Open Collections

UBC Graduate Research

CHALLENGES AND/OR BARRIERS FACED IN THE RENTED CONDOMINIUM MARKET Rental Providers’ Perspectives, City.. 2009

Item Metadata

Download

Media
SCARP_2009_gradproject_Campbell.doc
SCARP_2009_gradproject_Campbell.doc [ 2.62MB ]
Metadata
JSON: 1.0107182.json
JSON-LD: 1.0107182+ld.json
RDF/XML (Pretty): 1.0107182.xml
RDF/JSON: 1.0107182+rdf.json
Turtle: 1.0107182+rdf-turtle.txt
N-Triples: 1.0107182+rdf-ntriples.txt
Citation
1.0107182.ris

Full Text

. CHALLENGES AND/OR BARRIERS FACED IN THE RENTED CONDOMINIUM MARKET Rental Providers’ Perspectives, City of Vancouver By Latosia Campbell BSc., The University of Technology, Jamaica, 2001 A MASTER PROJECT SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE (PLANNING) In The Faculty of Graduate Studies School of Community and Regional Planning We accept this project as conforming to the required standard ............................................................ ............................................................. ........................................................... THE UNIVERSITY OF BRITISH COLUMBIA (Vancouver) August, 2009 © Latosia Campbell, 2009  i i ABSTRACT The aim of this research is to assess the significance of rented condominiums and its implications for rental housing in the City of Vancouver; and to identify the challenges faced by providers of rented condominiums and policies needed to increase the supply. Interviews were  conducted  with  rental  providers  and  other  stakeholders,  using  snowball  sampling methods, which were supported by secondary data. Research findings revealed that rented condominiums are highly significant in the City,  given the gradual  decline of the purpose built  rental  stock. However,  an increased reliance  on  rented  condominiums  is  problematic  because  this  supply  exists  solely  for investment  purposes  and  there  are  some  concerns  regarding  housing  affordability. Furthermore, challenges faced by rented condominium providers could affect the supply of this  stock.  These  include  rent  control  and  rental  restrictions,  which  are  regulated  by provincial legislations. Minor amendments to these legislations are suggested to increase the supply.  However,  there are risks involved in adopting policies that encourage rented condominiums such as an unstable supply and difficulties in securing the stock. To secure rental housing affordability and adequate rental housing for renters in the City,  policies  focusing  on  increasing  the  supply  of  purpose  built  rental  housing  are recommended, in addition to comprehensive research on the rental housing sector. Strong emphasis  is  placed  on  supportive  federal  government  policies,  improved  partnerships among all  levels  of  government  and a  collaborative  approach between government  and rental providers in solving the rental housing shortage in the City. i i TABLE OF CONTENTS Pages Abstract .............................................................................................................................. ii Table of Contents................................................................................................................. iii List of Tables and Illustrations.............................................................................................. iv Acknowledgement................................................................................................................ vii CHAPTER ONE:  INTRODUCTION 1.0 . Background............................................................................................................... 1 1.1 . Study Rationale......................................................................................................... 5 1.2 . Research Objectives and Questions.......................................................................... 7 1.3 . Methodology............................................................................................................. 11 1.4 . Definition of Key Terms and Concepts..................................................................... 13 1.5 . Organization of the Chapters.................................................................................... 14 CHAPTER TWO:  RENTAL CONDOMINIUMS, CITY OF VANCOUVER 2.0 . Policies Affecting Rental Housing in Canada........................................................... 15 2.1.     The implications for Rental housing, City of Vancouver...........................................  22 2.2.    The Growth of Rented Condominiums....................................................................... 25 2.3.     Factors Influencing Investors Rent............................................................................ 27 2.4.     How significant are Rented Condominiums in the City?........................................... 28 2.5. Are there Implications for an Increased Reliance on Rented Condominiums........... 34 CHAPTER THREE:  TRENDS, OPPORTUNITIES AND RISKS 3.0 . Factors Impacting the Rented Condominium Supply............................................... 38 3.1       Challenges  and/  Barriers Faced............................................................................... 39 3.2.      Emerging Trends...................................................................................................... 48 i i i 3.3.      Implications for the Supply of Rented Condominiums.............................................. 50 3.4. Opportunities............................................................................................................  53 CHAPTER 4: ANALYSIS 4.0. Discussion................................................................................................................ 55 4.1. Strategic Policy Direction.......................................................................................... 57 4.2. Study Limitations....................................................................................................... 60 CHAPTER 5: CONCLUSION 5.0. Conclusion..................................................................................................................... 63 5.1. Policy Implications......................................................................................................... 65 REFERENCES......................................................................................................... 66 APPENDICES One: Interview questions...................................................................................................... 70 i v LIST OF TABLES AND ILLUSTRATIONS                                                                                                                                  Pages  Tables: Table 1: The Main Tax Policies Affecting Rental Housing since the 1940s.......................... 18 Table 2: Investor-owned Share of Rented Condominiums in Vancouver and the CMA...................................................................................................................................... 33 Table 3: Stakeholders in the Rented Condominium Market and their Interests................... 46 Table 4: Possible Policies, Actions and Incentives Needed................................................. 59 Figures: Figure 1: The Share of Private Market Rental Housing in the Vancouver CMA, 2008.......... 2 Figure 2: Proportion of Apartment Condominium Rented, 2008............................................ 3 Figure 3: Percentage Share of Rental Housing by Type in the City of Vancouver................ 6 Figure 4: Percentage Share of Participants Interviewed...................................................... 11 Figure 5: Purpose Built Rental Apartments Completions in Canada’s Urban Centers, 1970- 1997............................................................................................................................ 16 Figure 6: Housing Tenure for the City of Vancouver, 1971-2006......................................... 23 Figure 7: Vacancy Rates for the City of Vancouver and the CMA, 1975-2008..................... 24 Figure 8: Completion of Market Rental and Condominiums in Vancouver  (1970s to 2000s).................................................................................................................. 25 Figure 9: Change in the Private Rental Stock in Vancouver CMA, 2008.............................  29 Figure 10: Percentage Share of Condominiums Rented in the City of Vancouver and the CMA, 2007 & 2008..................................................................... 30 Figure 11: Median Household Income by Age Group and Tenure for the City, 2006 .........  34 v Figure 12: Percentage of Renter Households by Age Group, 2006..................................... 35 Figure 13: Average Rents for Purpose Built Rental and Rented Condominiums in Vancouver................................................................................... 36 Figure 14: Condominium Rental Restriction in the City of Vancouver.................................  44 Figure 15: The Effect of Lower Demand on Housing Prices................................................. 50 Diagrams: Diagram1: Conceptual Map of the Research Framework...................................................... 9 Diagram 2: Relationship between the Public and Private Domains in the Rented Condominium Supply Market................................................................................................ 41 Maps: Map 1: Condominium Buildings with Investor Share Less Than 20% in Adjacent Municipalities............................................................................................. 31 Map 2: Condominium Building with Investor Share Greater Than 40% in Adjacent Municipalities....................................................................... 32 Graphs: Graph1: Average Housing Price Trend, Vancouver CMA ................................................... 49 v i ACKNOWLEDGEMENT This project has been made possible due to funding provided through the BC Government Office  of  Housing  Research,  and  strong  support  and  encouragement  received  from my family,  friends  and  project  supervisors.  Consequently,  I  would  like  to  acknowledge  and sincerely  thank  these  individuals  for  their  support.  Firstly,  I  thank  God for  the  wisdom, courage and tenacity in conceptualizing, planning and executing a project of this nature. I am very thankful to the BC Government Office of Housing Research and the School of Community and Regional Planning (SCARP) for the funding award received, without which this project would not be possible. Additionally, I thank Penny Gurstein and Michael Gordon, my project supervisors, from SCARP for their invaluable support. I am very appreciative of the time they spent discussing, reviewing and providing feedback on this project. Lastly, I thank my family for their prayers, unwavering support, encouragement and patience throughout  this  whole  process.  Special  thanks  to  Paul,  for  his  love,  understanding  and beliefs in my capabilities, especially during this time.  Also, thanks to all of my friends for their support and kind words given during the very difficult times. v i i CHAPTER 1 - INTRODUCTION 1.1.1. Background The  supply  of  purpose  built  rental  housing  has  been  the  subject  of  numerous debates in Canada in recent years. A fundamental problem has been the inability of the private  sector  to  supply  new  purpose  built  rental  housing,  especially  in  the  three metropolitan  areas  (Toronto,  Montreal  and  Vancouver),  where  the  demand  for  rental housing  is  greatest  (Hulchanski,  2001).  Since  the  1970s,  there  has  been  very  little investment in new purpose built rental housing mainly because of unfavourable tax policies (Clayton Research Associates, 1998). The passage of condominium legislation during this period further complicated the problem, making it difficult for providers of purpose built rental housing to compete with those developing condominiums. Over the years, the condominium market flourished as the supply of purpose built rental housing steadily declined. Given the strong demand for rental housing, the secondary rental market, which includes condominiums, has grown more significant. Despite this, it is least explored as a strategy geared at ensuring an adequate supply of rental housing to meet the growing needs of renters. Consequently, the purpose of this research is to explore the  secondary  market,  in  particular  rented condominiums in  the  City  of  Vancouver  and address questions regarding their contribution. In  the  Vancouver  Census  Metropolitan  Area  (CMA),  more  than  half  the  rental housing is provided through the secondary market based on CMHC data. Fig 1 shows the share of private rental, which includes a breakdown of secondary market rental. 1 Figure 1: The Share of Private Market Rental Housing in the Vancouver CMA, 2008   Source: CMHC (2008): Secondary rental market survey, Vancouver and Abbotsford.  Although, other forms of secondary markets such as single detached and accessory units are providing a significant amount of the rental supply, it is the rented condominium supply that is of particular interest for a number of reasons. Compared to other CMAs in the rest  of  Canada,  Vancouver  has  the  second  highest  percentage  share  of  rented condominiums (see fig 2 below).  Moreover, the City of Vancouver has the highest share of rented condominiums than any other urban area in Canada in 2008, which illustrates the growing importance of this form of rental. 2 Figure 2: Proportion of Apartment Condominium Rented, 2008 Source: City of Vancouver (2009). CMHC apartment vacancy rates and rents as cited from CMHC, secondary market surveys. The Vancouver  CMA faces numerous challenges relating to housing affordability, which makes it relevant that the growing importance of the rented condominium supply be explored. Renters’ households in the province of BC, where the Vancouver CMA is located, had the highest percentage (44%) of all households facing affordability problems in Canada (BC Statistics, 2006). In comparison to homeowners, renters are almost twice more likely to face  affordability  challenges.  In  2006,  43.7  percent  of  renters  in  the  province  spent  30 percent  or  more on housing,  while  only 22.8 percent of  homeowners were faced with a similar  challenge  (BC  Statistics).  Additionally,  Vancouver  is  among  the  CMAs  with  the highest  shelter  to  income ratio.  The  high  cost  of  rent  is  a  major  challenge  for  renters, especially since their average income ($44, 671) is much lower than the average income ($68,262) of homeowners (Statistics Canada, 2006). Rental housing affordability1 has been the major theme in many of the rental housing studies and debates and is a major concern given the substantially lower income of renters relative  to  homeowners.  While  rental  housing  affordability  is  not  the  main  focus  of  this 1  Househo lds  are  cons ide red  to  be fac i ng  af fo rdab i l i t y  cha l l enges  i f  more than  30 percen t  of  the i r  gross  income is  spent  on hous ing  (CMHC, 2008) 3 research,  it  is  certainly  an essential  policy  consideration  in  exploring  strategies  that  are geared at promoting an increased supply of rental housing. The Greater Vancouver Regional District (GVRD) Draft Affordable Housing Strategy (2006)  recognises  the  need  to  increase  the  supply  of  affordable  rental  housing  for  low income renters and some strategies have been proposed. However, less emphasis is placed on  investigating  the  growing  significance  of  the  rented  condominium  stock.  With  no additional  supply  of  purpose built  rental  housing planned,  it  is  necessary to  assess the rented condominium supply to determine its significance, the challenges with the supply, and the policies that are needed to increase the current stock. Though an increased reliance on rented condominiums could have numerous implications for rental housing in the City, increasing this supply might be an essential priority. Therefore, it is crucial that this option is investigated as part of a strategy geared at increasing the rental housing supply in the City.   