Things are finally looking up for Kelowna renters - InfoNews

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Things are finally looking up for Kelowna renters

Image Credit: ADOBE STOCK
March 28, 2019 - 5:00 PM

KELOWNA - After years of struggling to find places to live, Kelowna renters are being offered hundreds of brand new apartments and their options seem destined to keep growing.

“The rental market is going to get a little more competitive over the next few years,” Canada Mortgage and Housing Corporation senior analyst Taylor Pardy told iNFOnews.ca. “It’s a positive sign for the rental market after the past three years of very tight vacancy.”

And by saying “more competitive,” he means landlords are going to have to try harder to attract tenants rather than simply raising rents as was the case in recent years.

Kelowna’s vacancy rate was under one per cent for a number of years, dropping to a low of 0.2 per cent in 2017. But since 2016, there have been 3,427 rental housing units started. That includes a peak of 1,837 in 2017 and 340 so far this year.

That boosted the vacancy rate to 1.9 per cent last fall.

While the City of Kelowna talks about three to five per cent being a healthy vacancy rate, Pardy focuses more on the one per cent mark.

Below that level — which Kelowna was at for three years — rents go up. Now that the city has moved above that level, renters have more choice.

While there are more places to rent, the newly built units seem to be filling up at such a pace that Pardy expects developers to build for renters for a few more years, at least.

“I was surprised, when the rental market data came out,” he said. “I was expecting you would get a bunch of new units come onto the market and perhaps occupancy wouldn’t keep up for those units and you would see higher vacancy rates for the newly completed units. What’s interesting is that wasn’t really the case. People in the market who, say, were already living in the Kelowna area, seem to have traded up into some of the newer units.”

While new units may be more expensive, people seem to be sacrificing space so they can keep paying the same rent while getting better amenities, like in-suite laundry, a better location, new appliances and better internet.

That may force owners of older units to renovate and upgrade, he said.

There is also a trend towards more people renting rather than buying, which is particularly true in the 20 to 40, and over 55 age groups.

Pardy puts that down in part to higher mortgage costs, but also a shift in attitude where some people don’t want to take on the maintenance worries and costs of owning their own homes.

City of Kelowna stats show that 26 per cent of housing units in the city are rented, but indications are a higher percentage of newcomers are renting.

Given the continued growth of the city (Pardy predicts a 1.6 per cent population growth this year and again in 2020), the shift towards more people renting and existing renters “trading up” to newer apartments, he sees a continued interest by builders to get into the rental housing market.

The City of Kelowna also offers incentives to builders willing to sign an agreement to keep their units as rentals for 10 years, including a reduction in the development cost charges they have to pay (in the range of five to 10 per cent) and a tax break on the value of the housing units they build.

That program has been used towards construction of about 350 units last year and this year, and could allow landlords to lower rents by $40 to $50 per month, said City of Kelowna planning specialist Ross Soward.


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