Vancouver's the worst place in the Lower Mainland to build a home due to red tape

Apr 27 2017, 6:08 pm

A tedious approval process and regulations mandated by the City of Vancouver could be exacerbating the municipality’s dire housing affordability crisis in a self-inflicted way.

According to a new report by the Fraser Institute, the largest city in the Lower Mainland region had the longest building permit approval time with an average of 21 months, with West Vancouver and Surrey trailing behind at 18.3 months and 13.2 months, respectively. In contrast, the City of Langley had the shortest approval time with an average of less than two months.

And more troubling is the finding that Vancouver’s regulations add $78,000 for every unit of housing built, which is over five times more than the compliance costs of neighbouring Burnaby at $15,000 per unit. The municipalities with the next highest costs were Surrey at $52,000 and Richmond at $41,000.

Such approval processes are delaying the creation of new housing stock, and the cost of construction and design regulations that must be adhered to are passed on to the consumer.

“Increasing housing supply in Vancouver could help lower prices, but unfortunately there are a lot of confusing and costly regulations on the books that deter new homes from being built,” said Kenneth Green, a senior research director with the Fraser Institute, in a statement.

Other factors that present a barrier to new housing development revolve around the uncertainty and ambiguity in the uses of land before rezoning and development applications. For major development projects, approval is tied to community amenity contributions to support the construction of new community centres, libraries, and public art, and such costs are also passed on to homeowners.

As well, a preference from Vancouver for less dense, mid-rise developments adds to cost as such types of development do not have the same economies of scale as highrises.

For such reasons, several of Metro Vancouver’s largest real estate developers refuse to work in Vancouver, instead focusing their efforts on other neighbouring municipalities particularly Burnaby.

“If municipal councils in the Lower Mainland, especially in Vancouver, really want to increase the supply of housing, they should consider more sound regulatory regimes that encourage – not stifle – residential development,” Green said.

Local opposition to developments from neighbourhood residents, commonly referred to as ‘NIMBYs’, are another challenge, particularly for dense projects with verticality.

Earlier this year, for instance, a proposal in Kerrisdale that would be considered relatively modest in the Eastside area, Broadway Corridor, and downtown Vancouver was met with fierce local opposition. Residents were against an eight-storey redevelopment, with rental and market housing, proposed by Dunbar Ryerson Church over fears it would cast a shadow over the area.

Typical timeline for new home approvals in 2016 (months)

(Fraser Institute)

Typical added housing costs per unit due to municipal regulations in 2016

(Fraser Institute)