(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

Comox Valley baseball player Thomas Green commits to Cuesta College

18-year-old shortstop following in older cousin Taylor’s footsteps

Toll booth down

3L Developments has stopped charging motorists on logging road

New look and name for Comox Valley school district

The Comox Valley school district is sporting a fresh look after the… Continue reading

Comox Valley Healthcare Foundation Golf Classic ready to tee off

The Como Valley Healthcare Foundation Golf Classic charity golf tournament will be… Continue reading

Comox Valley students show off their programming skills at Lake Trail coding quest arcade

Roughly 80 students from three Comox Valley schools were at Lake Trail… Continue reading

Comox Valley RCMP honoured at Local Heroes

On May 10, the Comox Valley celebrated its 2018 Local Heroes, and… Continue reading

Traffic stop leads to drugs, gun

Male driver arrested for driving while prohibited

B.C. RCMP swoop in to save injured eagle

An eagle with a broken wing now in a recovery facility after RCMP rescue near Bella Coola

Catalyst Paper to sell U.S. mills to Chinese company

Sale will allow company to focus on B.C. interests, says president Ned Dwyer

Bug spray 101: Health Canada wants you to stay bite free

Health Canada is reminding Canadians to use bug spray and other insect repellents safely

Unions reject CP Rail contract offers

Both meeting Friday to determine next steps; 72 hours notice required before strike action.

B.C. jewellers warn public about fake gold scam

‘They are playing on people’s sympathy and their greed’

Former B.C. premier says pot industry about to enter Wild West

Mike Harcourt says Canada is about to enter a new gold rush with many dreaming of striking it rich

Most Read