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Exclusive: Over 20,000 Victoria rental apartments due for major renos or replacement by 2025

The newly-completed Hudson Walk One tower (at left) is the latest purpose-built rental building to appear on Victoria's skyline. According to rental industry experts, dozens, even hundreds of similar buildings, must be built over the next decade to replace the region's aging rental stock and satisfy growing demand for housing.  Citified.ca.

Exclusive: Over 20,000 Victoria rental apartments due for major renos or replacement by 2025
MIKE KOZAKOWSKI, CITIFIED.CA

Citified was invited to participate in a rental housing roundtable organized and hosted by LandlordBC, the industry association representing over 3,300 of British Columbia’s rental housing providers.

The roundtable, attended by property managers, real-estate developers, Realtors, appraisers and LandlordBC leadership proved to be an insightful exposé of the challenges facing the industry as it prepares for a mass housing stock renovation scenario.

The following is a synopsis of the discussion. The issues raised and the solutions discussed affect all residents of the CRD, whether as renters, as home owners, purpose-built rental developers or industry professionals.

According to one of the region’s largest rental management companies, nearly half of metropolitan Victoria’s 50,000 rental units are due for significant restorative work, remediation or replacement by 2025.

That’s nearly the equivalent of every single house, rental apartment and condo in Colwood, Langford, and Sooke – combined.

David Hutniak, CEO of LandlordBC, confirms that mechanical and structural upgrades, building envelope remediation, boiler replacements, new wiring – even tear-downs and complete rebuilds – are indeed on the horizon for a large swath of Victoria’s purpose-built rental units. And in some cases, says Hutniak, the landlord’s decision to undertake the work will be one of forced compliance rather than choice.

“We now have situations on southern Vancouver Island where insurance companies are unwilling to extend insurance terms for aging buildings. What this means is a landlord will be forced to conduct immediate upgrades. And these are not cases of building mismanagement or a lack of maintenance, they are a reality of aging inventory that must be overhauled in order to qualify for insurance," Hutniak says.

The question on many Victorians minds is how did such a housing crisis sneak up on the region? The answer from the industry: it didn’t.

“The rental housing industry has been warning of this very scenario for many years, decades even. When we began sounding alarm bells in the 1990’s about housing supply issues and the need for all levels of government to intervene, our concerns failed to resonate,” Hutniak said.

As such only a limited supply of rental housing was built on southern Vancouver Island over the last 25 years, a situation the development community largely attributes to lukewarm support for high-density rental developments and overly restrictive zoning. The last two decades were also a time when financing for purpose-built rentals was difficult to secure without government intervention and support.

However, hundreds of market condos-turned-rentals by their owners and single-family-dwellings offering secondary suites did enter the market over that time and lessened the effects of a stagnant housing supply. But unlike purpose-built rental housing, secondary suites and rental condos can be available one day and gone the next given their lack of security of tenure. And in the case of condos, rental rates can be higher than comparable apartments as owners attempt to cover carrying costs that include a mortgage, strata fees, specialized insurance and in some cases, management fees.

Although the reality of Victoria’s housing situation is concerning, Hutniak maintains there is still time to add enough capacity in the coming years to avoid an all-out disaster.

“We’re seeing new purpose-built rentals coming on stream in Victoria, which is great, but we need to accelerate the current level of construction for the next decade, at least. If we can manage that, we can avoid a worst-case scenario where demand far outstrips available supply at all price points.”

By the numbers the situation plays out like so: currently under construction across southern Vancouver Island (as tracked by Citified) are some 1,330 purpose-built rental units among 17 buildings. Maintaining this level of construction for the next decade will yield approximately 13,000-15,000 homes in 170-200 buildings.

In order to fuel that pace of construction local governments must adapt their planning regimes to ensure proposals are not bogged down in years of municipal wrangling, a historic kink in the region’s housing supply chain.

Coincidentally that is what City of Victoria politicians say they plan to do – nearly a decade after talks of bonus densities and relaxed planning requirements were first raised by Victoria councillors.

“Starting this year, the City of Victoria will implement a fast-tracked planning process for purpose-built rentals. The changes will mirror the planning process currently used for affordable and subsidized housing projects which fall under less scrutiny and can jump the planning queue,” Hutniak says, adding that LandlordBC is encouraged by the City’s plans and will monitor the changes while working to bring other municipalities onboard with a similar fast-tracked planning process.  

While streamlined and expedited planning may be laudable, Hutniak has outlined additional measures municipalities should take to bring about expedited construction periods, lower rental rates and more housing.

“What we would like to see next is consideration in terms of Development Cost Levy and Community Amenity Contribution waivers, parking reductions, relaxation of unit sizes and density increases.  When combined, these considerations could all be linked to Housing and Non-Stratification Agreements for 60 years or the life of the building if properly structured,” said Hutniak.

"Ultimately," says Hutniak, "with a steady stream of new purpose-built rental housing affordability will be improved, housing transitions will be easier for tenants, and the market will have enough capacity to allow landlords to undertake necessary building upgrades without putting tenants in situations where they are unable to find alternative housing.”

As for tenants who are concerned about possible remediation in their building and how it may affect them, Hutniak stresses the key is open and frequent communication.

“Responsible landlords will always ensure that proper relocation consideration is given to tenants, often above and beyond what is required under the Residential Tenancy Act to ensure that any disruption is handled in a fair and equitable manner, while at the same time respecting the landlord’s right to invest in their asset. Communication is always key and tenants are advised to speak with their landlord or rental management company if they have any questions pertaining to future building upgrades which may affect them.” C

 

© Copyright 2016 by Citified.ca. All rights reserved.

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