Up to 339 housing units in Kelowna and West Kelowna could hit the rental market now that the provincial government has banned strata rental restrictions.
Data from the provincial speculation and vacancy tax shows 266 units in Kelowna and 73 units in West Kelowna claimed an exemption due to strata rental restrictions. They are among 2,900 across B.C.
The BC NDP, now under the leadership of David Eby, passed legislation this week targeting strata corporations.
The changes ban rental restrictions imposed by stratas and end adult-only resident policies. 55-plus restrictions remain unchanged.
“I think it's going to bring a decent amount of additional [rental] inventory into the market,” said AJ Hazzi, founder and associate broker, Vantage West Realty.
“It's not going to be enough to flood the market or to see any kind of real downward pressure on rental prices, which I think is their aim. But I do think it will bring some, some much needed supply.”
The new set of laws will give stratas the ability to appear at the Residential Tenancy Branch to evict problem tenants and recover costs of those appearances in cases where owners are not properly managing their tenants.
Owners who were previous provided an exemption under the speculation and vacancy tax due to rental restrictions will now either have to pay the tax, rent the unit out, or sell.
It is not clear at this point what impact the removal of strata rental restrictions will have on the condo and townhouse resale market.
“Suddenly now there's investment properties, where they were previously not in consideration… that could potentially rent out for enough to make a good investment,” Hazzi said.
“A lot of those are now going to have to be analyzed. And I think there's going to be some good cash flow opportunities with some of these properties.”
Hazzi says traditionally units that were both age restricted and rental restricted sold at a suppressed price, due to the smaller pool of potential buyers. Those units will now hit the broader market.
“So there's going to be a period of time, where the lifting of those restrictions—that won't be priced into the value of those condos just yet—but then as investors become aware of them, then eventually, I think they'll be worth more.”
Castanet Classifieds data places the average one-bedroom rental in the Central Okanagan at $1,492 while two-bedroom units are renting for $2,100. Both figures are down just slightly from the summer.
Ultimately, Hazzi says the changes are a positive.
“I'm usually pretty hard on the government when it comes to the measures that they take,” he said. “But I think that this one might actually have some positive benefits. So I'm more optimistic about what this will do for our market than any of the other recent legislation.”