Re: Rental market out of reach for many, Oak Bay News, Aug. 12.
Friday’s article about the shortage of rental apartments was excellent and timely. This critical problem is B.C.-wide, so it begs a follow-up to explain the causes and solutions. Here are the basics:
Prior to the BC Strata Title Act of 1966 (the first in Canada) there were no condo buildings, so the only way to own an apartment or townhouse home was via a co-op or corporation.
The innovation of strata titles was to extend the Canadian dream of home ownership to include apartments – a very good thing, at least for the first decade, until unexpected consequences arose.
Condo building projects were easier to finance than rentals, and the profits are much higher from selling a building in parts rather than a whole, so by the mid ‘70s rental construction had ceased. In the overheated market prior to the great condo crash of ‘81, condo flippers were even leaving condos empty.
By the mid ‘80s developers were converting/replacing existing rental buildings into condos. By the late ‘90s there was such a shortage of rentals that local governments turned a blind eye to the building of thousands of (illegal and not-to-code) secondary/basement suites, and even placed moratoriums on the approval of strata titles for existing rental buildings. Both were temporary band-aid solutions but they continue to this day.
In this century British Columbians have learned the hard way that even in a home-owning economy, you still need a supply of modern, spacious rentals to allow mobility within the economy.
There are times in everyone’s life when it is silly to own and better to rent, such as: trial moves to find work, temporary job transfers, newlyweds, newly divorced, students, sun-birds, migrants, widowers and pensioners with failing health.
Unfortunately, since 1980 there has been a net loss of rental buildings and many of the remaining rental buildings are tired three-storey walk-ups built in the 1950s and ‘60s.
Condos were a good innovation but the consequence of their profitability has been the un-balancing of the entire housing market.
For instance, because ageing pensioners have no suitable modern rentals to move into, they remain in their family-sized houses, thus those houses are not available for raising young families.
The Greater Vancouver Regional District published a risk analysis of this very problem in 2012, so all B.C. politicians and town planners know the solution.
Until a new supply of modern rental buildings has re-balanced the housing market they must extend existing moratoriums to suspend all new strata titles, and persuade developers to build rental buildings instead.