If the B.C. government wants to help renters, it should care about homebuilding
British Columbia Premier John Horgan recently appointed a Rental Housing Task Force to advise the government on how to “improve security and fairness for renters and landlords throughout the province.” It’s encouraging that the government wants to help renters, and as the task force starts its work, it’s important that they acknowledge the causes and consequences of this tight rental market.
Rental vacancies in Metro Vancouver are consistently below one per cent. As such, there are far more renters or would-be renters than there are available units. Subsequently, landlords can be more choosey with potential tenants, and can easily find replacements for outgoing tenants.
Basically, it’s a landlord’s market.
If government wishes to improve tenant leverage in what can sometimes look like a one-sided relationship, it should enable meaningful increases in the supply of rental units, giving tenants more options—and landlords less power.
To boost the rental supply, government can reduce the regulatory burden, costs and uncertainty associated with new homebuilding. After surveying dozens of homebuilders across B.C.’s Lower Mainland between 2014 and 2016, Fraser Institute researchers measured how long it takes to obtain building permits for new homes, the uncertainty surrounding these timelines, the costs associated with regulatory compliance, and the opposition builders face when proposing new homes.
Consider this. It takes the better part of two years, on average, to obtain building permits in Vancouver and costs almost $80,000, per unit, in fees. Dealing with Vancouver City Hall is also highly unpredictable, with uncertainty presenting a stronger deterrent to building new units than anywhere else in the region, except for West Vancouver. Consequently, Vancouver’s ability to respond to clear demand for new rental units has been limited.
As the B.C. government’s Rental Housing Task Force researches and consults throughout the summer and fall, it would do well not to lose sight of the market dynamics underlying Metro Vancouver’s rental woes. In particular, it should understand the negative impact local land-use regulations can have on the provision of much-needed new rental housing.