New city coun­cil can help in­vestors in­crease ren­tal sup­ply

Tony Miller

Ottawa Sun - New Homes - - HOMES -

Mort­gage and Hous­ing Cor­po­ra­tion (CMHC) listed Ot­tawa’s over­all va­cancy rate at 1.7 per cent but given cur­rent mar­ket con­di­tions it’s likely sit­ting at or be­low one per cent to­day.

In ad­di­tion to the low va­cancy rates, prop­erty man­agers and in­vestors are re­port­ing that mar­ket rents are ris­ing and that they have wit­nessed an in­crease in the num­ber of mul­ti­ple of­fer sit­u­a­tions for ren­tal units. This is very good news for in­vestors be­cause the mar­ket rents in Ot­tawa had been kind of stag­nant the last few years.

Ot­tawa is def­i­nitely trend­ing up­wards and I’m pretty sure that city hall is aware that the de­mand for ren­tal units and the lack of avail­able in­ven­tory will only push mar­ket rents higher. This will leave ten­ants with few hous­ing op­tions.

How can the city help?

The mu­nic­i­pal elec­tions are set for next month and the new city coun­cil will be in po­si­tion to help fos­ter an en­vi­ron­ment that will en­tice de­vel­op­ers to build new ren­tal units, and make it eas­ier for in­vestors to ren­o­vate and re­pur­pose ex­ist­ing prop­er­ties so they can be used as rentals. For ex­am­ple:

• Pro­vide in­cen­tives to de­vel­op­ers who want to build rentals. One de­vel­oper told me that low­er­ing the cost of de­vel­op­ment fees and de­lay­ing the pay­ments of other fees un­til the build­ing is oc­cu­pied would be a good start.

• Say no to land­lord li­cens­ing. If the city im­poses li­cens­ing, it will stunt the cre­ation of new ren­tal units and some of the “mom and pop in­vestors” that pro­vide roughly 80% of the ren­tal in­ven­tory in the city will close up shop and look else­where to in­vest their money. This will lead to fewer rentals in the in­ven­tory and higher rents. This is the ex­act op­po­site of what needs to hap­pen.

• Cre­ate a new pro­gram that of­fers grants or in­ter­est free loans to qual­i­fied peo­ple who want to con­vert their base­ments into SDU’s or their il­le­gal apart­ments into le­gal SDU’s.

• Advertise and pro­mote the city’s af­ford­able hous­ing pro­grams to in­vestors be­gin­ning with the Land­lord Part­ner­ship Pro­gram (LPP). Many in­vestors are un­aware of the pro­grams of­fered by the city.

• Al­low in­vestors to add third units, coach houses, and tiny homes to be built on prop­er­ties where an SDU al­ready ex­ists. Some­times in­vestors need the ex­tra unit and in­come to make the in­vest­ment worth­while.

• Amend the room­ing house def­i­ni­tion to al­low land­lords to rent four bed­rooms to four in­di­vid­u­als for com­pen­sa­tion and whose oc­cu­pancy is not a sin­gle house­keep­ing unit.

The REIN re­port also states that the city of Ot­tawa is “some­what land­lord friendly”. Given the cur­rent ren­tal mar­ket con­di­tions and pre­dic­tions that Ot­tawa is head­ing into a boom phase, let’s hope that the new city coun­cil will work to im­prove this rat­ing, and make it eas­ier and less expensive for in­vestors to cre­ate suf­fi­cient hous­ing to meet the de­mand.

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