VICTORIA — B.C. municipalities could soon begin zoning for rental developments only, under legislation introduced by the provincial government Tuesday.
The bill, if passed, would give local governments the power to zone property for rental-only development. Currently, municipalities are unable to make such a designation.
Housing Minister Selina Robinson said the changes would give local governments the ability to preserve and increase the overall rental supply using local discretion.
“Local governments are on the front lines of the housing crisis and they need solutions that work for them,” she said. “This will prevent rental buildings from being torn down for luxury condos that only a very small number of people can afford.”
The legislation would also empower municipalities to ensure existing rental properties cannot be redeveloped for another use, such as high-priced condos. A local council could designate an entire new building for rental only. Or it could deem just a portion of a new development be required for rental, leaving the remaining mixture of units for sale.
The power would be optional for local governments to use. A municipal council could not use the rental-only clause to override existing strata rules that limit rentals in existing buildings. The zoning would only apply when that property is redeveloped in the future, said Robinson.
“I think it’s a pretty innovative instrument the provincial government is development in the housing realm,” said Andy Yan, program director at Simon Fraser University’s City Program. “This reflects really the request from municipalities for more tools to engage the issue of affordability.”
The Union of B.C. Municipalities called for rental zoning in a January housing committee report. Some urban planners have said it could be a key tool to help maintain and expand the rental stock to help combat slim vacancy rates and high rents. Others have warned such zoning could have unintended consequences and disturb the balance of rental and ownership properties that helps create vibrant neighbourhoods.
“I think it’s another tool we can use,” said Surrey Coun. Vera LeFranc. “It has a lot of possibilities, but it also requires a bit of study.” It will fit well with Surrey’s new affordable housing strategy, which has a rental preservation policy, said LeFranc.
LeFranc said in Surrey an obvious focus could be to designate rental along the future light rapid transit project corridor. “Because we’re moving so quickly with light rapid transit, it might be another opportunity to ensure we have strong rental stock around some of our stations to make sure we have strong ridership,” she said.
In Vancouver, the city is supportive of the proposal, said Dan Garrison, assistant director of planning for housing policy. Currently 53 per cent of Vancouver households are rental, and the city has targets to expand thousands of social, secure and laneway rental housing over the next 10 years to boost the supply to up to 65 per cent, he said.
“We’re interested in as we go to try and generate more new rental supply, but right now the tools municipalities have available to us are quite limited,” said Garrison. A rental-only zoning tool would help preserve stock in key rental neighbourhoods like the West End, Mount Pleasant, Kitsilano, South Granville and Kerrisdale. “Our current tools are limited in our ability to protect them,” he said.
Victoria Mayor Lisa Helps said municipalities such as hers appreciate the new powers because they feel they’ve exhausted available tools to encourage affordable rentals.
There’s no guarantee that rental-only zoning will reduce the high cost of rents, admitted Robinson. The hope is that by increasing supply the prices will begin to fall. “The idea is to get more supply out there and we know when with a greater vacancy rate that will help with some of the costs,” she said.
In Vancouver, where rent for a one-bedroom apartment can easily exceed $2,000, even an increase in supply may not have an immediate impact on prices.
“We do know in the absence of new rental supply those rents are going to increase,” said Garrison. “We really do need to increase the supply of rental housing at a minimum to stabilize or level off the inflation of rents we’ve been seeing in the last number of years. Whether we can bring rents down is an interesting question.”
SFU’s Yan said the zoning does not immediately deal with affordability of rents, or displacement of lower-income tenants. “That’s one of the bigger issues when we talk about zoning is the issue of zoning for non-inclusion and anti-displacement,” he said, noting areas like Burnaby’s Metrotown are suffering from high-end condos displacing affordable rental units. “Purpose-built rental does not necessarily equal affordability.”
Urban Development Institute president Anne McMullin said the development industry does not oppose rental-only zoning but it needs to be used by municipalities to improve the value of land to make it financially feasible to build on the property.
“We don’t want to add too many regulations or restrictions because the rental market is very tenuous,” said McMullin. “We’re able to build it because interest rates are low and, frankly, there’s a zero vacancy rate, so there’s demand and low supply. So the numbers economically work. If you come up with too much disincentive, you can create all the rental zoning you want but if it isn’t economically viable it won’t get built.”
Rental construction also needs a faster approval process, because McMullin said with a construction time of two to three years and an approval process in some municipalities of up to five years it could mean the province is eight years away from new rental supply.
The NDP government also introduced legislation Tuesday that would make it mandatory for real estate developers to collect and report information on pre-sale condo contract assignments. Finance Minister Carole James said the law will penalize developers who do not disclose pre-sale flipping of condo contracts, and will also help capture buyers who are trying to avoid paying certain taxes by using the so-called shadow flipping technique.
A third piece of legislation introduced Tuesday would require local governments to draft local housing needs reports every five years, making them mandatory while developing a regional growth strategy or official community plan. Robinson said the goal is for municipal councils to have the most up-to-date information about their local economy, housing and tourism sectors so that they can make the best choices during planning. The government has set aside $5 million over three years to help municipalities fund the research and planning.