Earlier this week, a major residential unit developer announced that it is pulling back from its plans of constructing new buildings amid a rent-control recommendation that would put a cap on allowable yearly rent increases.
“We have now halted plans for hundreds of new purpose-built rental units just over the next 12-24 months and will now focus on developing condos,” Redbrick Properties CEO Aly Jiwan said, as quoted by The Star Vancouver.
“Government and public opposition to purpose-built rental business is stifling much-needed rental housing supply.”
The recommendation called for rent across B.C. to increase by inflation only, instead of the existing set-up of 2% plus inflation. The measure was proposed amid predictions that rents could grow by around 4.5% in 2018, the largest rise since 2004.
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Landlord BC CEO David Hutniak warned that the stricter clause will make it even more difficult for rental developers to secure bank financing for new projects, especially since other players in the builder space (specifically, condo developers) are able to provide quicker returns on initial investments.
NDP MLA Spencer Chandra Herbert, who chaired the task force that made the recommendation, allayed the fears by saying that similar measures elsewhere in Canada did not interfere with the rate of new rental construction.
“We looked at Manitoba, we looked at Ontario, and we’ve seen in Ontario even with stronger rent controls than what we’re recommending, for the most part over the past decade they’ve been building more rental housing than we have,” Chandra Herbert said.