Consequently, the purpose of this research project is to assess the growing significance of the rented condominium supply and investigate possible implications of this supply for rental housing. Also, this research investigates the challenges and/or barriers rental providers of condominiums face and identifies the kinds of policies or actions needed to increase the supply. 4 1.1.2. Study Rationale Understanding the significance of the rented condominium stock and challenges and/ or barriers faced by rental providers (investors) in the City of Vancouver is necessary, given the strong demand for rental housing. The supply of purpose built rental housing in the City has been declining for several years, while the demand continues to increase.  Developers favouring condominiums over purpose built rental development and the lack of favourable government tax incentives to promote rental housing development are the main reasons contributing  to  the  shortage  of  this  stock.  Since  the  1990’s,  there  has  been  minimum investment in new purpose built rental buildings because developers have chosen to build condominiums  (City  of  Vancouver,  2005).  Investing  in  condominiums  has  been  highly profitable in comparison to purpose built rental housing. Additionally, the federal tax system discourages investment in  rental  properties through actions such as not  allowing capital gains reinvested in rental housing to be exempt from capital gains tax (City of Vancouver, 2008).  As a result,  vacancy rates for purpose built  rental housing in the City have been among the lowest in Canada and for the past two decades these rates have never risen above 1.8 percent2 (City of Vancouver, 2005). Low vacancy rates are a strong indication that the existing supply is insufficient to meet the growing demand. In 2008, the rental vacancy rate for purpose built rental housing declined further to 0.3 percent down from 0.5 percent in 2007 (CMHC, 2008). Built  mainly in the 1960s and 1970s, many of the purpose built  rental  units have aged; been lost either through conversion or demolition;  are temporarily out of the rental pool as they are being renovated; and are under redevelopment pressures (CMHC, 2008). Because of the shortage of purpose built rental housing, the secondary market, including the supply of investor owned rented condominiums has increased in significance. Currently, less than half the rental housing stock in the City of Vancouver is supplied by purpose built rental units, while a significantly higher proportion is being supplied through the secondary market. Fig 3 shows that the purpose built  rental stock make up approximately 42 percent of the stock  of  rental  housing  in  the  City,  while  secondary  suites  (19%)  and  Investor  owned condominium  (11%)  are  other  significant  forms  of  rental  housing  supplied  through  the 2  A vacancy rate of 1.8 percent or less means that 18 or less apartments out of every 1000 are available for rent. Generally, a vacancy rate of 2.5 percent is considered a balanced market for the City of Vancouver. A balanced market is defined by the City as one in which renters have a wide selection of properties and landlords can meet their cost.  Achieving this balance market has been difficult as this has only occurred once in the last 30 years (City of Vancouver, 2005). 5 private market. There are also other types of rental housing, which include SRO’s and units in rooming houses (12%) and non-market rental housing (16%). Figure 3:  Percentage Share of Rental Housing by Type in the City of Vancouver  Note: Based on estimates derived from Statistics Canada (2006), City and CMHC data Source: City of Vancouver (2008). Rental housing strategy: Processes and consultancies.  City of Vancouver administrative report. In contrast,  the demand for rental housing in the City has remained quite robust, having  grown steadily  over  the  past  years.  The  proportion  of  rental  to  owner  occupied dwellings has increased steadily since 1951, with the largest increases in the 1960s, and has remained relatively stable (City of Vancouver, 2005). In 2006, a total of 131,535 (~52%) of all dwellings in the City were rented (BC statistics, 2006). Across the region, the demand for  rental  housing continues to increase with  over  30,000 people  moving to Vancouver, many  of  whom  will  take  up  residence  in  rental  housing  before  becoming  homeowners (CHMC, 2008). Increasing the rental housing supply and maintaining the current stock in the City is vital given the strong demand for rental housing relative to the rest of the GVRD and the province.  The City of Vancouver has almost half (1/2) of the rental housing stock in the region and more than one quarter  (1/4)  of  the province’s  rental  housing supply  (City  of Vancouver,  2008).  Additionally,  almost  half  the  City’s  population  (46%)  rely  on  rental 6 housing  (City  of  Vancouver,  2008).  This  strong  demand  for  rental  housing  and  the correspondingly steady decline of the purpose built rental supply is a major concern, making it imperative that the secondary rental housing market be explored. The stock of investor owned rented condominiums is of great interest as increasingly more of these units are being placed on the rental housing market. In 2008, an estimated 27 percent (approximately 17,000) of the condominium stock in the City was rented based on CMHC secondary  market  rental  survey (2008).  This  supply  appears  to  be an important source of rental housing in the City, but little is known about the extent of its contribution to the overall  rental  housing supply.  Additionally,  there is  insufficient  information  about  the barriers and/or challenges rental providers face in renting their condominiums, which could potentially  limit  the supply.  If  there are challenges and/or  barriers that  could  impact  the supply, it might be necessary to identify policies and actions that are needed to increase the stock. On the other hand, increasing the existing supply could have implications for rental housing affordability as renters pay significantly more for rented condominiums relative to purpose built rental units. In the City of Vancouver, average rents for condominiums were more than 30 percent higher compared to purpose built  rental  units (City of Vancouver, 2008). In  this  regard,  research  that  investigates  the  overall  significance  of  rented condominiums  and  factors  impacting  the  supply  is  relevant.  Accordingly,  this  research assesses the rented condominium stock in the City of Vancouver in an attempt to provide a better understanding of the growing significance of this stock and more insights into factors impacting the supply. Also, the research discusses the implications of a highly significant rented condominium supply in the City, challenges faced and policies needed to increase the supply. 7 1.1.3. Research Objectives The main objectives of this research are: 1. To explore the significance of rented condominiums as part of the rental stock in the City of Vancouver and the implications of this for rental housing; 2. To identify factors influencing rented condominium providers (landlords) to rent  their units and remain in the rental market; 3. To  explore  possible  incentives,  actions  and  policies  that  are  needed  to  further encourage  rental providers (landlords) to rent their condominiums on a long term basis; An understanding of the significance of the rented condominium market as part of the overall rental stock is relevant in developing strategies for increasing the supply. Factors influencing investors’ decisions to rent their units could provide useful insights into ways to increase the supply.  Also,  identifying the barriers and/or challenges investors face could help to increase our knowledge about these issues and possible ways to address them. Finally,  exploring  the  kinds  of  policies  and  incentives  to  encourage  rental  providers  to increase the supply might be necessary. Diagram 1 shows a conceptual map of what this research intends to achieve. 8 Diagram 1: Conceptual Map of the Research Framework  9 Knowledge gaps • The significance of the rented condo stock • Challenges faced by rented condo providers (supply side) • Profile of investors in rented condo market • Renters profile (demand side) • Incentives, policies and programs needed  to increase the supply of rented condos Research interests 1. Understanding the significance of the rented condominium supply 2. Identify factors influencing investors to rent their units 3. Implications for rental housing affordability given an increase reliance on rented condos 4. Challenges and/or barrier faced in the rented condominium market Interest groups   Rental providers /Landlords  Developers  Landlords associations  Strata councils  Government Contribution  Insights into the significance of rented condominiums   Better understanding of the challenges faced by rental providers  Programs and policies needed Prov ide rs ,  enab le rs and regu la t o r s Research Questions This research seeks to answer a series of questions relating to the research objectives: 1.  How significant are rented condominiums as part of the overall rental housing market? 2 . What are the factors influencing owners to rent? And how long do they intend to be in the rental market? 3 . Given the loss of purpose built rental units, what are the implications for increasing the supply of rented condominiums? 4 . What are the specific challenges and/ or barriers faced by owners of rented condominiums? 5 . What are the policies and actions needed to increase the supply? 10 1.1.4.  Methodology This  research  is  primarily  qualitative  but  is  augmented  by  statistical  data  in determining  the  significance  of  the  rented  condominium  supply  and  assessing  the implications  for  rental  housing.  The  research  focuses  primarily  on  rental  providers (landlords) and the barriers they face in renting their condominium apartments in the City of Vancouver. Additionally, the kinds of policies that are needed to possibly increase the supply are explored. Data Collection Method As this is an exploratory research, a variety of data collection methods were used. The primary source of data was interviews (semi-structured) conducted with key informants. Snow ball  sampling was used because of the difficulties in identifying and accessing key informants such as the rented condominiums providers and/or investors in the City. A total of twenty  (20)  interviews  were  conducted.  Those  interviewed  included:  rental  providers, housing advocates, researchers and developers (see Fig 4 below). These participants were asked a series of questions relating to their involvement in the rented condominium market. Figure 4: Percentage Share of Participants Interviewed 11 *others  includes landlords association, housing advocates and researchers The questions asked varied given participants’ interests in, knowledge about, and experience with the rented condominium market. Rental providers (investors and property management companies) were asked about the length of time they have been in the market; their reasons for entering; why they stayed; the challenges they experienced in renting their units and kinds of policies and actions that are needed. Others such as developers and housing  advocates  were  asked  questions  relating  to  the  significance  of  the  rented condominium stock, the challenges faced and the kinds of policies and actions needed to increase the supply. (See Appendix 1 for the interview questions). Rental providers interviewed have been involved in the rental market for at least five years. The majority (85%) of those interviewed have been renting their condominiums for over 10 years, while the remainder (15%) have been doing so for at least five years. From the interviews conducted, greater insights into the challenges faced by rental providers have been obtained as well as the kinds of policies and incentives that could encourage greater interest in rental housing in the City. Additionally,  a  seminar,  “Ready  for  Rental”  hosted  by  the  Urban  Development Institute (UDI) in March, 2009 provided further insights into the rented condominium supply market and the challenges faced by rental housing providers. Through this seminar, data was obtained about the implications of federal disincentives and the kinds of policies needed to stimulate a greater interest in rental housing. Key strategies were highlighted that could 12 be considered in exploring ways of not only increasing the supply of rented condominiums but also the stock of purpose built rental housing.  Finally, several secondary data sources were used in analysing the significance of the rented condominium supply. These sources provided a broad perspective on the rental housing  market  including  the  implications  of  government  policies;  current  and  emerging trends in the rented condominium market; and the gaps and opportunities involved. Key data sources  included  CMHC  rental  housing  studies,  studies  on  condominiums  and  City  of Vancouver rental housing reports/releases. 2.0 .  Defining Key Terms and Concepts The secondary rental market refers to non traditional forms of rental accommodations that are  supplied  through  the  private  sector. This  includes  rented  condominiums, secondary suites, accessory units, single detached and row/duplex homes. Defined  by  Statistics  Canada  as  a  residential  complex  in  which  dwellings  are  owned individually while land is held in joint ownership with others, rented condominiums differ  from  other  rental  properties.  Unlike  other  rental  properties,  there  is  joint ownership  that  is  regulated  by  the  Strata  Property  Act  and  as  such  there  are differences in the handling of issues relating to the rental of condominium units. Investor,  a  term  widely  used  throughout  this  paper,  refers  to  an  owner  of  a  rented condominium unit(s). In addition to investor(s), rental provider (landlord) is a broader term that  is  used  to  describe  an  investor  and/or  his/her  agent.  The  term  landlord  or  rental provider refers to a person that owns an interest in property and who in exchange for rent, gives  another person (tenant/renters)  the right  to use the property  (Residential  Tenancy Branch, 2006). These persons can be: • the unit or building owner; the owner’s agent (property management company); 13 • a person, permitting occupation of a rental unit under the Act, on behalf of the owner; • A person entitled to the possession of a rental unit and exercise rights of a landlord under the tenancy agreement. 2.1.1.  Organization of Chapters The chapters are organized in the following manner: Chapter Two:  Rented Condominium, City of Vancouver This chapter gives an overview of the policies impacting rental housing in Canada. It begins  by  examining  the  implications  of  these  policies  on rental  housing  in  the  City  of Vancouver and the growth of rented condominiums. The factors influencing investors to rent are discussed and the growing significance of the rented condominium market assessed. Finally,  the implications of  an increased reliance on the rented condominium supply  are explored.  Chapter Three:  Trends, Opportunities and Risks in the Rented Condominium Market In this section, the factors impacting the rented condominium supply are highlighted including  the  challenges  faced  by  rental  providers.  Additionally,  the  interests  of  key stakeholders and the role of all levels of government in the rented condominium market are discussed. Also, policies and actions needed to increase the supply are identified. At the end,  the  implications  of  the  changing  economy  on  the  rented  condominium  supply  are assessed; and risks and opportunities underlined. 14 Chapter Four: Analysis The research findings are analysed and discussed in this chapter, and a strategic direction  for  increasing  the  supply  of  rental  housing  highlighted.  