Condo market rebounds as B.C. lifts rental and age-restrictions – The Globe and Mail

Back when it first went on the Vancouver market in 2001, a newspaper ad for the condominium at 3088 W. 41st Ave. boasted it is an “adult building,” which meant only people over the age of 45 could live there. The Kerrisdale building also had a no-rental policy when realtor Karin Smith listed it last summer.

“This building had been that way from day one, and it has quite a few of the original owners, and they liked it,” Ms. Smith says.

But instead of being a draw as it was when her client purchased the unit two decades ago, those restrictions had in 2022 become a serious impediment to its sale. Relatively few potential buyers showed interest, and those who did made offers well below asking. Ms. Smith’s client simply wanted to sell for as much as she could.

Luckily for her client, British Columbia changed its Strata Property Act legislation in late November so that condominium buildings couldn’t implement age and rental restrictions, except for over-55 buildings. But even those buildings could no longer restrict rentals, which are now allowed for renters over 55 (an exemption is made for live-in caregivers).

For some, the lifting of restrictions has been a game changer. The unit at 3088 W. 41st Ave. sold a couple of weeks later.

“When it got lifted, it went from zero to 100 in buyer interest,” says Ms. Smith, who’s been a Vancouver realtor for 20 years. “I couldn’t get them in fast enough. The first or second person who came through was smart enough to write an offer right away.”

It ended up selling to a man whose son will live in the unit while he attends UBC.

“It took three months to sell a really nice unit. Without that restriction, it would have gone quickly,” Ms. Smith says.

There aren’t that many age-restricted units in Vancouver, but there are pockets of them mostly in older buildings on the west side and in the West End. Rental restriction bylaws had been more common and either prohibited rentals or only allowed a percentage of units to rent at a time. An amendment to the Strata Property Act in 2010 ended rental restrictions on newly built condos and the new move now covers older buildings.

Realtor Lorne Goldman had been involved in three transactions in buildings with restrictions in recent years, and he says none of them went into multiple offers, even in a hot market. Last month, he helped a buyer close on a unit in an older Kerrisdale building at 2189 W. 42nd Ave., which used to ban anyone under age 19 from living there.

Mr. Goldman paints a picture on how restrictive it got.

“Say you have your grandkid staying with you – you have a limit on how long your grandkid can stay there because they’re under 19. That’s the problem. What about somebody who has a surprise pregnancy at age 40, what are they supposed to do? Move out? Yes, they have to move out. What about somebody who gets transferred for a year out of the city to Toronto? They say, ‘okay, I would like to rent out my suite.’ They can’t. … It’s problematic to have those sorts of restrictions.”

It’s a policy that has directly impacted the market, he adds.

His client, Paul Lamoureux, and his wife, Xuanli (Shirley) Li, already live in the building on West 42nd Avenue. Mr. Lamoureux had long advocated for his strata corporation to lift the restrictions but didn’t have the required support to make the change. The government did the job for him, which made staying in his building, moving up to a bigger unit, a desirable option. He’d also like to see the no-pets rule lifted and hopes that will be next.

“I’ve always advocated that we at least have some limited rentals in the building.

“And same with age restriction, because you had so many families that would love to have their kids go to schools [in this area],” Mr. Lamoureux said.

By the time the bigger unit in their building hit the market, on Jan. 15, the sudden lack of restrictions made it a hot property. It was listed at $998,000, received five offers and sold eight days later, to Mr. Lamoureux and Ms. Li, for $1.05-million.

“When we first moved into the Kerrisdale area back in 2004, it was a very old community and now you see a lot of younger families moving in. With this legislation change, it’s really going to open up the rental market,” says Mr. Lamoureux.

Mr. Lamoureux and his wife now have the option of renting out their old condo unit. He’s trying to decide whether to do that, or to list the property.

Donald Mackenzie, president of Bodewell Property Management, said he has acquired new clients as a result of the change. Their properties had been left empty because of rental restrictions.

“One man who called, he and his wife owned a condo in the West End in one of the nicer buildings; top floor in a 20-year-old building. But they moved and bought a house in West Vancouver. They left the condo empty because of rental restrictions. As soon as the restrictions came off, he called and said, ‘we can finally rent it and we don’t want to give it up because we may come back one day and it keeps going up in value,’” says Mr. Mackenzie.

“Another one, a man called and said he and his dad own a property in the Fairview area, in a building that they clearly bought in anticipation of one day being redeveloped. Meanwhile, they left it to sit empty because of rental restrictions. As soon as the restrictions lifted they called and said, ‘we can now rent it out and we will get revenue while we hold it.’

“The policy is working and adding inventory to the market.”

Housing Minister Ravi Kahlon said in an e-mail that the move was designed to increase housing choices, including young people and families. Renter households make up about 34 per cent of strata condos in B.C., according to census data supplied by the province.

“These changes will increase housing options and make it easier for prospective strata owners and renters in a challenging housing market,” Mr. Kahlon said.

Mr. Goldman figures the resale value for a unit that had restrictions was about 10-per-cent less than market value.

“As a long-term financial outlook, it’s better to own something that has no restrictions,” Mr. Goldman says.

A concern for strata councils has been that investors and renters might be less likely to maintain their properties. And strata councils are volunteers who will now have to deal with property management issues.

While some investors are becoming landlords as a result of the new legislation, others say they are forced to sell, says realtor Ian Watt. One of his clients sold her part-time residence because she wanted to use it for a couple months at a time, and without the rental restriction, she would have had to pay the Speculation and Vacancy Tax (SVT). The tax kicks in when a home is left empty for more than six months. In Vancouver, there is also the Empty Homes Tax, which would apply.

It’s cheaper to stay at the Fairmont Hotel for a couple months a year rather than own an empty condo and pay the extra taxes, says Mr. Watt, who specializes in the downtown market.

“People are starting to unload these places,” he says.

Surrey, B.C., realtor Steve Karrasch said on his YouTube channel that the move would increase the number of investors and speculators already in the market. He argued that that increase in resale value is precisely the reason that lifting restrictions will only make it more difficult for buyers to afford homes. Restrictions suppressed prices because investors couldn’t compete.

He called the move a “tax grab” because the province will now be able to apply the SVT to more homes.

Mr. Watt doesn’t believe the new policy will do much to increase affordable housing with rents as high as they are.

“There are so many rentals out there but nobody can afford them. Look at Facebook Marketplace or Craigslist and you’ll see there are tons.”

He predicts an increase in short-term 30-day rentals, popular with the film industry and corporations that need rentals to house temporary staff.

“It will change the whole culture of the building, but it won’t make it more affordable.”

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