(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

UPDATE: 5 injured in plane crash following Abbotsford International Airshow

One in critical condition in incident involving vintage plane

Slippery suspect evades RCMP near Clearwater twice in one week

Anyone with information urged to contact RCMP or Crime Stoppers

B.C. Wildfires 2018: Thousands prepare to leave their homes at a moment’s notice

Northwest B.C. and Cariboo seeing most fire activity in province as crews battle 490 fires

Man Tracker Invitational returns to Clearwater

By Jaime Polmateer The fourth annual Man Tracker Invitational is taking place… Continue reading

Wildfire smoke fills North Thompson Valley – people advised to be mindful of their health

Many areas of the province are currently fighting active wildfires, with evacuation… Continue reading

A look at B.C. wildfire smoke from space

NASA provides a timelapse of smoke covering B.C. from space

Child dies in boating incident in Okanagan

A North Vancouver family was boating on Kalamalka Lake in Vernon when the incident occured

B.C. Wildfires 2018: Province calls for federal aid

More fires have burned in B.C. already this year than did in all of 2017

Kayak in Indian Arm waters off B.C.’s Deep Cove and feast on famous doughnuts

About a half hour drive from Vancouver, Deep Cove is a great kayaking spot for locals and tourists

Child, 4, attacked by cougar near Fernie

The BC Conservation Officer Service said it happened while the family was fishing

Trans Mountain pipeline protesters practise resisting police at Camp Cloud

Last week, a Supreme Court judge granted the City of Burnaby an injunction ordering protesters to remove everything from the site

Gun used in Fredericton killings is legal, man had licence

Police Chief Leanne Fitch said the long gun is commonly available for purchase, and is not a prohibited or restricted weapon

Ontario will sell pot online when legalization comes in the fall

There are further plans to have pot in private retail stores in early 2019

Woman missing after car swept away by mudslide near Cache Creek

A search is now underway for Valerie Morris, who has been missing since the afternoon of August 11.

Most Read