The introduction of new regulations in British Columbia could lead to a delay or cancellation of thousands of new rental homes.
A total of 19,972 homes are currently in development across the province but two thirds – 12,000 – could be at risk if the B.C. government imposes restrictive new policies on rental properties.
A new survey by the Urban Development Institute of 30 leading rental home builders shows they are warning against the introduction of more prohibitive rent controls specifically “vacancy control,” in which the rent on a unit is strictly regulated by government.
“British Columbians desperately need more rental homes,” said UDI President & CEO Anne McMullin. “This is not the time for new restrictions that could result in the cancellation of important rental home projects in communities across British Columbia.”
The report says that vacancy control would tie rent controls to a unit rather than the tenant meaning the end to the ability of rental owners to adjust rents between tenants to account for building and unit upgrades and other increased costs like property taxes, insurance and utilities.
It also warns that with rent tied to the unit, the incentive for a rental owner to ensure necessary upgrades, including seismic and energy efficiency standards are completed to aging buildings is severely compromised.
Low vacancy rate would tighten further
The builders say a pull-back in construction would further reduce the already low vacancy rate, which remains below 1% in many communities across the province.
“We need to remove the countless government barriers to increasing supply,” said Dr. Andrey Pavlov, finance professor at Simon Fraser University’s Beedie School of Business. “Rent controls feel good for the moment, but hurt everyone, including renters, in the long-term.”
Anne McMullin added that builders want to build more homes and the UDI is keen to work with the government to find a solution to help solve the BC rental crisis.