(Sardaka/Wikimedia Commons)

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

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

The Valley Votes: Your election results

The results are in from the 2018 municipal election.

Fire destroys travel trailer in West Kelowna

Fire crews were called a blaze just after 5 p.m. Saturday

Injured hiker reported near West Kelowna

COSAR is responding to reports of an injured hiker at Blue Grouse Mountain

Team Canada gold medal winners for first time in world curling championship

Team Canada earned gold in Kelowna at the 2018 Winn Rentals World Mixed Curling Championship

Apples the star fruit of the Kelowna farmer’s market

The second annual Apple Festival was held this morning

Tommy Chong says cannabis legalization makes him proud to be a Canadian

Legendary marijuana advocate and comedian celebrates cultural milestone at Kelowna event

Prank pizzas delivered to B.C. mayor on election night

The fake orders happened throughout Victoria mayor’s re-election campaign

MLA to become Nanaimo’s next mayor, could weaken NDP’s grasp on power

Leonard Krog’s win will trigger a byelection when he gives up his provincial seat

Horvat nets OT winner as Canucks beat Bruins 2-1

Young Vancouver star had spirited scrap earlier in contest

B.C. passenger caught smoking weed in a car issued $230 fine

Saanich police did a field sobriety test on the driver and deemed it safe for him to drive

Payette invites critics to ‘come and spend a few days’ with her

Governor General Julie Payette made her first official to B.C. back in March

Letter: Get the facts on homeless in Kelowna

During the Journey Home process, all task force members agreed the strategy must be evidence based

More pot stores expected in B.C. in coming ‘weeks and months’: attorney general

Attorney General David Eby and Public Safety Minister Mike Farnworth visited the new BC Cannabis Store in the province’s Interior

Letter: Get the facts on cannabis legalization for our kids

“Safe kids” are necessarily safe when pot is legalized

Most Read