So, our new premier is attempting to make a big splash as he starts his tenure!
First, it was like Christmas: everyone gets a $100 rebate on their hydro bills and low-income families get a handout of up to $410.
Thank you, Santa! We all appreciate that!
It took only three days for the more substantive stuff to be announced: a massive new housing strategy, designed to expand options for renters.
We should not be surprised. David Eby, in his pre-political life, was a human rights and low-income person’s legal advocate, focussing on the homeless and under-housed residents of Vancouver, in his role with the Pivot Legal Society.
As a member of the government, in addition to serving as Attorney General, he was the minister responsible for housing. So, available and affordable housing is dear to him.
This new initiative has three planks: The first is to increase housing supply by forcing municipalities to have a housing strategy in place that addresses “local barriers to construction so that housing can get built faster, including updating zoning bylaws” (such as permitting three units on previously single-family properties) “and streamlining local development approval processes.”
The progress of the municipalities will be monitored. The province will have the right to step in and force compliance.
The second is to amend the Strata Property Act “to limit age-restriction bylaws so that the only permitted age restriction is to preserve and promote seniors’ housing through the “55 and over” rule in strata housing.”
Currently, many strata properties don’t allow children, making it difficult for families to find rental housing, and forcing young couples to move out when they start families. This addresses that.
The third plank is to immediately force the removal of rental restrictions on all strata properties. This will open up many properties for rental that currently disallow them. In particular, it will immediately provide rental options for an estimated 3000 units that are now vacant in buildings that don’t allow rentals.
But will these strategies work? Will it make housing more available and more affordable?
Providing availability seems more likely than affordability. Hey, immediately making available 3000 more units—how can you argue with that? And changing zoning bylaws to permit multiple units on properties where there is now only one should bring more units onto the market. And putting pressure on municipalities to produce faster and more properties should have at least a little effect on accelerating housing supply.
But I doubt that housing will be more affordable for renters. First, to add another level of bureaucracy to monitor and force compliance costs time and money, and that’s got to come from somewhere. Will that extra time and money off-set any gains, or just (as is typical) add more jobs to the government bureaucracy?
Will the opening up of many more strata properties to rentals mitigate high rents? I’m doubtful.
On the surface, one would expect a greater supply of rentals to create more options for renters and more competition among landlords, bringing down rents (the simple Law of Supply and Demand.)
But look a little deeper! Strata properties that allow rentals are already considerably higher valued than equivalent properties that do not (a personal experience I had earlier this year suggested as much as 20% difference). If many of those properties that do not currently allow rentals suddenly allow them, their prices will be driven up by investors bidding to grab the new supply of rentals.
But those investors don’t buy properties to lose money. The Residential Tenancy Act regulates the amount that a landlord can raise rents every year (with the result that many long-term renters in the same property are paying far below current market rates), but it does not regulate the opening rental rate of a new tenant. So, these new rentals will be rented out at market value and at high enough rates to ensure the investors don’t lose money.
So, the property values for these newly rentable properties will immediately appreciate (simply because they’re rentable), and the rental rates on those units will likely be higher, on average, than those that already serve rentals.
It may be that the property values of currently rentable properties drop a little as the much greater supply of rentals competes with them for value. But will their owners reduce their rental rates as a result? (haha!)
Personally, though, I’m excited by these new policies! In fact, rent-2-own programs and our clients may be the biggest winners of all!
That’s because, in our area, single family homes are pretty much beyond the scope of rent-2-own options. Most who are looking to get into housing through our strategy can only afford strata properties. But, until now, those have been severely limited for our strategy because: A, they must be rentable properties (because R2O clients are simply renters during the qualifying period); and B, they usually must not have a renter in them (because we can’t kick out current renters in favour of our rent 2 own clients.)
While this may not address B above, the much greater availability of rental units in strata properties, and the possible decline in values of existing rental properties (saving our clients money), make the rent-2-own opportunities in strata properties much more attractive and affordable.
Thank you, David Eby!
Your new initiatives may provide a golden opportunity for would-be homeowners to join the rent-2-own strategy in fulfilling their home-ownership dream!