When Latosia Campbell, MSc student at UBC’s School of Community and Regional Planning (SCARP), first came from Jamaica to Canada to study she was surprised to find only a small selection of Vancouver rentals fit her student budget.
“After my first year at SCARP I looked at a couple of basement apartments and then decided to live on UBC campus because I felt what was being offered in the city wasn’t giving me value for my money,” says the international student.
That first brush with Vancouver’s rental market prompted Campbell to enroll in a housing course taught by Michael Gordon, senior central area planner, City of Vancouver and adjunct professor at SCARP. Issues raised in the class sparked questions for Campbell about how the city, with a vacancy rate of 0.3 per cent compared to the national average of 2.2 and no plans to significantly increase the number of rental units, could sustain an estimated population increase from 578,000 to 668,000 by 2021 (2002 BC Stats projection).
In 2008, B.C.’s 1.1 per cent rental vacancy rate was slightly below Manitoba, at one per cent, and ahead of Saskatchewan, at 1.2 per cent making it one of the lowest in the country.
What she learned in Prof. Gordon’s class prompted Campbell to research the significance of rented condominiums to the city’s rental housing. “Over several years a developers’ market has favoured condos over what’s referred to as ‘purpose built’ or planned rental developments,” she says. “There has also been a lack of government tax incentives to promote rental housing. Today approximately 27 per cent of condos are rented in Vancouver, the highest of any Canadian city.”
For her study, Campbell interviewed 20 individuals including condo rental owners, housing advocates, researchers and developers about their involvement in the rented condo market. She learned that while owners rent out their condos for a number of reasons such as income security should they find themselves unemployed, or as income for their children while at school, the chief reason is for investment. Her study identified some challenges that may influence the willingness of condo owners to continue renting their units and also to remain in the market.
“Condo investors complain they aren’t making money off their investments because rents aren’t enough to cover expenses such as ongoing repairs and strata fees,” she says. “Another complaint they have is rent controls and rental restrictions, which either prevent them from raising the rent unless the tenant leaves or limit their ability to rent.”
Even if there were government incentives and policies to encourage investors to provide rented condos on a long term basis, there are concerns by
renters and rental housing advocates about housing affordability, she adds.
Rented condominiums are 30-48 per cent higher in price than planned rentals and are generally newer and more sophisticated with modern fixtures and amenities. This poses a problem for 43.7 per cent of renters who – according to 2006 BC Stats figures – spend one third or more of their income on housing.
When Campbell interviewed researchers, housing specialists and rental housing advocates, most agreed more attention should be given to ‘purpose built’ rental housing.
Campbell says the current federal tax system discourages investment in rental properties, for example not allowing capital gains reinvested in rental housing to be exempt from capital gains tax. She adds the municipal government could help to stimulate greater interest in rental housing such as partnering with senior levels of government and stakeholders in the rental housing sector and lessening the burden for new rental development.
“Vancouver has a role to play in stimulating greater interest in rental housing and in helping solve the rental housing
shortage,” says Campbell.
She adds Canadian universities could contribute by forming countrywide research partnerships to better understand rental housing markets, the status of the current supply of rental housing, and the significance of rented condominiums in Canada’s
Campbell will present her study on Oct. 16 at the UBC School of Community and Regional Planning Symposium on Affordable and Sustainable Housing. The symposium will look at three main themes: Provision of housing, housing policies and sustainability, and emerging housing needs related to housing and health.