Over the course of 2018, the B.C. government’s Rental Housing Task Force has been listening to suggestions from its citizens and their politicians on fixing the housing crisis. The three-member task force has dutifully recorded every idea, no matter how outlandish, and last week, they finally presented their report, which includes 23 recommendations to government.
Prior to last week, many in the construction industry, including us, were in a mild-to-severe panic over the possibility of our government introducing a policy of ‘vacancy control’, which had been suggested to the Task Force by a Vancouver COPE councilwoman. This idea, which would tie rent increases to rental units themselves (a more radical version of rent control, which ties increases to tenants), would have almost certainly made the shortage of rental units in the Lower Mainland dramatically worse.
“If vacancy control were ever passed, I think it would be the end of our industry as we know it,” says Daniel Greenhalgh, ENM co-founder . “Developers were surveyed about this by the Urban Development Institute (UDI), and they responded emphatically – about two thirds of rental units currently in development would be delayed or cancelled if vacancy control were introduced. It would destroy any attempt to solve the crisis of supply.”
Greenhalgh believes that landlords would simply let older units decay, since there would be no money or incentive to maintain or update them.
But luckily for us, Recommendation 10 of the Task Force’s report specifically states, “Maintain rent tied to the renter, NOT THE UNIT.’ It seems that vacancy control, for now, is being put to the side.
The UDI released a preliminary response to the report that expressed relief at this development. However, rent control, despite being a lesser evil, is still chock-full of thorny unintended consequences. This old idea is seeing resurgence in markets like Vancouver with surging rent prices and governments elected to do something about them. But it’s still a bad idea, and in market after market, it’s been shown to do more harm than good to the most vulnerable populations.
The UDI points out that of all the topics discussed with the Task Force, one of the most urgent was the lack of supply of rental units in urban areas. However, the Task Force’s report recommends nothing to incentivize construction of new rental homes.
The UDI urges the government to consider its policy proposals – including exemptions on property transfer and property taxes for purpose-built rental units, as well as rebates on PST – which are designed to spur developers, like us at ENM, to pursue more purpose-built rental projects.
