What if rental-only zoning move backfires?

Giving municipalities the power to create more rental-only housing sounds like a great idea, especially in Metro Vancouver where vacancy rates are so low.

But what if the move backfires and actually creates fewer housing opportunities for people, not more?

That’s the warning from Vancouver developers, who worry about properties being “down-zoned” under new powers proposed by the provincial government.

Housing Minister Selina Robinson says giving municipalities authority to bring in rental-only zoning will help low- and middle-income earners find an affordable place to live.

But what if a developer buys a property currently zoned for a multi-family development with the intention of building a condo tower, and then the municipality “downzones” the property to rental-only?

“Now the value of that land will go down,” warned Anne McMullin of the Urban Development Institute.

“If the owners then can’t afford to build rental, they might just hang on to the property and sell it 10 years later if values go up.”

In that scenario, nothing would get built any time soon, though Robinson says there’s a flip side to the coin.

“There’s also lots of opportunities for up-zoning,” she said.

Up-zoning would be where the value of a property increases, such as when a piece of land currently zoned for single-family homes is re-zoned as multi-family rental-only.

But that creates another set of problems: Opposition from neighbours.

One obvious answer to Metro Vancouver’s housing crunch is to build more housing. But try increasing density — by building townhouses or low-rise rental — in a neighbourhood currently zoned for single-family homes.

City council meetings reviewing such proposals often become “a public-speaking contest for the No side,” Port Coquitlam Mayor Greg Moore told a real-estate conference in Vancouver this week.

“We’re getting the crap kicked out of us by the NIMBY-ism,” Moore added.

No doubt. But it’s a rare municipal council that defies local voters to approve unpopular densified housing projects when there’s always another election to win.

One way to beat the NIMBY factor would be for the provincial government to get tough with municipalities, by refusing to approve transit projects unless more densified housing gets approved and built, for example.

Talk to any home builder and they will also tell you nightmares about long, costly delays to secure municipal permitting and approvals — another area where the province could step in.

Want another idea? How about exempting rental-only developments from the GST — a proposal that’s been around for years. And ignored.

But these are all supply-side measures — ideas designed to get more homes built. This government appears to prefer demandside moves, such as anti-speculation taxes.

You can live in a home. You can’t live in a tax. The government’s approach does not seem balanced.