Additionally,  study limitations are highlighted and gaps in the analysis discussed. Finally, areas requiring further research are identified. Chapter Five: Conclusion and Policy Implications In this chapter, the research findings and analysis are summarized, highlighting the main concerns and policy implications. Key policy directions are suggested for consideration in ensuring an adequate supply of rental housing in the City. 15 CHAPTER 2 RENTED CONDOMINIUMS, CITY OF VANCOUVER Purpose built rental housing construction in Canada increased significantly from the 1960s before entering a period of modest growth in the 1980s, declining thereafter from the 1990s onwards. Given the steady decline of the purpose built rental supply, the secondary market,  especially  the  rented  condominium  supply  has  increased  (Lampert,  1999).  To provide a better understanding of the problems leading to the decline in the purpose built rental  stock  and  the  subsequent  growth  of  the  rented  condominium  supply  market  in Vancouver,  it  is  necessary  to  discuss  the  implications  of  past  government  policies  and programs that have impacted rental housing. 2.1.2. Policies Affecting Rental Housing The supply of housing in Canada has traditionally been and is still the responsibility of the private sector. Canada’s housing system relies almost entirely on the private sector to supply, allocate and maintain the housing stock (Scanlon and Whitehead, 2004)3. However, this has not always been the case as governments’ interventions have been necessary to stimulate an increased supply, in particular, in rental housing. Beginning in the late 1940s to 1960s, unprecedented economic growth and demographic changes necessitated a level of adaptation and adjustment in housing policies (Oberlander and Fallick, 1992). One essential adjustment  has  been  the  provision  of  favourable  tax  policies  that  encouraged  the construction of housing. The progress made, particularly, in the rental housing sector in the 1960s and early  1970s was highly  significant  as the majority of  Canada’s  purpose built rental housing were constructed during that period. Smith (1983) suggests that Canadians were extremely well housed at the end of the 1960’s and this he argues was a result of the increased number of rental housing starts (47%). Factors that have helped to spur rental housing  construction  included  the  strong  demand  from  especially  the  baby  boomer generation, favourable income tax policies,  lower interest rates and a lower inflation rate (Lampert, 1999). 3 As cited by J. David Hulchanski (2001) 16 However, since 1972 government policies have increasingly favoured ownership over rental housing, beginning with changes made to the mortgage and taxation systems. As part of  this  change  process,  several  of  the  tax  incentives  for  rental  housing  were  removed. Notable changes that have severely impacted the provision of rental housing were: 1.  The loss of tax benefits to investors such as the ability to pool properties to delay Capital Cost allowance (CCA) was eliminated; 2. The use of  “paper  losses”  from CCA as tax shelter  against  income from other sources was terminated; 3. The taxing of capital gains on rental properties was introduced. The changes in these provisions substantially  reduced the attractiveness of rental investment by reducing the after tax yields and liquidity of the investment (Smith, 1983). Furthermore, the inequities in tax provision created an imbalance in the provision of housing, which  increasingly  favoured  homeownership  over  rental.  These  have  served  to disadvantage  the  rental  housing  supply  market,  impacting  all  the  stakeholders  (renters, investors and developers).  Table 1 summarizes the main policies that  have encouraged rental housing investments since the 1940s and the substantial changes made that have served to discourage these investments. Another  fundamental  impact  on the provision  of  purpose built  rental  housing has been the passage of the condominium legislation, which introduced condominiums as a form of residential tenure in the 1970s. This legislation provides opportunities for higher income renters to own apartments rather than rent, and this in effect reduces the demand for rental housing and increases the demand for condominiums. Also, it is difficult for purpose built rental  investors to compete with those investing in condominiums without  favourable tax incentives. One of the main problems is that renters’ incomes are lower than the incomes of homeowners, making it easy for condominium developers to outbid developers of purpose built rental housing for residential sites (Hulchanski, 2001).  Taken together,  these changes have had profound impact  on the rental  housing provision,  contributing to the steady decline of the purpose built  rental  stock. During the 1970’s, other factors such as the sharp rise in interest rates, uncertainties about land and construction costs and the growing fears of rent control also contributed to the decline of the rental  supply   (Clayton,  1998).  In  response to the  sharp decline  of  purpose built  rental 17 housing, the federal government introduced a combination of programs that increased the supply. These were: • The Multiple Unit Residential Building (MURB), which allowed for investors to use the capital  gain cost obtained from rental building as a deduction against total cost. This program was introduced in 1974 and was later extended to 1979; • In addition to the MURB, the Assisted Rental Program (ARP) was also introduced from 1974 to 1978.  Through this program, grants and later interest rate loans were provided to help make new rental projects more viable (Clayton, 1998). In essence, ARPs permitted  investors  to  reduce  their  tax  payables  by  deducting  initial development cost, such as interim financing and architects’ fees from total income; • The  Canada  Rental  Housing  Supply  Program  (CRSP)  was  a rental  subsidy program that replaced the MURB program, and which was reactivated in the 1980s (Hulchanski, 2002); The MURB and the ARP programs resulted in a substantial increase in purpose built rental  housing.  However,  after  they  were  cancelled,  the  supply  of  purpose  built  rental housing has been declining continuously. Data compiled by Clayton Research Associates on twenty six (26) urban centers from 1970-1997, illustrates that the supply of rental housing have been on the decline in urban centers across Canada. Fig 5 shows that over this period, the number of  private rental  housing completed for  these centers declined substantially. Although,  this  data  excludes  the  past  ten  (10)  years,  it  is  still  reflective  of  the  current situation in the purpose built rental market. 18 Figure 5: Purpose Built Rental Apartments Completions in Canada’s Urban Centers, 1970-1997  Source: Clayton Research Associates (1998). Economic impact of federal tax legislation on rental housing in Canada prepared for the Canadian Federation of Apartment Association Since the 1970s, there has been little investment in the purpose built rental supply and the number of new rental  completion has been declining especially  from the 1990s onwards. Researchers assessing the declining trend in the provision of purpose built rental housing have identified various reasons for this. For instance, Smith (1983) argues that the philosophy of rental housing shifted from one which encouraged rental housing, improving the  efficiencies  in  the  real  estate  market  in  the  1970’s,  to  one  that  discouraged  rental housing  through  direct  intervention  and  regulation  such  as  rent  controls  and  subsidies. Likewise, the decline of purpose built rental housing in the 1990s has been attributed to the economic recession and its after effects, higher vacancy rates and the emergence of the secondary  market  supply  (Clayton,  1998).  This  implies  among other  things the reduced demand for the purpose built rental housing. Though, in recent times the secondary market supply has increased, accommodating much of the current demand for rental housing in Canada (Lampert, 1999). However, a decline in the purpose built rental stock and an increase in the secondary supply leave more questions than answers about the rental housing supply market. These include but are not limited to: 19 1. How significant is the secondary market supply? 2. What is the significance of this for the rental housing sector? 3. What are the factors driving this significance? 4. Are there implications and what might these be? 5. What are the most appropriate responses in stimulating an increase supply of rental housing? These are some of the questions that have been addressed in this research, which explores the rented condominium stock as part of the secondary rental market in the City of Vancouver. In the next section, the growing importance of the rented condominium supply is analysed for the City of Vancouver and findings discussed in relation to the significance of this stock. Additionally, the factors influencing this significance are investigated.  20 Table 1: The Main Tax Policies Affecting Rental Housing since the 1940s Periods Government’s actions Policy decisions Post WWII (1945- 1960s) -high fertility rate -post war baby boom -stimulated housing production and upgrade Federal and provincial partnerships: -insured mortgage loan -Limited Dividend Program (LDP) LDP- subsidizes rental units Rental housing boom (1960s- 1971) - Demand from baby boomer generation - High divorce rates - Decline in birth rates - Enhanced role played by the provincial government - Federal government changes in mortgage financing and taxes Capital Cost Allowance (CCA) deductions allowed the treatment of depreciation on a building as an expense for income tax purposes.  - rental buildings pooled for tax purposes - shelter income gained by claiming Capital Cost Allowance (CCA) Treatment of rental losses - the losses on any rental property can be deducted from income from other sources in order to calculate income for tax purposes.  These losses could include expenses such as operating costs and mortgage payments but not depreciation on buildings.  Capital gains on real estate properties were not taxable  Soft Costs are expenditures incurred by the owner of a new rental property which are not related to the actual acquisition of a fixed asset (building and land) - these costs could be deducted upfront in the first year Continued on the next page 21 Table 1: The Main Tax Policies Affecting Rental Housing since the 1940s Sources: (Clayton, 1998; Lampert, 1999; and Oberlander and Fallick, 1992) 22 Periods Government’s actions Policy decisions Emergence of condominiums (1972-1980) - economic recession - rising land and housing cost - declining housing start - declining vacancy rates - high interest rates - Federal government changes in mortgage financing and taxes - Condominium legislation introduced - Federal government introduces  new incentives in 1974: o MURB o ARP - loss of income tax benefit provisions to rental investors - tax shelter abolished - 50% of capital gain tax applied to the sale of rental property - prohibits the treatment of carrying costs (interest and property taxes) as operating expenses MURB-reintroduces tax shelter coverage for individual and private investors and ARPs provided capital cost benefits to investors Disengagement and withdrawal  of the federal government  from rental housing (1980s-1990s) - high interest rates - Federal government- Canada Rental Supply Plan (CRSP) - Reduced federal government role in direct subsidies - Greater role of provincial government      (rent control)  • Soft cost allowed to be capitalised into the value of buildings and depreciated overtime • CRSP- provides interest free loans to encourage  the  construction  of  rental housing • Capital gain taxes increased to 66.67% in 1988 and then to 75% in 1990s. In 2000, it was reduced to 50 % • Designation of rental housing as a passive investment in the income tax Act. This means that rental properties are ineligible for the tax advantages enjoyed by active small businesses, such as a special low rate of tax provided by way of an annual tax credit. 2.1.3. Implications for Rental Housing Development, City of Vancouver Purpose  built  rental  housing  development  in  the  City  of  Vancouver  has  been severely constrained by the lack of favourable government tax incentives and the substantial development in condominiums. Since the 1970’s,  the construction of purpose built  rental units in the Vancouver CMA began to decline. Planned rental starts dropped from a peak of 67.4 percent in the 1960’s to 11.7 percent by 1975 (Hamilton, 1978). With the introduction of tax  incentive  programs such  as  the  MURB and  the  ARP in  1974,  purpose  built  rental housing starts increased significantly. After these programs were cancelled, the supply of purpose built rental started to gradually decline. Very few rental housing units have been built, except for an anomaly in 2003 when a total of 2000 new units were added (City of Vancouver, 2008).  In the first ten months of 2008, less than 3 percent of all new housing starts were rental with only 300 new rental units added across the Vancouver CMA, based on  CMHC  data.  Additionally,  a  significant  proportion  of  the  existing  stock  has  been demolished. Over the past year, more than 1,000 of this stock have been lost in the region (CHMC, 2008).  CMHC indicates that the City of Vancouver is one of two cities with the greatest  loss in  its  purpose built  stock in  the CMA.  The demolition  and in  some cases conversion of rental buildings to condominiums and the temporary removal of some of the existing units from the rental pool for renovations are the main reasons contributing to this decline (CMHC, 2008). The remainder, particularly the older stock, is under redevelopment pressures in areas such as Marpole, the West End, South Granville and Kerrisdale (City of Vancouver,  2007).  At the UDI discussion forum, “Ready for Rental,  part  1”,  a developer indicated that, “several of the current rental housing stock have reached the end of their economic life, where the land is worth more than the value of the rental units”. Redevelopment  of  these  existing  older  purpose  built  rental  housing  is  highly favourable  for  condominium  development,  considered  the  “highest  and  best  use”  of residential  lands in the City.  The strong demand for  apartment  condominiums,  and high building  and  land  costs  have  over  the  years  made  building  for  homeownership  more attractive  (CMHC,  2008).  The  desirability  of  the  condominium  supply  market  is  further strengthened by the fact that profitable returns can be realised very early. Profitable returns can  be  obtained  from  the  presale  of  condominium  units  even  before  these  units  are completed, while similar returns from rental buildings can only be realised when completed 23 (Clayton, 1998). Although the cost to build a rental apartment is roughly the same as the cost to build a condominium, investors of purpose built  rental housing will  have to wait a decade  to  recover  the  land  and  construction  costs.  Conversely,  condominium  investors could have within a few years made money and would have lowered their financing cost by pre-selling units before construction (Paulsen, 2009). As a result, the supply of purpose built rental units continues to decline in the City. Rental  housing  demand in  the City  has  remained quite  robust  since the  1970’s. Census data on housing tenure analysed from 1971-2006 reveals that there is a consistently higher proportion of rented dwellings in the City compared to those that are owned. Fig 6 shows that more than half the households in the City of Vancouver are renters compared to homeowners  and  this  proportion  has  grown  tremendously  over  the  years.  In  2006,  52 percent of all households in the City were renters (Census, 2006). Increased inter and intra migration into the City and the rising cost of ownership are factors contributing to this strong demand for rental housing (CMHC, 2008). As a result of this persistently strong demand for rental housing and limited supply of purpose built rental housing, the rental vacancy rates for the City has remained very low. Figure 6:  Housing Tenure for the City of Vancouver, 1971-2006 Source: City of Vancouver Planning Department information sheet: City facts Census data series, tenure of dwelling 1971-2006. 