesticides being banned

The nicotine-based pesticides scientists have linked to a rising number of honey bee deaths will be phased out of use in Canada over a three year period starting in 2021.

Time to kick maverick Tory MP Maxime Bernier out of caucus, Scheer urged

Conservative MP Maxime Bernier is taking issue with Prime Minister Justin Trudeau’s oft-repeated message of diversity in Canada, calling it a form of “radical multiculturalism.”

Thousands of police officers expected at regimental funeral in Fredericton

Two civilians were killed in a shooting in Fredericton that also claimed the lives of two police officers.

2 girls, hand-drawn map in hand, sneak out of B.C. home for adventure

The pair’s escape has transit police reminding commuters to report unusual behaviour

Ex-B.C. teachers’ union leader among latest pipeline protesters to get jail time

Twelve people have been sentenced for violating court order to stay away from Kinder Morgan terminal

B.C. not prepared for a Humboldt Broncos bus crash, group says

An air ambulance advocacy group wants an overhaul of B.C.’s emergency medical system in rural regions

Liberals look at creating federal holiday to mark legacy of residential schools

AFN National Chief Perry Bellegarde said day to recognize painful legacy would boost understanding

Mounties deployed to help B.C. communities affected by wildfires

RCMP officers heading to places particularly within central, northern and southern B.C.

Most Read