THE City of Vancouver’s rental housing programs have been successful in approving new rental homes over the last decade, but more work is needed to meet the current need for rental housing.
Results from two external studies, presented to Council on Wednesday, highlighted many of the challenges associated with developing rental as well as the important role new rental plays in a healthy housing market, particularly in Vancouver where upwards of 75 per cent of net new households rent.
A comprehensive review and analysis of the City’s rental incentive programs over the last 10 years conducted by CitySpaces Consulting cited the need to recognize that newly created rental units play a critical role in alleviating pressure on the rental stock as a whole, and that this need not result in lower rents for those particular units in order to contribute to housing choice and affordability.
The impact new rental has on a healthy housing market was further evidenced by a survey of renters living in new rental units, which revealed that the majority lived in Vancouver before they moved into their current rental, and of those, 76% moved from another rental unit in Vancouver.
A financial analysis completed by Coriolis Consulting illustrates that the higher profit associated with ownership housing, combined with the high cost of land and construction, means that strata development is still more financially attractive than market rental. Without providing incentives, rental is not likely to be built.
Key learnings from these studies:
Viability of rental projects:
· Developers will not build multi-family rental housing unless these projects are financially viable. In order for a project to proceed, sufficient profit is required for developers to obtain project financing and address the costs and risks associated with new development
· Strata condominium development is typically the most financially attractive housing type
City rental incentives:
· The City’s incentive programs have been successful in delivering new rental housing, and since 2009, over 8,700 new purpose-built rental units have been approved city-wide
· Incentives, such as density and DCL waivers from the City or funding from other levels of government are necessary to help close the financial gap between rental and strata condominium projects
· However, existing incentives will not be sufficient to meet the City’s current Housing Vancouver targets for new purpose-built market rental
Creating a healthy housing market:
· The rental incentive programs play an important role in creating housing that serves a range of income types and housing needs, taking pressure off of the existing rental housing stock
· New purpose-built market rental housing is creating important choice for households who cannot afford to, or do not choose to, own a home in Vancouver
· Achieving below-market rates, without senior government subsidies, requires additional City incentives beyond those currently provided by the market rental incentive programs
The review identified key opportunities for improvement which we will be exploring further through Phase II, including simplifying and clarifying our policies and incentives and reducing processing times, identifying ways to address neighborhood fit.
Phase II will also look at early learnings from Moderate Income Rental Housing Pilot Program and investigating whether we can incorporate additional opportunities to secure below market rental. Staff will also be bringing forward a work program for a reinvestment pilot, which will look at opportunities to support landlords with key upgrades while keeping tenants in place.
Finally, the review identified important opportunities to deliver more market rental housing in lower density areas to broaden the range of options and improve the diversity and equity of housing choice for renters in Vancouver. Further opportunities to address equity and increase rental supply in RS/RT areas will be explored through the City-wide plan process.