City of Vancouver to make it easier to build six-storey rental housing buildings | Daily Hive

City of Vancouver to make it easier to build six-storey rental housing buildings, as costs threaten projects

Example of a six-storey residential building. (City of Vancouver)

City of Vancouver staff are recommending major changes to rental housing zoning policies in an effort to keep new apartment projects financially viable as construction costs rise and the housing market cools.

During a public meeting this week, Vancouver City Council is expected to approve the changes to the city’s Residential Rental (RR) zoning districts that would make it easier and faster to build six-storey rental apartment buildings across parts of the city.

The changes are part of a broader strategy to fast-track rental housing and maintain construction activity during what City staff describe as a difficult economic environment for developers.

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According to a report by City staff, high construction and financing costs have continued to climb while rents and home sale prices have either stagnated or declined over the past year.

City staff note that although lower rents and prices may help affordability, they also make many new housing projects harder to finance and complete.

“The housing market continues to face challenging financial conditions, with increases in project costs outpacing achievable sales and rents. Industry data shows residential sale prices and rents are down over the past year, reflecting a correction that, while positive for affordability, has intensified financial strain on projects currently in the pipeline. Maintaining housing delivery through this period requires sustained policy action to reduce costs, accelerate approvals, and to restore market confidence,” reads the report.

“The City’s approach continues to emphasize both early and sustained action to improve development viability and maintain the delivery of public benefits. Earlier adjustments to the Secured Rental Policy have begun to improve predictability and processing times for low-rise rental developments. However, continued softening in the housing market and escalating input costs for materials, labour and financing require further adjustments to sustain the housing pipeline.”

One of the biggest proposed changes would eliminate the city’s RR-2C zoning district, which currently allows six-storey rental apartment buildings only if 20 per cent of the residential floor area is rented below market rates.

Instead, City staff recommend expanding the RR-2B district to allow six-storey rental housing buildings without below-market rental housing requirements in most cases. Within the provincially-legislated Transit-Oriented Areas around SkyTrain stations and major bus exchanges, projects could go up to eight storeys if at least 20 per cent of the residential floor area is secured as below-market rental housing. Eight-storey projects made up entirely of social housing would also be allowed.

City staff also propose creating a new RR-3C zoning district for mixed-use rental housing buildings. This new zoning district would allow six-storey rental housing buildings with commercial uses at street level but would not require below-market rental housing units.

According to City staff, the financial testing found below-market rental housing requirements were no longer feasible for many mixed-use projects, particularly in the Vancouver Eastside areas. On the Vancouver Westside, however, City staff assert some affordable housing requirements remain workable. As a result, RR-3B projects in the Westside would still need to provide some below-market rental housing, although the requirement would be reduced from rents set at 20 per cent below Canada Mortgage and Housing Corporation averages to 10 per cent below average rents.

City staff shared that more than 3,000 secured purpose-built rental homes have already been approved under the RR zoning districts since 2021, including 2,395 units in RR-2 zones and 642 units in RR-3 zones.

The report also recommends rezoning four existing in-stream projects to fit the updated zoning rules. Those projects are: 4708-4742 Joyce St. and 3604 Tanner St.; 4471-4485 Fraser St. and 691 East 29th Ave.; 2005-2045 West 49th Ave.; and 1401-1455 East 49th Ave. All of these projects are between four and six storeys.

Because the proposed zoning amendments align with the recent citywide Official Development Plan, deal only with residential zoning, and are intended primarily to increase housing, City Council cannot send the changes to a public hearing.

Earlier this month, City Council approved the City-initiated rezoning of over 2,300 properties for rental housing and hotels up to six to eight storeys in commercial areas, which are generally found along major/arterial roads.

While there are currently more favourable conditions for renters and prospective homebuyers, there is a growing concern that a prolonged period of limited new housing construction activity could lead to a return of significant housing affordability challenges later this decade, when there is a resurgence in demand.

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