Kelowna city council shocked by micro suite rents

Councillors say the owners of some 335-square-foot microsuites in the city are asking as much as $1,500 a month.

The units may be small, but concern is growing among Kelowna city councillors about the high rents being charged for microsuites.

Several councillors expressed their concern Monday after hearing some of the suites, which get tax breaks not afforded to other forms of residential development in the city, are costing in the neighbourhood of $1,500 per month to rent.

That is for a suite just 335 square-feet in size.

“It’s disappointing,” said Coun. Gail Given, who said there was an expectation when developers came to the city for approval to build the living spaces, that microsuites would help with Kelowna’s affordable housing shortfall.

Under a provincial mandate, developers of microsuites do not pay development cost charges for units that small.

DCCs are used by the city to help pay for infrastructure such as roads, sidewalks and street lighting associated with the developments.

Coun. Ryan Donn said he was shocked when he heard that some microsuites in the city were being rented for between $1,500 and $1,600 per month.

“My jaw just dropped,” he said. “It’s shocking, almost predatory pricing.”

While Given, Donn and others on council said they expect the market will eventually help bring down rents as more regular-sized units currently in the planning or construction phase make their way onto the market, council was given no indication such high rents would be charged for microsuites when developers came to it seeking approval to build them in the city.

In fact, the indication was the opposite, said Given.

She would not go as far as to say council was duped, but said she felt council asked all the right questions at the time.

Donn was quick to add not all developers of microsuites in the city are charging rents disproportionate to the size of the units.

One developer, he said, has made the decision to keep rents for the units he built near the Cottonwood extended care facility on Gordon Drive in the $700 to $750 per month range.

But learning that others could be rented for so much more has councillors openly questioning whether they should approve any more.

Couns. Tracey Gray, Charlie Hodge and Luke Stack all said they felt council needs to have a discussion about the issue.

“At this point, I think we want to know what can we do,” said Hodge, who was blunt in his criticism.

“Basically (with high rents, microsuties) are not helping the people they were supposed to help—those with lower incomes.”

With a vacancy rate in the city of just over 0.5 per cent, rental rates have jumped substantially in recent months. And house prices for those looking to buy have also shot up.

The city, following a surge in the number of applications from developers to built microsuites last year and earlier this year, decided to allow them in the five town centres of the city—downtown, South Pandosy, near the Landmark technology centre towers across from the Parkinson Recreation Centre, in Rutland and around the Orchard Park Shopping Centre, as well as close to UBC Okanagan.

In addition to the provincial mandate that DCCs not be charged for them, the city offers other breaks and incentives for microsuites in a bid to get more housing in the city. But while council says it is not in the business of rent controls, councillors did feel smaller suites should have smaller rents and could help ease the current rental squeeze here.

Relief may be on the horizon, however, as there are as many as 1,000 new regular-sized rental units in various developments slated to be built across the city.