NEW WESTMINSTER (NEWS 1130) – It’s been one year since the province gave municipalities the option to set up rental-only zoning — but only one city has signed up.
With a vacancy rate in the region only slightly above zero, everyone agrees: we need more rental supply.
But with just New Westminster opting to use the proposed zoning — and getting sued — economist Tsur Somerville with UBC’s Sauder School of Business says it’s not an option he would have recommended for a couple of reasons.
“There are some complicated legal issues associated with it, and I think there’s also some concerns long-term when you lock a location in to not just particular land-use type, but then a particular tenure within that land-use type,” he explains.
Sommerville adds: “When you’re in a situation when there’s a shortage of rental space, but we have an excess of rental space — which happens, I mean, you do have things that are cyclical, particularly with demographic trends.”
When he first heard about rental-only zoning as an option, he says he thought it was a “pretty heavy hammer.”
“But it’s kind of a weird box where people are in favour and want more rental housing. But as you’re seeing in places like [Kitsilano], if you provide additional density to encourage rental housing, then the neighbourhood screams about that.”
It's been one year since the province gave municipalities the option to set up rental only zoning, and just one city has signed up. I'm asking economists whether it's a failed policy. Listen to @NEWS1130 for details.
— Martin MacMahon (@martinmacmahon) April 24, 2019
Sommerville describes the housing problem as a general “have your cake and eat it too” kind of situation.
Meantime, while it’s been a year since the policy was floated as an option, Sommerville says it’s still too early to call rental-only zoning a failed policy.
He notes more time is needed, and believes it’s not about adjusting the current policy and getting more uptake on it, but rather figuring out how to get more rental property built.
“I think the policy is offered as a tool with the objective of having more purpose-built rental housing,” he explains. “I think the more appropriate question is what’s the most appropriate use there.”
Tom Davidoff, also with the Sauder School of Business at UBC, doesn’t see the policy as a failure either, instead calling it an “interesting choice.”
“Essentially, people want to build condos so much that it makes it hard for anybody to do rental because the value under condos is so great,” he explains. “I think there’s a strong argument to be made that condos aren’t so bad — they’re housing too, a lot of them are rented out.”
He lists a number of initiatives like the speculation tax, empty homes tax, and even limitations placed on Airbnb rentals as examples of why the risk of properties sitting empty isn’t as high as it may have been.
Davidoff says there’s a “reasonable perspective” that rentals serve people who “wouldn’t be served otherwise through condo to the extent you believe that rental-only zoning makes sense.”
So why has only one municipality implemented the policy? He has a number of suspicions, but says it might be wise to wait until time has passed.
“Where condos weaken, and see if there isn’t some take up of this by municipalities,” Davidoff adds.