Purpose-built rentals: A new definition of affordability for Burnaby?

Burnaby is looking at ways to encourage more rentals-only housing projects in the city—and not just housing that’s considered “below-market.”

As the City of Burnaby embarks on a post-election review of many of its major policies, including the rental use zoning policy (RUZP), staff will be directed to include “consideration of all tools available to facilitate purpose-built rentals, prioritizing tools that tie incentives to affordability.”

Coun. Alison Gu and her Burnaby Citizens’ Association colleagues brought forward a motion at last Monday night’s city council meeting that would ask staff to explore how Burnaby can increase the amount of rental housing in the city that will remain rentals in perpetuity—and incentivize developers to build those projects.

The motion also looks at ways to keep rents low, while not restricting the costs to “below-market.”

Currently, new multi-family residential developments in Burnaby are required under the RUZP to reserve at least 20% of units for below-market rentals. Rental units in old buildings torn down for new developments must also be replaced at a 1:1 ratio, and tenants returned to their units will pay the same amount in rent that they paid prior to the new development.

But Gu told the Beacon that while increasing supply is one piece of the puzzle, adding affordable rental stock is more nuanced than simply approving new developments.

“You need the right kind of housing stock,” she said.

At the moment, Gu pointed out the majority of new units built in Burnaby are tied to stratas. And while some owners may choose to rent out those units, they are still an “insecure” source of rental housing.

Owners may, for instance, decide to sell down the road to a buyer who will take the unit off the rental market—or they, or a family member, could move into the unit themselves.

Purpose-built rentals in Burnaby, however, remain rentals in perpetuity. Gu said they represent an opportunity to make sure the rental stock in Burnaby actually increases over time, rather than fluctuating as units move on and off the market.

And as they’re built, Gu wants the focus to be on a new definition of “affordability”—one that doesn’t pit renters in wildly different income brackets against each other.

The RUZP, first established in 2019, has focused mostly on building below-market rentals for people with lower incomes, she pointed out. Below-market rentals are usually priced at 20% below the median rent for the neighbourhood, as determined by the Canada Mortgage and Housing Corporation (CMHC).

The most recent CMHC report, for October 2021, shows that the median rent for all rental units in the Metrotown area was $1,275 and $1,450 in North Burnaby. That would put the below-market rate at about $1,020 in Metrotown and $1,160 in North Burnaby.

Meanwhile, British Columbians eligible for income assistance can receive $375 a month in shelter allowance from the province.

But Gu said those supports exclude a whole population of renters who are not considered low-income, but still find themselves paying well over 30% of their monthly income in rent.

While the median rents in the CMHC report may seem low, the reality is that the average one-bedroom posted on Rentals.ca in July 2022 was listed for $2,010 a month.

That put Burnaby as the sixth-most expensive city in the country to rent in.

Gu noted that a low vacancy rate in Metro Vancouver of about 1.2% is also driving prices up.

“There’s a whole subset [of renters] being missed here,” Gu said.

“You have households making $200,000 a year fighting those making $80,000 a year over one unit. It leads to bidding wars, and lineups and waiting lists over units.”

Gu’s motion asks staff to consider how developer incentives, designed to encourage developers to build more non-market rentals, can be tied to affordability—with the benefits of those incentives eventually passed down to residents in the form of lower rents.

For instance, she told the Beacon, parking minimums could be eliminated for some purpose-built rentals—although she said staff ultimately should be the ones deciding what incentives would work best.

For their part, developers have said they have concerns about the city’s inclusionary housing policy, specifically as it relates to purpose-built rentals.

CEO of the Urban Development Institute (UDI) Anne McMullin wrote a letter to council last October that said while it may be feasible for developers to reserve a fifth of units in strata buildings for below-market rentals, it’s not the same situation in buildings that are entirely rental units.

“The city’s current approach to the approval of 100% PBR buildings is making them unviable for many proponents. As a result, projects are being delayed and some could potentially be cancelled,” she wrote.

“Thousands of PBR units are at stake, which is the very form of housing for families and individuals that Burnaby has committed to provide following your extensive and commendable public engagement process.”

The UDI says strata floor space has a significantly higher value than rental floor space, which means developers in PBR buildings have no way of offsetting the costs of below-market units.

McMullin also noted concerns over possible changes to the city’s approach to density bonus rates.

“It is not possible for purpose built rental to take on the same level of affordable housing and density bonus expectations as strata residential, and city policies, procedures, and decision-making that do not differentiate in this regard will significantly undermine our members’ ability to deliver this much-needed housing form,” she wrote.

At a November 2021 planning and development committee meeting, Coun. Sav Dhaliwal noted that the UDI is bound to work in the best interest of developers—but said it was worth analyzing how the city can support more market rental projects in Burnaby.

“It may be through some reduction in the density we want to charge, it may be through providing in-kind supports. … But certainly, this is a lot bigger than just wanting to say … ‘let’s not charge them,’” Dhaliwal said.

“We need to do an analysis of what that means to us. … So I think it’s worth talking about it. But then when we do open up our policy, that would be the time to talk about how we support purpose-built market rental.”

Gu told the Beacon that part of the reason she wanted to put forward her motion Monday night was that she agrees that the city’s policy is deterring the building of new rentals in Burnaby.

“… Because council and planners were focused on the non-market aspect of the policy. Now, we’re at the point when we can start to look at other, also important areas of tackling the housing problem,” Gu said.

“Where I do want to add some nuance is that I think there’s room to explore some tools and levers that would allow for a mix of affordability levels of new rentals, and that’s what this motion intends to do.”

Gu’s motion passed at Monday night’s meeting, although independent Coun. Colleen Jordan put forward an amendment that would ask staff to consider, as part of the review, improvements related to the appropriate size of replacement units as per CMHC guidelines.

However, Coun. Dhaliwal said he would like to see an amendment of that stature in writing before voting on it, and asked that Jordan provide notice of motion at a later time.

Other councillors felt the same way, and Jordan’s amendment was defeated 4-3.