Tight vacancy rates and higher rents, but more long-term rental units in Vancouver: CMHC
Tenants in Metro Vancouver looking for housing specifically built as rentals faced tight vacancy and skyrocketing rents in 2019, according to an annual survey by the Canada Mortgage and Housing Corporation.
But, there was one notable change to the region’s rental housing market that the CMHC is hoping to research in greater detail. For the first time since the CMHC has tracked this information, the number of long-term rental condos added, at 11,118, exceeded the number of new condo units added, at 9,142.
It means a number of existing units that were either being occupied, left empty or used as short-term rentals were converted to long-term rentals between 2018 and 2019, said Eric Bond, a Vancouver-based senior specialist of market analysis at CMHC, who wrote the report.
Bond wrote that this was especially the case in the downtown Vancouver area known as the Burrard Peninsula zone where 2,996 units were “added to the long-term rental universe while only 318 new units were added.”
What will be interesting, said Bond, is to see how many of the newly completed units will also end up in the long-term rental pool.
It’s a trend that coincides with a combination of policies, including the province’s speculation tax, the city’s empty homes tax, and various other new regulations for empty homes and short-term rentals, said Bond.
B.C. Liberal housing critic Todd Stone said CMHC’s report showed vacancy rates in Vancouver “have remained virtually stagnant, despite assurances from the NDP that their faulty speculation tax and other tax measures would improve housing availability.”
In a prepared statement, Housing Minister Housing Selina Robinson said “the old government stood by while renters were priced out of their communities.
“It’s clear our government’s efforts to reduce speculation and support new rental supply are starting to pay off and move things in the right direction.”
Andy Yan, director of The City Program at Simon Fraser University, said it takes time for government policies to take effect. He said the change to the long-term rental pool is something to note. “It shows a gathering of some traction.”
Bond’s report said while there have been significant increases in Metro Vancouver rents for purpose-built rentals, “the year-over-year change in rent for condos was relatively small and not statistically significant, potentially due to increased competition among landlords with more units being made available for rent.”
Rental rates for condos owned by investors are typically about 10 to 20 per cent higher than those for purpose-built rental units with the same number of bedrooms, according to the CMHC.
The average, rental unit rate for purpose-built rentals increased 4.7 per cent over the past year. This is much higher than the 2.5 per cent increase that landlords are legally allowed to charge existing tenants.
It’s a gap that has been increasing since 2015, said Bond. He wrote it suggests that “landlords, through turnover of long-term tenants, are able to increase rents to market levels that are higher.”
The average current asking rent for vacant, purpose-built rental units was 20.8 per cent higher than the overall average rent for occupied rents, said Bond.
Landlords, non-profit operators and developers maintain there is a need to be able to increase rents in order to keep up with operating costs, as well as invest in the constructing new purpose-built rental buildings.