24 Vancouver’s  rental  vacancy rates  have been among the lowest  in  Canada  since World War II (City of Vancouver, 2005). Compared to the CMA, vacancy rates for purpose built  rental  in the City are very low and have been at their  lowest  since 2004 (see fig.7 below). Figure 7: Vacancy Rates for the City of Vancouver and the CMA, 1975-2008 Source: City of Vancouver (2009). CMHC apartment vacancy rates and rents as cited from CMHC, secondary market surveys. Given the shortage of purpose built rental units in the City, much of the demand for rental housing is being filled through the secondary rental market. While there is insufficient information  about  the  secondary  market  in  the  City  of  Vancouver,  it  is  expected  to  be significant given the strong demand and shortage of purpose built  rental housing. Of the secondary market rental opportunities, the rented condominium supply is quite significant given its growth. Also, the rented condominium supply is increasing as many investors have been placing their units in the rental housing pool for different purposes. Although the extent of this increase is largely unknown, recent studies have shown that a growing number of condominiums are rented out especially in urban areas. Before examining the significance of this supply, it is important to assess the growth in the condominium market and the factors which influence investors to rent. 25 2.2 . Growth of Rented Condominiums Condominiums  ownership  is  the  most  popular  form  of  ownership  in  the  City  of Vancouver.  Over  the  past  eight  years,  the  supply  of  condominiums  has  grown phenomenally,  since  becoming  popular  in  the  1990’s.  Fig.  8  shows  that  condominium development  increased  sharply  in  the  1990s  before  declining,  thereafter  becoming increasingly more significant as the supply of purpose built rental housing declines. In 2008, the total  number of condominiums reached 62,714, up from 59,988 in the previous year (CMHC, 2008). The impetus for the magnitude of growth in the condominium supply market has  been favourable  government  policies,  notably  the  50 percent  reduction  in  taxes  on capital  gains.  Government  policies  created  an enabling  environment  for  risk  taking  and investment  by  allowing  investors  to  retain  more of  their  gains  (Government  of  Canada, 2002). Figure 8: Completion of Market Rental and Condominiums in Vancouver (1970s to 2000s) Source:  cited  from CMHC housing  now survey  in  the  City  of  Vancouver  (2008).  Rental  housing  strategy: Processes and consultancies. City of Vancouver administrative report. 26 Rising  house  prices  have  resulted  in  condominiums  development  outperforming other housing options since it is the least expensive form of ownership. However, given the strong demand and limited  supply,  the  average price  increases for  condominiums have increased significantly. The Housing Price Index 4(HPI) for condominiums increased by 82 percent  ($387,  000)  compared to the increases (70%) for  detached homes in  the CMA (REBGV,  2008).  The  City  of  Vancouver  had  the  highest  average  price  increases  for condominiums in the CMA, especially in the Downtown subareas, where the prices were among  the  highest  in  the  region.  The  average  price  increase  from  2000  to  2008  was between 85-118 percent (Goodman report, 2008).  Given the remarkable price increases, investing in condominiums in the City became highly lucrative for developers and investors alike. In 2008, housing supply increased considerably across the Vancouver CMA, reaching its highest recorded number of starts in 25 years (CMHC, 2008). Condominium apartments made up 60 percent of the new housing starts, the majority of which were in the City of Vancouver and Surrey, both having more than half the total number of starts, according to CMHC Housing Now Survey (2009). Rising  prices  have  made  homeownership  difficult.  CMHC market  outlook  (2008) suggests that the high cost of ownership has limited the demand from low equity and first time investors as well as investor buyers.  However, some investors that have bought into the condominium market are increasingly renting their condominiums for several reasons. 2.3. Factors Influencing Investors to Rent 4  The Housing  Pr i ce  Index  (HPI )  i s  an al t e rna t i v e  measure  of  rea l  esta te pr i ces  tha t  prov ides  a c leare r  p ic tu re  of  marke t  t rends  over  t rad i t i o na l too l s  such  as mean or  median  average  pr i ces  and i s  modeled  af te r  the consumer  pr i ce  index  (  REBGV) 27 There are several reasons influencing investors to rent their condominiums in the City. Based on interviews conducted with some of these investors, the following reasons were identified: 1. For investment purposes; 2. Steady income source/ cash flow; 3. Increase equity on the capital gains/ Pension plan; 4. Changes in personal circumstances such as relocation and  family situations; The majority of investors interviewed disclosed that renting out their condominium(s) in Vancouver was an investment decision. One person pointed out that he entered the rental market, “hoping to flip the unit and make a gain as the economic conditions have been very good over the past couple of years”. Another indicated that, “condo rental in Vancouver is highly  beneficial  as  the  demand is  strong,  prices  continue  to  increase  and  in  a  couple months or  years you are able to increase the gains on the rental  property”.  In contrast, others interviewed were of the view that the strong demand for condominiums for investment purposes is a major challenge. One housing advocate interviewed noted that, “investors are gambling up the price for condominiums in the hope to fetch a higher price in the resale market”. Still there were others who were interested in having a steady income source to help with their mortgage payments, property taxes and strata fees. One person noted that, “the steady income from rent provides security in the event I lose my job or I was to become ill and couldn’t work”.  Another indicated that, “by renting my condo, the mortgage payments, property taxes and strata fees are covered and I  don’t  have to worry about  these on a monthly basis.” Further to this, several of these rental providers are involved because of the low  risk  associated  with  the  rented  condominium  market.  According  to  one  investor interviewed,  “renting a condominium is less risky when compared to stocks and bonds”. However,  others see rented condominiums as  part  of  their  pension  plan and long term investment held for their children. An investor noted that, “I bought my condo for my children and while they are at school they have been renting it to supplement their income”. While another stated that, “the rented condominium is my pension plan- over time the equity builds up, and by the time I retire I can pay off my mortgage, sell my apartment and live off the interest gained”. 28 Changes in family situations often influence some condominium owners to rent their condominiums. One person interviewed said, “I rent because I moved away for work and didn’t want to sell my condo”.  Another person noted that, “I got married and wanted more space but was not interested in selling... because I want to keep it as an investment”. 2.4.     How Significant are Rented Condominiums in the City? While this question is difficult to assess given the limited information about the rental stock consisting of condominiums, recent studies supported by interviews with individuals knowledgeable about this supply suggest that it is highly significant. A developer interviewed noted that, “the rented condominium supply is pretty significant in the City, especially in the Downtown area where a significant portion of condominiums have been constructed over the past couple years.” Similarly, the most comprehensive data available on this supply, CMHC secondary market survey, suggests that across the region the significance of this stock is increasing. This data reveals that more than one fifth (1/5) of all apartment condominiums have been rented out by individual investors in the Vancouver CMA. Additionally, more condominiums have been added to the existing supply than any other form of rental housing over the past year. CMHC estimated that more than 3,500 rented condominium units were added to the existing rental supply in 2008. Fig 9 shows that across the CMA the change in the number of rented condominiums added to the market is higher than other secondary market rental sources such as secondary suites and row/duplex homes. Although there was a mere increase of  1135 rented condominiums added to the rental  market  in  the  City  over  the  past  year,  the  existing  data  does  provide  sufficient information for one to make a conclusion about the significance of this stock. CMHC (2008) revealed that an estimated 27.1 percent (16,986) of condominiums were rented in the City, compared to the 22 percent for the rest of the region (CMHC, 2008). Fig 10 shows that rented condominiums remain highly significant despite the decrease in the percentage share of units rented between 2007 and 2008. There were more condominiums rented in 2007 in the Burrard Peninsula6 (Downtown) and the City of Vancouver in 2007. Approximately 39 percent were located in Downtown Vancouver, while 19 percent were in other parts of the 5  This  number  i s  der i ved  th rough  the  ca lcu l a t i o n  of  data  prov ided  by CMHC on the  number  of  ren ted  condomin iums  fo r  2007 and 2008. 29 City. It is important to note that the percentage share of rented condominium decreased by more than 4 percent in Downtown Vancouver between 2007 and 2008, while there was a slight increase (1%) in the percentage share of units rented in Vancouver (east/west ). Figure 9: Change in the Private Rental Stock in Vancouver CMA, 2008 * Change = number of units added to or lost from the rental housing stock Oct 07 and Oct 08   Source: CMHC (2008). Secondary Rental Market Survey, Vancouver and Abbotsford Figure 10: Percentage Share of Condominium Units Rented in the City of Vancouver and the CMA, 2007 & 2008 6  Accord ing  to  CMHC (2008) ,  the  Bur ra rd  Peninsu la  inc l udes  RMS Zone 1 (West End and Stan ley  Park) ,  Zone2 (Eng l i s h  Bay)  and Zone 3 (Downtown) 30   Source: CMHC (2008). Secondary Rental Market Survey, Vancouver and Abbotsford Although this is a good estimation of the rented condominium stock in the City, the number of units might in fact be higher, as not all rented condominiums have been captured by CMHC surveys. This is a significant challenge in assessing the full significance of this supply in the City. Other studies have provided further evidence that supports the argument of a highly significant rented condominium supply. Recent data collected7 by Alexander and Somerville (2009)  revealed  that  rented  condominiums  make  up  more  than  one  third  of  the  rental housing supply in the City. The majority of the stock is located in Downtown Vancouver, while the remainder is in other parts of the City. Map 1 and 2 show the distribution of rented condominiums throughout the City and identify where the majority are concentrated. This data is  consistent  with  CMHC data,  illustrating that  the City of  Vancouver  has a higher concentration of rented condominium than adjacent municipalities. Map 1: Condominium Buildings with Investor Share Less Than 20% in the City of Vancouver and Adjacent Municipalities 7  This data does not include rented condominiums in Vancouver’s West End and is based on BC assessment data which was used to determine whether a unit is investor owned or not. If the assessment is sent to the unit owner it is considered to be owner occupied. If it is not, it is considered to be investor- owned with the potential for rental (Alexander and Somerville, 2009) 31 Source: Alexander, M., & Somerville, T.,  (2009).  Diverse housing and the Vancouver Area’s Investor owned Condominiums. Map 2:  Condominium Buildings with Investor Share Greater Than 40% in the City of Vancouver and Adjacent Municipalities 32  Source: Source: Alexander, M., & Somerville, T., (2009). Diverse housing and the Vancouver Area’s Investor owned Condominiums. Table  2  summarises  the  percentage  distribution  of  rented  condominiums  in  the  lower mainland and in the City of Vancouver. From this data, it could also be assumed that the 33 stock is highly significant throughout the City, but is of greater importance in the Downtown. Notwithstanding, there are still significant gaps in the Table 2: Investor owned Share of Rented Condominiums in Vancouver and the CMA Area % share  of investor  owned Investor  owned uni ts  as % of  the  renta l   apt  & town houses Lower  Main land 20.5% 34.6% Vancouver 26.3% 31.2% Vancouver Downtown*  40.9% Over   90% West  End 28.2% 18.4% *data excludes the West End Source: Alexander, M., & Somerville, T.,  (2009).  Diverse housing and the Vancouver Area’s Investor owned Condominiums. Yan (2009) in a study of ownership, occupancy and the rental of condominiums in Downtown  Vancouver  revealed  that  more  than  10,000  rented  condominium  units  were supplied. This is very significant considering the gaps in the source data and the fact that only a section of the downtown area is represented. The high demand for rental housing in Downtown Vancouver is possibly one reason for this high concentration of rented condominiums. Generally, there is a higher demand for condominiums in Downtown Vancouver, but no correlation has been established between this demand and the supply of rental housing, or whether or not the demand is solely for investment or for ownership. Nevertheless, the supply of rented condominiums is limited in this area given the lower vacancy rates.  In the Downtown area, the vacancy rate is 0.3 percent8, while in other sections of the City, the vacancy rate is higher (1.2%), indicating a lesser  demand  outside  the  urban  core.  This  raises  questions  such  as  why  are  rented condominiums more significant in downtown Vancouver than in other parts of the City? And are there implications for an increased reliance on this supply given the continuous decline of the purpose built stock? The answer to the first question could be linked to why people own  versus  rent  in  the  City,  a  discussion  which  is  outside  the  scope  of  this  research. However, the second question is the intent of this research and as such is dealt with below. 8 Source: CMHC rental market survey 34 2.5.  Are there  Implications for  an Increased Reliance on Rented Condominiums?  Housing costs in the City of Vancouver are among the highest in the CMA and the rest  of  Canada.  The high  cost  of  ownership  along  with  the tight  job  market  is  a  factor contributing to strong demand for rental housing (CMHC, 2008). Since tenants have lower incomes compared to homeowners, rental housing affordability is a major challenge. Income data collected from Statistics Canada reveals that the income of renters is significantly lower than the income of homeowners.  In 2006, 44 percent of renters earned less than $30,000 per annum, compared to 19 percent of homeowners. The median income for renters in the City  was  less  than  $40,000  annually  for  all  age  groups  who  were  relying  on  rented accomodations (see Fig 11). Fig 11: Median Household Income by Age Group and Tenure for the City, 2006 Source: Statistics Canada custom tabulation for City of Vancouver, 2006 Conversly, a vast majority of the rental demand in the City is from the lower income groups, mainly younger households i.e., less than 35 years old (see Fig 12). Approximately 87  percent  of  renter  households  are  within  the  15-24  age  groups,  while  73  percent  of households are within the 25-34 age groups (Statistic Canada, 2006). Besides having lower income,  many  of  these  households  might  not  have  enough  savings  to  enter  the homeownership market, resulting in a sustained demand for more rental housing in the City. Figure 12: Percentage of Renter Households by Age Group, 2006 35  Source: Statistics Canada custom tabulation for City of Vancouver Lower income renters’ households,  especially,  are more likely to face affordability challenges,  and  this  will  be  even  more  severe  if  they  are  dependent  on  the  rented condominium supply as a source of rental. Purpose built rental housing is more affordable for many renters but their continual decline is a major challenge. In contrast to purpose built rental  housing,  rented  condominiums  are  newer  and  more  sophisticated  with  modern fixtures and amenities.  