With David Eby stepping up as the new Premier of BC, the government is prioritizing BC’s housing crisis in an effort to deliver more homes for British Columbians faster. Eby has recently passed the first piece of legislation to this end, the housing supply act. This act introduces 3 new actions that may have substantial impacts on the BC real estate market:
Removing strata rental restrictions to turn empty units into homes for people
Ending most strata age restrictions so young people and families have more housing options
Working with municipalities to set targets that deliver more homes faster
Today we’ll discuss these three changes and their potential impacts for buyers, sellers and investors in the BC real estate market. The first among these is the removal of rental restrictions on strata properties. Although there has been talk about empty homes being owned by foreign buyers as investment properties for some time now, this has tended to be more of a problem for major urban centers like the cities and suburbs of metro Vancouver, rather than a problem for smaller towns and communities. Until now one of the bigger deterrents for this kind of activity has been the introduction of taxes like the Speculation and vacancy tax, and the Foreign buyer tax. Taxes meant to deter foreign speculation without impacting local residents who have made BC their home. With that in mind, and the fact that the federal government has introduced a 2 year foreign buyer ban that will come into effect in January, it doesn’t seem like the removal of rental restrictions will actually introduce much inventory into the real estate market in the near term. On the contrary, the previous limitation of rental restrictions has tended to depress the prices of some strata properties by making them unappealing to investors who are looking for rental properties. With that in mind, I think the more likely long-term outcome will be to open up this section of the market to investors raising the cost for first time home buyers who are looking for a home to live in. Unfortunately, this will likely reduce the number of affordable homes for first time buyers looking to make their first purchase. On the bright side, buyers and investors who are looking to purchase right now, before the cat gets out of the bag, still have some time to benefit from this price difference before investor demand pushes the value of these properties higher.
The second action taken by the Provincial government is to end most strata age restrictions so young people and families have more housing options. This includes the removal of all age restrictions except for 55+ buildings. This action will likely be very beneficial in opening up housing supply to a lot of families since prior to this there were a lot of strata properties with arbitrary age restrictions (i.e. 19+) that served no other purpose except to preserve peace and quiet for existing residents. While I can understand the value of this for some homeowners, from a housing supply perspective, it had a substantial impact on reducing housing options for both young families and any individual or couple thinking about having kids one day. The end result was to make housing options without these age restrictions more expensive since age restricted properties were effectively taken out of the market for families and anyone planning to have kids. Unlike with the removal of rental restrictions, the removal of age restrictions has no direct benefit to investors, although arguably there is the indirect benefit of making these properties more rentable to a wider group of people. However, this also has an additional benefit of creating more rental property inventory. I think that the current removal of age restrictions will generally increase available housing supply. I also think that leaving 55+ age restriction bylaws intact is a prudent move. This will ensure that these retirement age strata properties remain affordable for low income and fixed income retirees.
The third action taken by the Province has been to give itself the power to set housing targets in municipalities with the greatest need and highest anticipated population growth. The outcome of this action is the hardest to predict of these three actions. On the one hand setting targets for lagging municipalities could create a good opportunity to encourage higher density housing, and cut through a lot of red tape and housing development barriers that are motivated by local NIMBYISM (Not In My Back Yard). On the other had, targets alone will be pretty toothless unless the Province is able to back them up with the right formulation of carrot and stick motivators. It stands to be seen what the Province will do to encourage municipalities to play ball, and just how cooperative or uncooperative each municipality will end up being.
In total, I think that the removal of age restrictions will increase access to housing inventory, while the removal of rental restrictions will decrease access to housing inventory. The jury is out on the impact of setting municipal targets, but there is definitely potential for this to become a tool for motivating increased housing supply.
I am a Victoria based local realtor with eXp Realty. My commitment to honesty, integrity, loyalty and hard work have been important pillars for me because they drive a high standard of excellent service for my clients. Helping you realize your dream is my goal!
I service Vancouver Island, but my focus is on: Victoria, Sooke, Saanich, Malahat, Shawnigan Lake, Cobble Hill, Duncan, and the rest of the Cowichan Valley.