Here at ENM, we’ve decided to focus our energies on developing purpose-built rental housing, like our new 191-unit Willoughby Walk. We want to be part of filling a gaping a hole in the Lower Mainland housing market and provide more and better options for tenants who want to commit long-term to a quality rental property.
As a business, we’re well aware of the risks in focusing on this area of the market. In fact, we’re one of the only developers in the Lower Mainland who plan to focus exclusively on purpose-built rentals. We believe we can build a successful business model in the current climate – but we’re also observing with increasing unease the rapid changes to that climate that are being wrought by the current provincial government.
The NDPs seem to be trying to tax their way out of the housing crisis. They’ve introduced one new tax after another by claiming they can curb foreign speculators and force developers to bring their prices down. But these taxes don’t just apply to luxury strata developments and mega-mansions – they apply to rental properties as well. And a recent analysis by the Urban Development Institute shows that these new taxes will add about $850 a year to a tenant’s rent in a new project – like the ones we plan to build.
Our co-founder, Daniel Greenhalgh, believes that all these new tax efforts are attacking the wrong problem. “I think the provincial government’s energies would be better spent on finding ways to expedite and incentivize purpose-built rental housing, like our development Willoughby Walk. It’s getting harder and harder to build, and the permitting process is getting longer. Meanwhile there’s a crisis of supply of quality purpose-built rentals. I’d love it if our industry and the NDPs could work together more productively in finding solutions to adding to that supply.”
The most pressing issue, as we’ve said before, is a dearth of supply of affordable housing and construction costs that are the highest in the country. There are several new incentives to build rental housing that have been introduced, and we welcome these. But we fear these will be negated by new taxes that end up hurting our potential tenants.
The truth is, we’re out on a limb with devoting ourselves to purpose-built rentals. And that limb is being shaken by the changes to the regulatory framework. “It’s always going to be harder to recover investments from building rental housing,” says Daniel. “It takes a lot longer and it comes from a lot of different sources. We have to trust that the rules and regulations aren’t going to look completely different in five to ten years. Not only will we be forced to turn away from our model, but it will be tough to convince any developer, or any investor, to take a risk on purpose-built rentals. There’s just a lot of uncertainty now, and the market can’t take much more of that.”
The UDI recently wrote a letter expressing these kinds of concerns to the provincial Rental Housing Task Force. They urged them to protect the Residential Tenancy Act from further radical changes, or risk a radical shift away from building rental housing. We support protecting the RTA in its current form. The rental market needs a solid foundation, and it can’t weather the weight of many more shifts.