Additionally,  they are much more expensive.  The average rental rates for condominiums are approximately 32 to 48 percent higher than purpose built rental housing (City of Vancouver, 2009). Fig.13 compares the average rents for purpose built and rented condominiums in Vancouver CMA, the City and Downtown. Given the average cost of rents in the City, lower income tenants face affordability challenges in renting the more affordable  purpose built  units,  let  alone being able to  afford the more expensive rented condominium stock. This is further complicated by the fact that rents are increasing faster than  income.  For  instance,  the  median  price  of  a  2-bedroom  purpose  built  apartment increased by 3.1 percent, while the median income of renters grew by 0.6 percent in 2008 (CMHC, 2008). Fig  13:  Average  Rents  for  Purpose  Built  Rental  and  Rented  Condominiums  in Vancouver, 2008 36 Source: Canada Mortagage and Housing Corporation (CMHC, 2008). Housing Market Survey Vancouver and Abbotsford. Irrespective  of  income  levels,  renters  choosing  to  live  and  work  in  the  City  of Vancouver must be able to access rental housing. The provision of rental housing, given the need,  is  good  social  (public)  policy  (Carter  and  Polevychok,  2004).  This  is  because  it ensures the stability and security of households, which is important for economic and social sustainability.  Therefore,  an  adequate  supply  of  rental  housing that  meets the needs of renters in the City must be provided.  Regardless of income, renters face different challenges in finding accommodations in  the  City,  given  the  extremely  tight  rental  supply  market.  For  instance,  lower  income households face affordability challenges and whilst higher income renters are able to afford high  end rental  units,  these opportunities  are  still  very  limited.  Increasing  the  supply  of rented condominium is highly beneficial  since it  adds to the overall  supply.  Furthermore, since these are high end rental units, attracting higher income tenants, they allow for the freeing up of the purpose built supply for lower to moderate income renters. New supply will add to the stock of rental housing giving renters more choice between condominiums and purpose built rental units (CMHC, 2008). In the absence of this added supply, there would have been stronger competition for the limited purpose built rental stock. Equally,  if  purpose built  rental supply continues to decline,  and there are no new rental investments, there will be stronger competition for rental housing among the low to moderate income renters. CMHC rental survey (2008) suggests that while more households 37 will  be occupying secondary rental units, many will  be competing for purpose built  rental units  in  a  tight  market.  Already,  the rental  vacancy rate for  purpose built  apartments is declining, which indicates a stronger demand for these units. Conversely,  increasing the supply  of  rented condominiums is  disadvantageous to profit  seeking  investors.  This  equates  to  the  law of  demand and supply;  as  the  supply increases the demand decreases and vice versa. Over the past year, some first time buyers have been vacating their rented condominium apartments and are moving into their own home and this along with an increase in supply has contributed to an ease in the demand (CMHC, 2008).  The ease in demand will  no doubt impact the investors’  ability  to attract tenants and earn profits on their investment.  At the UDI seminar, one presenter noted that, “the higher income tenants are buying homes and many of the cash strapped tenants are seeking units that are within their budget and which meet their needs such as proximity to school and other amenities”. While this presenter encouraged investors to be more creative in attracting tenants to their units, if tenants are unable to access rented condominiums due to affordability challenges, there will be fewer uptakes of these units. In contrast, the rented condominiums supply is important to continually satisfy the higher end rental demand as predicted by CMHC (2009). Regardless of this, increasing the supply of rented condominiums will not make up for the gradual loss of the purpose built supply, given the high cost of rents. The continual loss of the purpose built supply will have implications for rental housing affordability. This is a major public policy concern that needs to be addressed. 38 CHAPTER 3 - EMERGING TRENDS, OPPORTUNITIES AND RISKS The purpose of this section is to discuss the emerging trends, opportunities and risks in the rented condominium supply market. 3.0 .  Factors Impacting the Rented Condominium Supply The Investors’ Priorities To a large extent, investors’ priorities influence the supply of rented condominiums in the City of Vancouver. From the interviews conducted, two types of investors were identified. Short term investors (“flippers”) are those buying condominiums for the sole purpose of capitalizing on the short term gains either through rental and/or resale of their units. Many of  these investors rent  their  units  for  short  periods of  time,  until  they are ready to sell. “Because of the way the condominium market has been booming for the past few years, it has become a source of income or cash flow for investors”, according to one researcher interviewed. These investors rely on a risky market, which is hinged on rising condominium prices. The supply of rented condominium from these investors is unstable as there is a possibility  that units might be withdrawn at any time for resale or other purposes. In the Downtown  area,  where  a  large  percentage  of  rented  condominiums  are  found,  renter turnover  is  very  high.  Yan’s  (2009)  research  on  13  (thirteen)  buildings  in  Downtown Vancouver, reveals that 15 to 55 percent of the condominiums surveyed had a change of name on their BC hydro record from 2007- 8. While this data represents only 10 percent of the (possible)  rented condominium stock,  it  suggests a high turnover  in  unit  occupancy. Since renters are three times more likely to move than homeowners based on census data, this high occupancy turnover indicates the possibility of renters. In contrast, long term investors are more likely to rent their condominiums for longer periods of time because of their interest in increasing the capital gains on their properties. These investors prefer the lower risks associated with the rental market as opposed to other forms  of  investment  such  as  buying  stocks.  Although  several  of  these  investors acknowledge  that  condominium rental  is  not  very  profitable,  they  seemed satisfied  with being able to simply cover the expenses related to maintaining ownership.  One investor 39 interviewed  pointed  out  that,  “being  able  to  cover  my  expenses,  while  the  property  is increasing in value is what really matters for me”. Even though long term investors may remain in the rental market longer, the supply of rented condominium is not guaranteed and cannot be fully relied on to meet the needs of renters. This is because an investor’s decision and/or priorities for being in the rental market may change. Furthermore, there are unforeseeable circumstances, challenges and/or other barriers that may cause investors to take their units off the market at any time. 3.1. Challenges and/or Barriers Faced There are several  challenges and barriers faced that  could impede the supply of rented condominium. These include: • The unprofitability of  investing in rented condominiums; • Dealing with issues relating to tenant management; • Rent control system. Below are some of the comments made by investors regarding the challenges they face: Interviewee 3: “We are not making any money off our condo...rents charged are not enough to cover expenses”. Interviewee  1:  “it  is  very  unprofitable  ...the  rental  income we receive  barely  covers  the mortgage, property tax and strata property fees”. Interviewee 6: “rent control makes it difficult for us to raise the rent, which can only be done when tenants leave”. Interviewee  8:  “damages  to  the  apartment  caused  by  one  of  my  tenants  and  the overspending on maintenance made it  very hard for us because the rent does not cover those costs”. Interviewee 11: The Residential  Tenant Act is  too heavy handed with little protection for landlords...it is often complicated when I have to deal with a difficult tenant and frustrating”. Interviewee 14: “Evicting and getting a new tenant is time consuming, and is often a lengthy and costly process.” 40 Some barriers to increasing the supply of rented condominiums include changes in economic  conditions.  From the interviews with rental  providers,  few indicated that  rising interest rates, inflation and corresponding financial hardship would cause them to consider selling their rented condominium units. Below are a few of the comments made by those interviewed. Interviewee 5: “if I were to experience financial hardship, I would consider selling the unit.” Interviewee 4 “if interest rates were to rise and mortgage rates were to go up; we would consider possibly selling our unit”. From the interviews, the role of all levels of government as a facilitator of and an inhibitor to increasing the supply of rented condominium was highlighted, making it relevant that this role be further assessed. Governments’ Role Both the federal and municipal levels of government play an important role in facilitating an increase in the supply of condominiums in the City. The federal government stimulates these  investments  through  interventions  such  as  providing  financing  and  mortgage insurance, lowering interest rates and providing favourable taxation policies. On the other hand, the municipal government regulates land for development, through zoning and other bylaws; collects property taxes; and offers increased densities. However, the federal and municipal governments have very little or no control over the supply of rented condominiums (see diagram 2 below). In contrast, the provincial government through legislations such as the Strata Property Act and the Landlords Tenants Act has some influence over the supply. The possible effects of legislation on the supply of rented condominium are examined below. 41 Diagram 2: Relationship between the Public and Private Domains in the Condominium Supply Market (cash flow) 42 Priva te Publ ic Domain Developers Strata Councils I nves t or s Housing supply Housing demand Ownersh ip Renta l New hous ing sta r t s Comple t i on and absorp t i on Mortgage f i nanc ing Fi nanci a l i nst i t ut In te res t s • Inves tment and hold ings : - Risk premium - Asset d ive rs i f i c Devel opmen t f i nanci ng Provinc ia l Government • Develops leg i s l a t i o n such  as land lo rd tenant  Act • Regula tes condo (S t ra t a proper t y Munic ipa l Government • Regula tes zon ing / l and use • Sets  ra tes fo r  DCCs, CACs • Col lec t s proper t y taxes Federa l Government • Develops  Tax po l i c i e s • Sets  in te res t ra tes • Prov ides f i nanc i ng  and guaran teed mortgages • Under takes • Strata Property Act (2009) To some degree, the supply of rented condominiums is influenced by the Strata Property Act, which gives Strata Councils the power to restrict or prevent the renting of condominiums in British Columbia. Under the Act, a ¾ majority could pass a bylaw restricting or preventing owners from renting out their units (BC Government, 2005). By restricting rental, the strata council decides the number of allowable rental units that will be permitted in their buildings or whether they will allow rental. One important exception is that developers can file a Rental Disclosure  Statement.  This  allows developers and owners who purchase directly  from a developer to rent their units, even if a rental restriction bylaw is passed at a later time by the owners  (BC  Government,  2005).  The  possibility  of  rental  restrictions  increases  when condominiums are bought and resold by the original purchasers to other purchasers. This is because  subsequent  purchasers  cannot  rely  on  the  rental  rights  created  between  the developer  and the initial  purchaser and will  be subjected to rental  restrictions under the strata bylaws (BC Government). Few of those interviewed raised concerns about the ability of the strata council to restrict the rental units in condominium buildings as one factor potentially affecting the supply. One rental housing advocate interviewed indicated that, “there are a lot of condominiums sitting vacant and some owners wanting to rent are unable to do so because their Strata Councils restrict  rental”.  While  this is  widely  seen as a barrier  to increasing the supply  of  rented condominiums, it is not the most profound barrier faced by rental providers interviewed. It is important to note that many, if not all of those interviewed had permission from their Strata Councils  to  rent.  Some  indicated  that  they  were  Strata  Council  members.  As  a  result, information  used  in  assessing  the  extent  to  which  rental  restriction  is  a  barrier  and/or challenge to investing in rental condominiums was very limited. For instance, it is not known how much of an impact these restrictions have on the supply or potential supply. Despite this, recent 9data compiled by Alexander and Somerville (2009) reveals that less than  half  the  buildings  listed  as  condominiums  in  the  City  have  some  form  of  rental restrictions.  Additionally,  there  are  some  buildings  in  which  no  rental  is  allowed, approximately  15 percent  of  buildings  surveyed.  Fig  14 shows the percentage share of buildings with rental restrictions and those with no allowable rental in the City, the West End and Downtown.  From this data, it is assumed that rental restrictions could actually impede 9  This  data  is  based  on MLS l i s t i n g  2006- 2009. 43 the  supply  of  rented  condominiums  given  the  high  percentage  (45%)  of  buildings  with restricted rental in the City, especially in the West End.  However, rental restriction is less of a  challenge in  the Downtown area as approximately  18 percent  of  rented condominium buildings have some forms of rental restriction. Similarly, there are more buildings that do not allow rental in the City (15%) and the West End area (18%) as opposed to the rest of downtown Vancouver (4%).   Another interesting finding from this data is that older buildings (built before 2003) have more restrictions than newer buildings (built after 2003)10. Given this trend, rental restrictions might  be less of  a  challenge to increasing the rented condominium stock since a large majority  of  the  condominiums in  the  City  were  built  after  2003.  Also,  there  is  a  strong possibility that rental restrictions might be non- existent in many of the newer condominiums buildings. Although this might be the case, it is difficult to predict future trends; for instance changes in ownership. One major assumption from this data is that many of the older units are owner occupied, while the newer units exist largely for investment purposes and this does affect the supply of rented condominium. While there are noticeable gaps with this data, it provides a rough estimate of the extent to which rental restrictions could impact the supply of rented condominiums in Vancouver. There are still unanswered questions from the investors’ point of view, one of which is the extent to which rental restriction is a barrier to entering the rental market. In addition to this, there is widespread speculation among those interviewed that there are several “hidden” or unaccounted for rented condominiums. This means that some of the condominiums believed to  be  owner  occupied  are  actually  rented.  “Many  of  these  condos  are  part  of  the underground market... these investors evade taxes and other obligations, which is not only bad but unfair  for others” one rental provider noted. Knowing whether a condominium is owner occupied or rented is not very obvious from the data available. Furthermore, given the nature  of  rental  restrictions  and other  barriers  it  is  extremely  difficult  for  researchers to provide a good estimation of the supply. Another major challenge is identifying the rental providers (investors), which is essential to better understand the supply. Figure 14: Condominium Rental Restriction in the City of Vancouver 10  Alexander ,  M.,  & Somerv i l l e ,  T. ,  (2009) .  Diverse  Housing  and the Vancouver  Area ’s  Inves to r  Owned Condos.  BC Land Summit ,  May 21,  2009. 44               * excludes West End  Source: Alexander, M., & Somerville, T., (2009). Diverse housing and the Vancouver Area’s Investor owned Condominiums.  • Residential Tenancy Act (2006) This legislation is applicable to all residential tenancies in BC. It sets out the roles and responsibilities of landlords and tenants. The Act mandates that every landlord and tenant must  enter  in  an agreement  that  establishes  the  rules  regarding  tenancy.  For  instance, residential  landlords cannot arbitrarily increase the rents for rental properties, as this Act stipulates when and how rent increases can be applied. This was one of the challenges raised  by  those  interviewed.  Several  disapproved  of  the  rent  control  system,  which mandates the yearly rent increases in the province. One investor/ landlord noted that, “if we are to make a profit, rent control can’t be controlling rents”. Despite this, there are others who are still firmly in support of the rent control measures. Their main concern for keeping the  rent  control  system  was  based  on  the  possible  implications  for  rental  housing affordability. A rental housing advocate interviewed pointed out that, “removing rent control only serves to worsen the challenges faced by renters... government needs to improve the economics of rental housing”.  In addition to this,  rent control has been singled out as a fundamental problem in the rental housing market and is still  a highly debateable matter. Despite the disagreements, there is still insufficient information to determine the implications of rent control on the rented condominium supply, which is a matter requiring further study. Another  concern  raised  about  this  legislation  is  the  limited  protection  of  tenant’s rights given the fact that rented condominiums are in some cases short term rental. Under 45 Section 49 (landlord’s use of property) of the Act, there is very little protection offered to tenants in rented condominiums. In this section, “an individual landlord may end tenancy of a  rental  unit  for  the  following  reasons:  to  occupy it  or  to  sell  the unit  providing  that  all conditions  of  the  sale  have  been  met  and  the  purchaser,  in  writing,  requests  that  the landlord gives notice to the tenant”. This is a fundamental clause that seeks to work in the favour of short term investors in the rented condominium market. A major challenge is that renters are not protected against short term eviction notices given by rental  providers- investors (rental  providers) can require tenants to vacate their premises by giving two months notice. There are several assumptions that are being made about  the  implications  of  this  provision  on  tenants  living  in  condominiums  and  the subsequent  implications on the supply.  One tenant advocate interviewed suggested that, “investors in rented condominiums have far more leeway in getting rid of tenants...with only two  months  notice  a  tenant  can  be  kicked  out  of  their  apartment”.  This  is  especially challenging because rental vacancies are limited in the City of Vancouver. Moreover, renters on the move are faced with higher cost rents as vacancies are created, allowing landlords the  opportunity  to  raise  rents  to  the  current  market  value.  As  a  result,  displaced condominium renters might be faced with increased affordability challenges. The  protection  afforded  to  renters  of  condominiums  is  a  sharp  contrast  to  the protection renters have in purpose built rental housing. The Act was amended to give more protection to tenants (renters) by increasing the amount of notice that landlords must give to tenants in the event of renovation and increases the compensation payable to them under these circumstances (Bill M205, 2008). In addition to government’s limited role, other stakeholders (such as the developers and  renters)  are  also  playing  an  important  part  in  increasing  the  supply  of  rented condominiums.  Table 3 summaries the role of these other stakeholders.  Developers are often seeking ways to maximize their  returns,  and given the robustness of  the housing market over the past few years condominium investments provide many opportunities for them to do so. Developers capitalise on the solid demand of households and/ or investors to achieve their  returns by increasing the supply  of  condominiums at  the price  people  are willing to pay, without depleting their profit margin. In contrast, increased profitability in the rented condominium market depends largely on the strong demand by renters. Given the rising  house  prices  over  the  years,  many  renters  have  been  unable  to  own  homes.  In Downtown Vancouver,  the demand for  rented condominium is  highest,  which may be a 46 result of higher income renters being unable to buy into the housing market. Higher income renters are usually more attracted to the newer units with modern amenities and fixtures, the convenience of the downtown and proximity to transit and other services.  Table 3: Stakeholders in the Rented Condominium Market and their Interests The demand for rental units is one of the reasons many rental providers enter the market.  Providers  of  rented condominiums capitalize  on the solid  demand from renters. Despite the challenges, some rental providers have chosen to remain in the housing market for a variety of reasons. The majority of those interviewed indicated that having good tenants over the years and a low renter turnover is a key consideration in their decision to remain in the market. “It is a real hassle to find tenants...I don’t want short term tenants because I fear those are the ones more likely to thrash the unit”, notes one investor interviewed. Another 47 Category  of stakeholders Interests Developers:  - Provide  competitive  price  for  units  so  as  to attract favourable returns - Investment is very profitable - Increase market share - Capitalise  on  strong  market  demand   for housing Short  term investors (‘flippers’) - Less risky investment - Cash  flow - Maximize  their  returns  through  short  term gains Long  term investors • Increase capital gains • Steady income Renters • Affordable rentals • Location:  convenience  and  proximity  (work, school, transportation) •  Access to amenities and services • Safe and appropriate housing Housing market condo: (supply oriented) Rented condo market: (supply oriented) Rented condo market: (demand driven) pointed out that, “I have a good relationship with the tenant in our building... the property is well maintained and I am quite happy”. It is worth mentioning that some investors intended on renting their units on a short term basis ended up staying in the rental market longer than anticipated. “I didn’t expect to stay this long, but it  was okay once I’m in and I’ll  see how it goes from here”, said one investor.  Another noted that,  “I  went  into the market  hoping to stay a year  and I’m still involved, I even have another rented condominium and I’ll remain in the market for a while, maybe until the economy improves”. This makes it very difficult to determine the length of time investors (rental providers) will remain in the rental market. Based on this and from previous discussion, two fundamental challenges have been identified  with  the  supply.  These  are  the  uncertainties  about  the  stability  of  rented condominium supply  and the  reliability  of  the  supply  in  continuously  meeting  the  rental demand in the City. What can be done to secure the supply? From the interview with stakeholders,  there are limited actions that  can be taken to increase  and secure the existing  supply  of  rented condominiums in  the  City.  The main actions suggested are: • Changes  to  the  Residential  Tenancy  Act,  for  example  eliminating  the  rent  control provision; • Senior governments providing special tax benefits (incentives) to investors as a way to encourage owners of vacant apartments to rent out their units or to encourage those already in the market to remain for longer periods (over 10 years); • Provincial government amending the Strata Property Act to increase the percentage of allowable  rental  units  in  condominium  buildings.  Through  this  amendment,  the provincial  government could require that Strata Councils does not set the maximum number of rented condominium at less than 20 percent. 48 3.2.1. Emerging Trends As  stakeholders  contemplate  the  challenges  ahead  with  the  growth  of  rented condominiums and the continuous loss of the purpose built, there are some emerging trends that impact rental housing.  It  is important to briefly discuss these trends and assess the implications for rented condominiums, as this is crucial in defining the next steps for rental housing in the City. Across  North  America  over  the  past  year,  housing  construction  and  sales  slowed tremendously,  following  the  sub-prime mortgage problems in  the  United  States  and the global economic recession that preceded this. Like the rest of Canada, Vancouver’s housing market has not been immune to the effects of the global economic slowdown, and both the privately owned and rental housing markets have been affected. Economic uncertainties and job losses impacted consumer confidence and the demand for housing in Vancouver. Case and Quigley (2008) argue that an economic slowdown or increase in condominiums can trigger a shift in consumer psychology, accelerating a decline in the demand. Additionally, the loss of full time employment has had adverse impact on the housing demand (CMHC, 2009).  As the housing demand decreases, the number of units available for sale, housing prices and the number of units sold are reduced. In  Vancouver,  the  demand for  new and resale  homes,  including condominiums,  has dropped substantially, while the supply increases. Compared to the past few years, buyers are now extremely cautious about entering the market, which is evident in the number of unsold  properties,  many  of  which  would  have  previously  commanded  multiple  offers (Goodman Report, 2008). Relative to other types of housing, the absorption (take up) of condominiums has been very good in  the City  of  Vancouver,  averaging 12 percent11 in February,  2009.  This  is  because  many of  these  units  were  presold,  before  completion, resulting in fewer of these units on the market. However, given the substantial amount still under construction, CMHC (2009) predicts that the lower levels of demand and very little presale  agreements for  recent  projects  will  contribute to an increase in  the inventory of unsold condominiums. As a result of the decrease in demand, the number of sales and active listing has also decreased, suggesting that sellers have chosen to let the listing expire or have taken their 11  Source :  CMHC Housing  Market  Survey  (2009) 49 homes off  the market  for  other purposes (CMHC, 2009).  Additionally,  prices have been declining as developers try to attract potential buyers. Several developers and marketers of new projects have been offering incentives such as discounts to remain competitive (CMHC, 2009).   Similar  to  other  types  of  housing  in  the  CMA,  condominium  prices  have  been reduced.  In spring of 2008, the monthly average resale prices peaked and by March of this year was reduced by 15 percent (see Graph 1). Graph 1: Average Housing Price Trend, Vancouver CMA Source: REBGV, seasonal adjustment, trends cycles generated by CMHC % change from peak to March 2009. CMHC calculations as cited in CMHC Housing Market Outlook (2009) The effects of a shift in consumer demand on home sales and prices are shown in Fig  15.  The  drop  in  demand  is  because  buyers  have  stopped  looking  and  sellers  are refusing to lower their prices for long periods, holding out at the ‘sticky price’ (Case and Quigley, 2008). As the spread between the bid and asking price increases, there are fewer agreements  or  sales.  Case  and  Shiller  (1988,  2003)12 survey  of  home  buyers  in  four metropolitan  states  in  the  United  States  found  that  sellers,  unable  to  sell  their  homes, reacted differently. Some sellers said they would leave the prices the same and wait for buyers, others said they would take the house off the market or rent it and still others said they  would  lower  the  price  step  by  step  until  a  buyer  is  found.  Similar  to  this  finding, homeowners in Vancouver who are faced with the challenges of selling investment property due to the lower  demand acted the same. More importantly,  however,  is  the underlying implications for rental housing. 12  As c i t ed  in  Case and Quig ley  (2008) .  How hous ing  boom unwinds :  Income ef fec t s ,  weal th  ef fec t s ,  and feedbacks  th rough  f i nanc ia l  markets . 50 Figure 15: The Effect of Lower Demand on Housing Prices Source: Case, k., & Quigley, J., (2008). How housing booms unwind: income effects, wealth effects and feedbacks through financial markets. 3.3. Implications for the Supply of Rented Condominium Some implications for the rental housing sector, especially for the rented condominium stock, arising from slower economic growth include: • Lower demand for rented condominiums Slower economic growth and job losses have caused increased hardship for renters in the City (CMHC, 2009). Since rented condominiums are more expensive than purpose built  rental  housing,  there  is  less  demand for  these  given  the  increased  challenges faced. Additionally, fewer tenants are responding to rental advertisements and more are vacating their  apartments (Goodman Report,  2008).  Interviews conducted with a few rental  providers  reveal  that  the  vacancy  rate  in  rented  condominium  buildings  is increasing, averaging between 3 to 5 percent. Throughout the City rental vacancy rates are increasing, and recent CMHC data reveals that vacancy rates are higher in rented condominium buildings than in purpose built rental buildings. While CHMC predicts that the vacancy rates in purpose built building would increase up to 1.5 percent by 2010, there is no indication as to the percentage increase for condominiums, which could be a result of the uncertainties surrounding the supply. 51 • Declining investment interest Since  the  economic  downturn,  a  number  of  new  housing  projects  (including condominiums) have been delayed given the substantial decline in sales. The demand for  condominiums  for  housing  and  investment  purposes  has  declined  significantly. Investment demand has been reduced since housing prices started to decline in the spring  2008  (CMHC,  2009).  