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Vancouver seeks crackdown on empty condos in soaring real estate market

Condo management and legal specialists say there aren’t simple reasons for why condos are empty, and there are barriers to forcing people to rent out.

DARRYL DYCK/THE CANADIAN PRESS

The City of Vancouver is planning to push for ways to reduce the number of vacant condos in a desperately tight housing market, but such plans could brush up against strata councils or owners who don't want to invite more rentals.

In the wake of a vacancy study that determined Vancouver had 10,800 homes in 2014 that had been empty for at least 12 months – almost all of them condos – Mayor Gregor Robertson said the focus needs to be on how to reduce that number. About 9,700 of the empty units were condos, meaning one of every eight condo units in the city is unoccupied.

Local politicians and experts have suggested governments look at ways to encourage owners of vacant condos to rent them out. A group of economics and business professors from the Vancouver area, for example, recently proposed a vacancy tax to penalize owners of empty condos – giving an incentive to even non-resident foreign investors to fill their properties with renters.

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But Premier Christy Clark said Tuesday that she is reluctant to force people in stratas to accept unwanted rentals. "People who have bought into stratas might have a very different opinion from the mayors, because I know there are a lot of people who buy into stratas who specifically look for ones that don't allow rentals and I think we need to respect the investment that those people have made in their homes, as well," Ms. Clark said in Victoria.

Condo management and legal specialists say there aren't simple reasons for why condos are empty, and there are barriers to forcing people to rent out. "The vacancy numbers in newer buildings are higher, but those owners just don't want to rent them out," said Tony Gioventu, the executive director for the Condo Home Owners' Association of B.C.

"I don't know how you motivate those people to rent them out. This really is a problem of a city that is a vacation and business destination."

A number of specialists surveyed by The Globe and Mail said that strata councils are trending toward increasing rental restrictions, rather than opening them up.

"They are increasing. I have many stratas in my portfolio that are imposing those rental restrictions," said Cameron Carruthers, a strata manger at CC Property Group, whose company manages a number of smaller buildings. "Their No. 1 fear is that renters are not going to take care of the property."

Jason Kurtz, vice-president at the much larger Stratawest Management Ltd., also said more buildings are putting in restrictions.

"More and more strata councils are concerned about the cost of wear and tear."

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They're also revising their bylaws to ensure that Airbnb-type rentals can't happen, either.

And lawyer Vivienne Stewart, who frequently represents people trying to get permission to rent out their condos, said councils with the power to do so are typically moving to more rental controls over time.

She said judges typically side with councils, unless they've made some kind of procedural error, because the courts don't want to interfere with democratic processes in strata buildings.

There are many condo buildings where a majority of the owners are investors who are renting their units or where the developer put in place an agreement that prohibits rental restrictions.

Those buildings tend to stay rental.

But everyone agreed that there are few units that are vacant because owners can't get permission to rent.

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Those owners who try to get exemptions but fail will usually sell the unit or stay in it themselves rather than lose money by leaving it empty, Mr. Kurtz and Mr. Carruthers said.

Mr. Gioventu said units that are vacant are likely the property of investors or part-time users who are not interested in rental income.

"Investors who only use it two or three weeks a year are already paying big strata fees and city taxes." They have the wealth to leave the unit empty and they're not interested in the hassle of a renter.

Ms. Clark said her government would rather look at other mechanisms to increase rental supply.

"That doesn't mean there aren't lots of things that we can do. Housing affordability, the availability of rental housing, is a big problem in Vancouver.

"We need to work in partnership with the city. So that means while we need to do our work, they need to do their work in ensuring supply."

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About the Author
Urban affairs contributor

Frances Bula has written about urban issues and city politics in B.C.’s Vancouver region, covering everything from Downtown Eastside drug addiction to billion-dollar development projects, since 1994. More

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