High interest rates impact building rentals in Metro Vancouver: Developer
Posted January 20, 2023 11:03 am.
Last Updated January 25, 2023 9:29 pm.
The average rent for British Columbians living in Metro Vancouver went up again in January, and some developers say high-interest rates are making it harder to build more rental homes.
On Monday, the provincial government announced a new permitting strategy to help speed up housing approvals, but one expert says it’s likely not enough.
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Richard Wittstock, a principal at Domus Homes Group in Vancouver, says the issue lies within municipalities and their lengthy approval times.
He says a recent development in Vancouver’s Marpole neighbourhood took way too long to be completed.
“This is the first rental building completed in Marpole…in 12 years…That’s not success,” he said. “[They] actually make it harder to build rental housing than to build condos.”
Wittstock says it’s also getting harder for young people to live in the city as the housing supply continues to fall short of demand.
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Although there have been hundreds of building proposals submitted to city hall, one Vancouver councillor says that not every idea is guaranteed to get built.
In June, a proposal to create the Broadway Plan was approved with the goal of creating more housing in the area of Vine Street to Clark Drive.
“Since the Broadway Plan was approved…and then enacted on September first, we’ve really seen an increase in those challenging economic factors,” Coun. Sarah Kirby-Yung explained.
The director of Abundant Housing Vancouver, a non-profit organization dedicated to finding housing solutions in the city, says there are lots of challenges developers face throughout the process.
“It’s really a tale of death by a thousand cuts. Definitely the rising interest rates, definitely the zoning constraints. The risk and the delay in the entire process of rezoning,” Jennifer Bradshaw said.
In a statement, the City of Vancouver says it does have rental-only zoning that allows up to six stories in commercial areas. It adds there is also a housing pilot program that allows rental buildings next to schools, parks, and shops.
Over the last five years, the city says it approved over 12,000 rental homes, adding it expects to approve another 20,000 applications by 2027.
“Right now, we’re in a little bit of a perfect storm, because we’ve seen rapid cost inflation over the last year,” Wittstock said. “It still takes three years to get a project like this in the ground.”
But Wittstock and Bradshaw say approvals need to be moving faster in Vancouver, and the city could still make the process faster.
“Instead of making it go through this long, risky, arduous, and expensive rezoning process, they could be allowed to build by right, just like a detached house is allowed to be built by right and goes straight to a development permit,” Bradshaw said.