Reducing  prices  have  eroded  the  profitability  in  the condominium market,  resulting in more investors exploring opportunities in the rental market. Some investors, especially those who were hoping to flip their condominiums, may consider putting them in the rental housing pool as they anticipate market recovery. CHMC housing market outlook (2009) estimates that the supply of rented condominiums will increase as more investors choose to rent their units. Although  there  is  the  possibility  that  the  rented  condominium  supply  will  be substantial,  there  are  some risks  involved,  which  include  but  are  not  limited  to  the following: • The supply of rented condominium is unstable, given the underlying interests of the investors. It is anticipated that once the market improves, condominium units will be withdrawn from rental. One rental provider said that, “some investors will prefer to rent their condominium rather than sell it below what they paid for it”. This is a point that has been reaffirmed by the CHMC housing market outlook, which suggests that investors will choose to rent their units out to help cover monthly mortgage carrying costs. • It is very difficult to secure the supply, even with government support, and there are no mechanisms to ensure that  the current  stock of  rented condominiums will  be available over the long run. • Rented  condominiums  are  the  most  expensive  form  of  rental  housing  and  an increased reliance on this  supply  could  result  in  more renters facing affordability challenges. Additionally, since the majority of renters in the City have low income, there is the greater possibility that more would fall within core housing needs13. • There is insufficient information about the rented condominium supply in the City. For example, neither the total number of rented condominium nor the length of time 13  CHMC def i nes  core  hous ing  needs  as househo lds  pay ing  more than  30 percen t   or  more of  the i r  income on hous ing 52 rented is known. Additionally, there is no information about the investors, where they are from and about the challenges faced within the rented condominium market. Given  these  risks,  researchers,  housing  specialists  and  rental  housing  advocates interviewed pointed out that the focus should be on the purpose built rental housing and not on  increasing  the  supply  of  rented  condominiums.  “What  is  required  is  senior  level  of government  involvement,  particularly  federal  government  incentives  to  encourage  the building  of  purpose  built  rental  housing,”  noted  one  housing  specialist.   Moreover,  the majority of those interviewed including rental providers indicated that senior government tax incentives are important to increase the supply of rental housing. This is also supported by the Director of Planning for the City of Vancouver who recommends in a letter, “that the Mayor  writes to  senior  levels  of  government  regarding  the  urgent  need  to  remove  tax disincentives,  and  reinstitute  incentives  to  build  purpose  built  rental  housing”,  (City  of Vancouver, 2007). The main policy initiative suggested was: The introduction of federal government incentive programs for rental buildings, which include but are not limited to: • Tax shelter packages for rental housing; • Reducing  the GST on new rental housing construction; • Reducing the interest rates for new rental construction; and • Providing low interest loans. The provincial government could assist the federal government to establish taxation and other measures that foster the development of purpose built rental housing.  In particular, there are some institutions such as pension funds that view development prospect much differently than residential condominium developers who do not want to carry a building for a long time. Government leadership bringing together these players would be very helpful. Besides the senior levels of government, developers have suggested that the municipal government could assist in a number of ways. These include: 53 1 Reduction in Development Cost Charges (DDCs) and building permit fees for developers of rental housing 2 Fast-tracking the time frame for approving development and building permits for rental buildings 3 Reducing parking requirements 4 Using zoning to encourage rental housing Several of these suggestions have been consistent with previous studies done in the CMA and elsewhere in Canada.  These include GVRD (2006); Smart Growth BC (2005) and the Ontario Housing Supply Working Group’s interim report (2001). Other possible approaches identified in one or more of the reports above, but not suggested by participants interviewed are: • Promoting public/ private partnership in affordable rental housing provision (combination of government subsidies, favourable financing and community involvement); • Improving partnership among all levels of government. 3.4 . Opportunities The economic slowdown has created a renewed interest in rental housing projects but  government  support  is  required  in  making  these  projects  feasible.  Some interested developers are seeking government’s assistance to make rental housing more viable from an investment standpoint  (UDI seminar,  2009).  Despite the lower construction costs,  the land costs remain high making rental housing feasibility difficult (CMHC, 2009).  Improving 54 the economics of rental housing investment is important in promoting more long term rental housing solutions. Given this renewed interest in rental housing development, there are opportunities to better  understand  the  rented  condominium  supply,  given  its  importance  and  develop partnerships with providers to increase the supply. CHAPTER 4- ANALYSIS 4.0. Discussion This research was intended to investigate the rented condominium supply as part of an overall objective of examining ways to increase the stock of rental housing in the City of Vancouver.  While  several  assumptions were made in answering the research questions, useful insights have been garnered about the rented condominium supply and the rental providers involved. Important findings about the significance of the supply, the challenges 55 faced by rental providers and the risks and opportunities are revealed. Additionally, some concerns are raised about the growing significance of rental condominiums, while the supply of purpose built rental housing continues to decline. This section assesses these findings and highlights a strategic approach to ensure that there is an adequate supply of rental housing in the City.  The study findings reveal that rented condominiums are very significant in the City of Vancouver, primarily in Downtown, where the majority of the stock is present. The supply exists  for  investment  purposes  and  is  largely  dependent  on  the  interest  of  individual investors. As a result, there are some concerns about this significance and the implications for the rental housing market in the City. The main concern is on rental housing affordability. Rented condominiums are far more expensive than purpose built rental housing and since the  majority  of  renters  are  within  the  low  to  modest  income  bracket,  challenges  with affordability  will  be  more  profound.  Therefore,  a  highly  significant  rented  condominium market alongside a declining purpose built rental supply is a major problem.  Moreover, it is a crucial public policy matter requiring government’s action. An  increased  reliance  on  rented  condominiums as  a  significant  source  of  rental housing in the City of Vancouver is challenging, given investors’ interests and the risks that these  units  could  be  removed  from  the  rental  market  at  anytime.  The  uncertainties surrounding the length of time condominiums will remain in the rental market are not very reassuring when developing a healthy rental housing market.  Furthermore, the instability and unreliability of this supply is a barrier in making steady progress toward ensuring an adequate supply of rental housing throughout the City. A fundamental challenge is that the supply exists solely to meet investors’ needs. Therefore, challenges and/ or barriers they face such as low rents, rental restrictions and rent control may prevent them from increasing the supply. Although many of  these are widely  recognizable challenges in the rental  housing sector, on the whole, there are no simple solutions as strategies identified (see preceding chapter) are difficult to implement. Also, there could be far reaching implications if steps are taken to increase the supply of rented condominiums as opposed to allowing the market to operate  without  intervention.  For  example,  removing  rent  control  may  have  severe implications for rental  housing affordability  and amending the Landlord Tenant Act could have  negative  consequences  for  both  investors  and  renters.  Additionally,  there  are  no 56 guarantees that these changes will increase the stock. Moreover, changes of any kind could possibly serve more as a hindrance for some interested rental providers. Finally, economic conditions conducive to rising housing prices may have a greater influence on investors’ decisions rather than targeted interventions.   As it is, the rented condominium supply market seems to be operating effectively, responding to the demand. The supply has been increasing as more investors are offering their units for rental and this is expected to continue up to 2010 as predicted by CHMC. An increased supply of this stock is important as part of any strategy aimed at maintaining a healthy and balanced supply of rental housing. This will  ensure that more rental housing options are available for renters, regardless of their income. A major obstacle, however, is the lack of information about the supply and challenges faced by renters given the cost, instability and insecurity of the supply.       In light of this, it is important that further effort be made through research to better understand  the  rented  condominium  market  and  to  investigate  the  implications  of  its significance for the rental housing sector. However, a fundamental insight garnered from this research is the need for government to improve the conditions for rental housing investment, through the provision of supportive tax policies. 4.1.1  Strategic Policy Direction Encouraging  the  building  of  purpose  built  rental  housing  through  favourable  tax policies  and  other  incentives  is  a  key  strategy  that  has  been  suggested.  Government intervention in the rental housing market is needed to create and sustain a healthy and well balanced  rental  housing  supply  market.  To  achieve  this,  the  best  approach  is  for governments to improve the economics of rental housing, thereby allowing for investments 57 in  purpose  built  rental  housing  to  become more  feasible.  It  is  crucial  that  all  levels  of government to be involved but the federal government has a more important role to play in influencing investment  in  new rental  housing,  given its  taxation  powers.  If  purpose built rental  housing  is  to  remain  profitable,  favourable  federal  government  tax  incentives  are needed (see table 4 for few examples). Also, since several of the existing purpose built stock have aged and deteriorated, providing  support  to  enable  continuous  maintenance  is  important.  Federal  government support is needed to encourage the improvement and upgrading of the existing stock. In addition to this kind of support, a comprehensive study of the rental housing market and a rental housing policy is needed to understand the rental housing supply sector. To the extent that the provincial government can act, new ways to partner with the federal  government  should  be  identified.  Other  actions  that  may  be  necessary  for  the province to consider are outlined in table 4. Also, increasing the assistance given to low income  renter  households  is  necessary  to  bridge  the  gaps  in  affordability  challenges experienced.  Although  it  is  acknowledged  that  without  the  support  of  the  federal government,  the  provincial  government  will  be  unable  to  increase  its  social  assistance policies and programs geared towards low income earners. Similarly, the City of Vancouver has a role to play in stimulating greater interest in rental housing. Several investors and some researchers including Clayton (1999) are of the view  that  they  are  able  to  lessen  the  burden  for  new rental  development  by  removing barriers in the development process. These include:  Development Cost Charges (DCCs) and the lengthy approval process. In addition, the City has municipal taxation powers, which could impact on rental housing development (see Table 4).  However,  reducing DCCs or property taxes could have consequences such as a greater burden on tax payers to fund the cost of services and possibly reduce quality of services provided in the City. Although these are well  needed actions,  it  is  recognized that  funding is  a major challenge  faced  by  various  levels  of  government  in  effectively  tackling  rental  housing shortage.  Responding  to  this  requires  strategic  intervention  geared  at  increasing  and sustaining the supply of rental housing. The substantial involvement and commitment of all levels  of  government  is  a  critical  first  step.  Secondly,  increased  partnerships  between government  and  key  stakeholders  are  important.  Thirdly,  the  economic  slowdown  has created the impetus for the rethinking of more innovative strategies in increasing the rental 58 housing supply, which includes greater collaboration with stakeholders in the rental sector. Finally,  there  are  opportunities  to  better  understand  the  existing  stock  including  rented condominiums through research partnerships that could be forged with local universities. For example,  funding research projects  and/or  researchers interested in  exploring  the  rental housing market. 59 Table 4: Possible Policies, Actions and Incentives needed at all levels of Government Level of government Policy influence in the rental market Possible actions Federal government: 1) Sets  taxes  policies and GST Federal  taxation  policies  were  important  in stimulating  private  sectors  interest  in  rental housing in the 1960s and 1970s. Also,  the  absence  of  GST  on  rental  housing construction was a favourable incentive for rental housing provision New purpose built rental housing • The  provision  of  shelter  incentives  for  the building of new purpose built rental stock • Reduction of GST on new rental housing • Enabling  investors  to  defer  CCA  recapture and  capital  gains  from  the  earnings  of  the sale of their property • Providing  lower  interest  rates  which  is favourable for the cost of financing and cash flow Existing Purpose built rentals housing • Providing  favourable  tax  incentives  to landlords to upgrade properties • Undertaking  research  on  the  existing stock of rental housing • Undertaking comprehensive study of the rental  housing  market  in  all  major Canadian centers Rented Condominiums • No direct control over supply 2) Determines  interest rates Interest rates have a direct effect on developers interested  in  rental  housing  projects.  They  are interested  in  maximizing  their  returns  and  so debt  servicing  should  not  exceed  operating expenses.  Currently,  rental  housing  investment is  highly  unprofitable.  Without  special consideration   in this regard, purpose built rental housing will remain unattractive to investors 3) Provides  access  to financing and  cost of mortgage insurance This enables developers to borrow a significant portion of financing for the housing project. This allows  for  the  reduce  equity  required  for  the housing  project  and  for  developers  to  borrow money at a lower rate than they would pay other wise 4) Collects  rental housing statistics  Provides rental  housing data for  purpose built and more recently the secondary housing market 60 Table 4: Possible Policies, Actions and Incentives needed at all levels of Government Level of government Policy influence in the rental market Possible actions Provincial Government: 1) Legislation Residential Tenancy Act • Rent control • Strata Property Act • Discouraged investment in rental housing • Rent control • Restriction  on condominium rental Rented Condominiums Limited  regulatory  action  might  be  possible such as amending the Strata property Act to allow for more rental units. New purpose built rental housing • Identifying  new ways to  partner  with federal  government.  