Opinion: B.C. developers can't build rental housing if the numbers don't work | Daily Hive

Opinion: Government needs to act, as B.C. developers can't build rental housing if the numbers don't work

New residential towers around SkyTrain's King George Station in Surrey City Centre. (Elena Alex Ferns/Shutterstock)

Written for Daily Hive Urbanized by Baldev Gill, CEO of the Fraser Valley Real Estate Board (FVREB), and Tore Jacobsen, Chair of the Board of Directors for FVREB.

For generations, homeownership in British Columbia has been a cultural rite of passage. But today, that dream is out of reach for many, as the province grapples with a housing crisis decades in the making.

While much of the focus has been on homeownership, it’s time we acknowledge what those on the ground have long known: rental housing is just as critical, and it’s under immense pressure.

According to RBC’s July 2024 rental report, more Canadians are turning to rentals than ever before, driven by rising home prices and economic uncertainty. But supply isn’t keeping up. The result? Rents are skyrocketing. In 2023, national rents surged by eight per cent — the fastest pace on record — far outpacing inflation (3.9 per cent) and wage growth (2.8 per cent).

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Here in British Columbia, the story is even more urgent. The rental market, from Metro Vancouver to the Fraser Valley, has suffered from chronic underinvestment for decades. Purpose-built rental units are scarce, vacancy rates remain low and fluctuate, and affordability is vanishing.

To his credit, Premier David Eby has acknowledged the seriousness of the crisis. His mandate to B.C. Housing Minister Ravi Kahlon includes removing financial barriers to small-scale multi-unit housing, speeding up permits, supporting builders through economic headwinds, and enhancing protections for renters — all without compromising supply or standards.

British Columbians need more. In the face of sustained inflation, a global slowdown, and a province teetering on recession, we need action, and we need policy execution.

The barriers to building rental housing are significant and growing. Developers face the triple burden of high interest rates, a capital-constrained lending environment, and rising costs. The federal ban on foreign investment, while well-intentioned, has further tightened access to financing. Quite simply, you can’t meet demand if you can’t build — and you can’t build if the numbers don’t pencil out.

Then there are the added costs: huge spikes in Development Cost Charges (DCCs) as well as various provincial and municipal taxes — the list goes on. Many of these costs are passed on to renters, compounding the affordability crisis.

In a recent episode of Conversations That Matter, developers Kerri Jackson (Concert Properties) and Beau Jarvis (Wesgroup) highlighted just how fragile the economics of rental housing have become. Despite their scale, even large developers struggle to get purpose-built rentals off the ground. Jarvis noted that Wesgroup currently has several projects on hold — rendered unviable due to dramatic increases in DCCs.

Both developers echoed the sentiment of the industry writ large — given that developers need to find and raise upfront equity (especially from investors) and that they need to carry that load for a long time, the sector needs certainty from the provincial government.

The problem isn’t just financial, it’s also structural. In Metro Vancouver’s municipal landscape of 21 jurisdictions, developers face a dizzying array of inconsistent processes, policies, and timelines. Uncertainty at every stage — from permitting to rezoning –discourages investment. What’s needed is a clear, coordinated roadmap from provincial and municipal governments that brings consistency to cost structures, approval timelines, and planning processes.

One of the biggest deterrents to building rental housing is rent control. While well-meaning, rent control in its current form creates disincentives to build and maintain rental stock. Over time, as buildings age and maintenance costs increase, developers are locked into artificially low rents with no ability to recoup costs. This makes long-term investment in rental housing financially unsustainable.

The solution? A new partnership between the provincial and municipal governments and the development sector — one that aligns incentives, removes red tape, and creates the conditions for builders to do what they do best: build. With predictable policies, access to financing, and a more reasonable approach to rent regulation, the private sector can be a powerful force in solving B.C.’s housing crisis, especially when it comes to rentals. Let’s not forget that today’s renter is potentially tomorrow’s homebuyer.

Every stalled project is a missed opportunity for housing British Columbians in need. If government is serious about tackling this crisis, it must treat rental housing as essential infrastructure — just like roads, transit, and schools — and give it the policy priority it deserves.

This is a moment for bold, practical leadership. If the province and its municipalities can come together with the private sector, we can get shovels in the ground, homes on the market, and renters into secure, stable housing.

It won’t happen overnight — but it won’t happen at all unless we start now. With urgency and the right support, we can gradually build our way out of this.

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