Community Planning

Guys, Did You Hear? There's a Rental Market Boom!

City of Kelowna revealed that we have 1,479 rental units under construction

The talk of purpose-built rentals and rental zonings has really entered the BC housing discussion of late. While some conservative voices over at a recent UDI panel warned of impending slums, many pragmatic types are getting projects off the ground to fill real market demand for regular Joes and Joannes who can’t get anywhere near the almost seven figure price tag (and almost so in Kelowna).

Apparently according to a Kelowna Capital News headline last Friday, we have a rental boom. The City of Kelowna revealed that we have 1,479 rental units under construction right now with more to come. This is great, this is needed, this has also been lamented as an unfortunately slow way to bring housing online and cool the market (as opposed to bringing existing vacant units online). But this is not something you can call a boom when renters are showing up cash in hand to enter bidding wars in order to land one of the few available rental vacancies in town. Nor is it a rental boom when hundreds of long-term renters literally just got the boot from airbnb-hungry landlords who only rent out long-term from September to May, unless we’re talking about a short-term holiday rental boom, which is not exactly news.

Purpose-built rentals can be profitable for developers filling demand, and probably even more so when luxury condos are being taxed for being cash stashes or investment properties for out-of-towners. The argument the Capital News piece makes however is that all the developers keen to get in on creating rental housing are somehow being hurt by the speculation tax. This one makes no sense since anyone who rents out long-term is exempt which would be the case here. The article then jumps to the land transfer tax being the drag on the building industry and cites developer Highstreet Ventures whose West Kelowna condo development is not exactly marketed as a purpose-built rental. This makes no sense either because that is the measure that was enacted to deter flipping, not building: that tax kicks in on the sale of a property. It’s just shocking how dumb they think we are – this is fear mongering and obfuscation done poorly. Masquerading condo investment properties as creating real rental vacancies, and anti-flipping measures as a penalty on the cost of construction is at best an intentionally super-loose definition of cost, and at worst, a joke.

It is as if such arguments presuppose that the units be flipped, pre-sale or post, in order to drive up the value enough to make it especially lucrative for the developers and investors. So they’re frustrated when the government puts the housing availability needs of locals above their right to make unfettered profits based on nothing more than heated and often manipulated bidding markets and financialized value. What’s another word for that? Oh yeah speculation. It’s certainly not tied to their value of filling the unprecedented massive market demand for shelter (if you don’t have an account to access the Globe & Mail inquiry’s revelations in the link above, here’s a Bloomberg summary of it). Maybe they’re just a little jumpy about the inevitable upcoming crackdown on pre-sale shadow flipping and will have to make their flipping-induced returns the slower, taxed way.