These  include assisting  to  establish  taxation  and other  measures  and  providing leadership  in  bringing  key  players together Existing purpose built rental housing • Developing a rental  housing strategy and action plan • Undertaking research on the existing stock  and  the  implications  of  rent control  and Residential Tenancy Act • Considering phasing out the system of rental control • Encouraging  the  preservation  and upgrading of the existing supply  2) Affordable  housing provision The  Province  provides  rental  assistance  to  low income  families  and  shelter  aid  assistance  for elderly renters. In addition to funding for housing projects,  which  includes  acquiring  and rehabilitating SROs. Municipal Government 1) Property Taxes Increases in property taxes could have an impact on the ongoing returns from rental investments. Rented Condominiums The City has no control over the supply of rented condominiums 61 Table 4: Possible Policies, Actions and Incentives needed at all levels of Government 62 4.2.1. Study Limitations: There were a number of limitations in researching the rented condominium market. While  there  was  congruence  between  primary  and  secondary  data  sources,  numerous assumptions  had to  be made in  answering  some of  the  key  questions  pertinent  to  this research. The main challenges were the lack of information about rented condominiums in the City; the difficulties in comparing and analysing data sources; and problems in finding investors and other stakeholders to interview. Although this research provided information about the rented condominium market, especially on the challenges and barriers faced, further research is still needed to unravel the uncertainties and dismiss speculations  that  still  exist  regarding the supply.  Similarly, comparing and analysing data sources, for example CMHC and Census data, was not only difficult but was based mainly on assumptions. Census data does not differentiate between renters  living  in  rented  condominiums  and  those  in  purpose  built  rental  housing. Furthermore, the data is collected every five years and as such recent changes are not captured. Therefore, several assumptions have been made regarding the implications for rental housing affordability. 63 Level of government Policy influence in the  rental market Possible actions Municipal (Continued) 1) Development cost charges Development cost charges, which assists the City to provide infrastructural services, may have very limited impact on the rental housing provision.  New purpose built rental housing • Offering  increased  densities  in exchange for more rental units • Reducing parking requirements  • Streamlining  the   development approval process  Existing purpose built housing • Continue  to  develop mechanisms  to  preserve  the existing stock • Undertake  rental  housing studies • Develop a rental action plan • identify  opportunities to partner with senior levels of government 2) Land  use  and zoning regulation creates  opportunities  for  new  rental  housing development 3) Rate  of  change regulations Restricts  the  demolition  and  conversion  of  existing purpose built rental housing Additionally, there are numerous privacy and confidential issues relating to the stock of rented condominiums, which made it difficult to obtain information. Rental providers and other stakeholders interviewed were difficult to identify and many of those interviewed were more interested in discussing the need to increase the economics of rental housing than the rented condominium supply market. While this research benefited from the perspectives of rental providers who have been in the rented condominium market for some time, it lacks the perspectives of the short  term investors. Understanding the interests and challenges faced by these short term investors is important because their decision could have serious effects on the supply. This is an area that needs to be further explored. Other areas include but are not limited to: • The implications on rental housing affordability in the City; • The extent to which policies such as Landlord Tenants legislations and the Strata Property Act impact the supply of rented condominiums in the City. CHAPTER 5- CONCLUSION Analysis  of  this  research  reveals  that  the  stock  of  rented  condominium  is  very important  in  the  City  of  Vancouver.  The  supply  is  highly  significant  and  its  contribution continues to increase.  Increasing the supply  of  this stock is important  as it  reduces the competition for higher  end purpose built  rental  housing,  making them more available for moderate to low income renters. However, the main dilemma is the growing significance of the rented condominium stock and the continuous decline of purpose built rental housing. This  is  a  major  concern  given  the  implications  and  risks  associated  with  an  increased reliance on rented condominiums. There are implications for rental housing affordability and for the provision of a healthy and sustainable supply of rental housing in the City. Rented  condominiums  are  the  most  expensive  form  of  rental  housing  and  an increased  reliance  on  this  supply  could  have  serious  implications  for  rental  housing affordability. While the extent of these implications is unknown, given the limitations of the research, it is a burgeoning public policy matter. In addition to this, there are other concerns and  risks  around  the  supply  of  rented  condominiums  that  are  major  barriers  to  its sustenance  as  a  major  source  of  rental  housing  in  the  City.  The  stock  of  rented condominium is not stable and cannot be relied on to continuously meet the rental housing 64 needs in the City. Moreover, measures that are required to secure the supply are unpopular and as such are very difficult to implement. With the exception of amendments to provincial legislations and possibly tighter regulation of rented condominiums, there is very little that can be done by way of government policies to increase the supply. Therefore, focusing on the rented condominium supply as part of a strategy geared at ensuring an adequate and healthy  supply  of  rental  housing,  while  important,  should  not  be  the  main  priority  for government.  The main priority, as underlined by this research, must be to create the conditions necessary  to  stimulate  a  greater  interest  in  rental  housing.  Improving the  economics  of rental housing is a key strategy. This includes the provision of supportive rental housing policies,  which  are geared at  creating a level  playing  field  for  developers  and investors interested  in  building  purpose  built  rental  housing.  Carefully  planned  and  implemented government policies and actions could greatly assist in alleviating the long standing problem of rental housing shortage. Overall,  these  policies  and  programs  should  aim  to  achieve  the  following  core objectives: • To increase and sustain a healthy supply and well balanced rental housing supply; • To increase societal benefits, which include reducing the risks of homelessness and the overall cost to taxpayers for addressing the associated challenges. The federal government, in particular,  must play a key role by leading the way in developing a rental housing policy, supported by the introduction of favourable incentives and tax policies. These include but are not limited to: 1. Tax incentive programs to stimulate greater interest in rental housing; 2.  The provision of  financial  and other incentives to promote the improvement and upgrading of the current stock; 3. Assisting the province with the development of more strategic social policies geared at helping low income renters. These include social assistance programs. In  addition,  partnerships  among  different  levels  of  government  and  strong collaboration between stakeholders such as community organizations, the private sector and 65 non-profit  organizations  are  critical.  This  is  important  to  maximize  the  use  of  scarce resources, while increasing the rental housing supply. Although the research was hampered by a lack of information and other limitations, several insights have been garnered from it and the work of others, which point to some implications for policies around rental housing in Canada 6. Policy Implications The key policy implications are: • Stronger partnerships are required among the levels of government to encourage and promote greater interest in purpose built rental housing; • Extensive  research  is  needed  on  the  rental  housing  market,  especially  research focusing on examining the status of the current  supply of  rental  housing and the significance  of  rented  condominiums  in  other  major  Canadian  centers,  and appropriate  policies  developed  to  promote  and  sustain  the  provision  of  rental housing; • Government needs to explore ways to partner with rental housing providers and other key players in ensuring an adequate provision of rental housing; • Rental housing policies that promote long term interests in the rental market are urgently needed. 66 REFERENCES Alexander. M., & Somerville.T., (2009). Diverse housing and the Vancouver Area’s investor- owned condominiums. Presentation at BC land summit. BC government (2005). Rental restriction for residential strata property. Information bulletin financial institutions commission of BC #5PA-05-01. -----------  (2006).  Residential  Tenancy  Act:  A  guide  for  landlords  and  tenants  in  British Columbia. Residential tenancy branch office of housing and construction standards. BC Statistics (2006).  Housing affordability in British Columbia. Census fast facts 2006 Case., K., & Quigley. J., (2008). How housing booms unwind: Income effects, wealth effects, and feedbacks through financial markets. European journal of housing policy vol 8, no 2, 161-180.  67 Carter. T.,  & Polevychok. C, (2004). Housing is good social policy.  Canadian Policy and Research Network Inc. Clayton Research (1998). Economic impact of federal tax legislation on rental housing in Canada prepared for the Canadian Federation of Apartment Association. ---------- (1999). Understanding private rental housing investment in Canada. Prepared for CMHC.  City of Vancouver (2005). Affordable Housing. The City of Vancouver Housing Center   ---------- (2005). Rental Housing. The City of Vancouver Housing Center. Issue 2006-14   ----------  (2007).  Protection of Rental Housing Stock: Rate of Change Regulation. Policy Report Building and Development. City of Vancouver. ---------- (2008). Rental Housing strategy: Process and Consultancies. Administrative report, RTS no. 07640 Canada Mortgage and Housing Corporation (2007). Rental market report, Vancouver and Abbotsford CMAs ---------- (2008). Canadian Housing Observer. Canada Mortgage and Housing Corporation (CMHC) ---------- (2008). Secondary market rental research, Vancouver and Abbotsford CMA ---------- (2008). CMHC apartment vacancy rates and average rents. Housing policy, social development, community services group, City of Vancouver. --------- (2009). Canadian housing observer. Canada Mortgage and Housing Corporation ---------  (2009).  Housing  market  outlook,  Vancouver  and  Abbotsford  CMAs.  Canada Mortgage and Housing Corporation. 68 --------- (2009). Housing now, Vancouver and Abbotsford. Canada Mortgage and Housing Corporation Goodman D.,  & Goodman M.,  (2008).  The market  repositions.  The Goodman report  for apartment owners. Issue 36 Government of Canada (2002). Capital gain tax cut. Tax bulletin, Department of Finance Greater Vancouver Regional District (2006). Draft affordable rental housing strategy Real Estate Board of Greater Vancouver (2008). Making sense of today’s housing market. REBGV news releases. Oberlander.  P.,  & Fallick  (1992).  Housing a nation:  The evolution  of  Canadian Housing Policy prepared for the Canada Mortgage Housing Corporation. Ontario  Housing  supply  working  group  (2001).  Affordable  rental  housing  supply:  The dynamics of the market and recommendations for encouraging new supply Hamilton, S., (ed), (1978). Condominiums a Decade of Experience in BC. British Colombia Real Estate Association (BREA). Hulchanski, D. (2001). A tale of two Canada’s: Homeowners getting richer, renters getting poorer,  income and wealth trends in Toronto,  Montreal and Vancouver,  1984 and 1999, Center for Urban Studies research bulleting #2, University of Toronto. Hulchanski, D., (2002). Housing Policy for Tomorrow’s Cities (Dec 2002), Canadian Policy Research Network Lampert, G., (1999). Review of recent reports on rental markets in Canada. Prepared for the Canadian home builders’ association Landcor Data Corporation (2006). A report on condo’s in Vancouver’s West end 69 Paulsen, M., (2009). We need rental today: Toderian. Tyree ht tp : / / t h e t y ee . ca /News/ 2009/03 /03 /Ren ta lHous ing / . McClanaghan & Associates (2006). Affordable housing supply analysis final study result. A report prepared for the GVRD Planning and Policy Department. GVRD. Smart Growth BC (2005). Affordable housing policy. Affordable housing policy committee, Smart Growth BC. Smith.  L.,  (1983).  The  crisis  of  rental  housing:  a  Canadian  perspective.  The  annals  of American Academy of political and social science. Sage. Statistics  Canada  (2006).  Custom  tabulator  for  household  maintainer  in  the  City  of Vancouver. Yan. A., (2009). Ownership, occupancy, and rentals: An indicative study of condominiums in Downtown Vancouver   70 Appendix 1 Semi Structured Interview Questionnaire Below are some guiding questions that were posed to participants. Section A:  Questions for landlords and/ or property manager of rented condominiums in the City of Vancouver.  1) How long have you been renting your condominium? 2) What would you say are some of the reasons influencing your decision to rent your unit(s)? 3) How long do you intend to remain in the rental housing market? 4) What are the factors that you take into consideration in deciding how long to stay in the rental housing market? 5) What are some of the barriers and/ or challenges you face in renting out your condominium? 6) How have you dealt with these barriers? And what kinds of support or assistance would you need in overcoming them? 7) What are some conditions or factors that might hinder or encourage you to stay longer than anticipated in the rental market? 71 8)  How much “on average” do you charge monthly for your condominium? Section B: Questions for housing specialists and other individuals knowledgeable about rental housing in Vancouver. Investor owned condominiums, along with secondary suites are providing needed accommodation as the more affordable purpose built rental units are declining, here in the city of Vancouver. • How significant are rented condominiums, as an option for renters? • What are some trends observed over the past year in the uptake of rented condominiums by renters? And are more units becoming available? • On average, how long do renters remain in rented condominiums? • What is the profile of a typical renter of a condominium? • What are some of barriers and/ or challenges landlords face in renting out their condominiums? • On average, how long do rented condominiums remain on the rental housing market? • Given the challenge with rental housing in the city, what policies and programs are needed around condominiums to encourage more landlords become interested in renting out their condominium on a long term basis? NB: Rented condominiums investigated as part of this study are primarily 100% strata properties in the City of Vancouver.  72

Cite

Citation Scheme:

    

Usage Statistics

Country Views Downloads
United States 5 0
Canada 3 1
Russia 2 0
Ethiopia 1 0
China 1 16
City Views Downloads
Unknown 7 1
Beijing 1 0
Harar 1 0
Thornhill 1 0
Vancouver 1 0
Ashburn 1 0

{[{ mDataHeader[type] }]} {[{ month[type] }]} {[{ tData[type] }]}

Share

Share to:

Comment

Related Items