A potential barrier to affordable housing presented by Vancouver City Council
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Presenting yet another potential barrier to housing affordability in the lower mainland, Vancouver City Council is planning to increase fees to developers, and it’s homebuyers who will really be paying the cost.
The council’s decision will be made next week, and, if approved, will take effect on September 30.
For each house or condo development, builders are responsible for paying something called development charges to the city. These charges often go toward things like infrastructure, public services or community enhancements like parks and public art. As it stands in Vancouver, for a 2,000 square-foot house, the charges are approximately $7,200. You can see how this can add up, especially once you’re talking about a multi-unit condominium tower. If city council approves the increase, development charges would spike to about $13,000.
One problem with increased charges like this is that they’re reflected in the purchase price of homes and condos, so it’s buyers who are really dealing with the consequences. This makes it challenging for developers to build more affordable projects. In a recent study by the C.D. Howe Institute, the team found that when development charges in Ontario were increased, the price of homes went up, not just for new builds, but for homes of all types. Unfortunately, this is likely to happen here too, should Vancouver City Council decide to approve the fee hike.
While it’s true that with the increase in density comes a need for enhanced infrastructure, requiring developers to fund increasingly more of that is actually detrimental to the idea of housing affordability. To make expansion work, the city needs to figure out a way to disperse the costs fairly. Otherwise, it’s homeowners who really pay the price.
Abana Capital © 2018
