The real hurdles
Ottawa’s latest budget declared Vancouver’s housing market to be more balanced, but times remain tough for renters.
“High demand for rental housing has not translated into an increase in supply,” the budget noted.
To encourage new development, Ottawa will give Canada Mortgage and Housing Corp. $113.6 million over five years to expand the Rental Construction Financing Initiative. The funding will help boost loans under the initiative from $2.5 billion to $3.75 billion over the next three years, leading to upwards of 14,000 new rental units.
But financing isn’t what rental housing developers in Vancouver need, said veteran apartment broker David Goodman, a principal at HQ Commercial.
“It’s helpful that they’re putting more money into rentals; I think it’s a good move,” he said. “[But] I’m not sure anyone’s going to take it – that’s the irony – because there are too many obstacles to get to the point where you want to borrow.”
Those obstacles include municipal policies and processes, access to land and, increasingly, workers.
Rather than offer financing, Goodman said, Ottawa could have helped B.C. builders by reforming the rules governing the GST on rental housing construction. The current regime kills a lot of projects, and industry groups including the Urban Development Institute (UDI) encouraged Ottawa to offer builders a full rebate or even an outright exemption for GST on new rental housing. UDI also encouraged the inclusion of GST input tax credits on the ongoing operation of rental housing.
Victoria is doing its part to reduce the tax burden on rental property owners. While residential properties worth more than $3 million will be assessed a new tax to fund school construction, rental properties will be exempt. (BC Assessment classifies multi-family rental properties as residential, just like condos and detached homes.)
When the province announced the new tax in the provincial budget, builders threatened to pass it along to tenants. This would have added an average of $125 to monthly rents. The province responded with assurances that multi-family rental properties would be exempt.
Two years ago, cheers went up as Ottawa announced $3.4 billion for transit projects across the country. Vancouver Mayor Gregor Robertson declared it “a game-changer for our region.” The formal city response applauded the designation of “at least $370 million” to accelerate design and engineering work in anticipation of new transit development in Metro Vancouver.
Two years on, the 2018 budget indicates that just $255 million has been invested across Canada. A further $683 million could be spent this year, while the majority – $2.5 billion – will be spent between April 1, 2019, and March 31, 2021.
While the funding is aimed at reducing “long commute times” to “give families more time to spend together,” delays in putting the money to work mean many children will have left elementary school by the time anything is built. Or, as in the case of Rheal and Sam (a couple mentioned in the budget), families will opt for less affordable housing close to work that reduces dependence on transit.
Perhaps the most notable element guiding spending proposals in the latest federal budget is its accounting for how spending on initiatives, including transit, housing and making commercial buildings more energy efficient, will affect people according to gender.
“No budget decision was taken without being informed by Gender-based Analysis Plus (GBA+),” the budget noted, explaining GBA+ as “an analytical tool used to assess how different groups of women, men and gender-diverse people may experience policies, programs and initiatives.” The government plans to make the approach a permanent part of federal budget-making through special legislation.
Go big or stay home, the saying goes, and I obviously went big when filing last week’s column while away from home.
Two readers noted that the Real Estate Board of Greater Vancouver’s benchmark price for housing in the region rose 12.6% between July 2016 and January 2018, rather than 75% as – inexplicably – appeared in this column.•