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City council-imposed condominium conversion moratorium not the answer to province’s troubling rental unit shortage
Jun 17, 2011
Not so fast was the message delivered by the city’s property and development committee to the province when it approved four of the five Winnipeg Public Service recommendations this week on apartment-to-condominium conversions. 
The Winnipeg Public Services report does not endorse the city becoming the jurisdiction to impose a condominium-conversion moratorium, as is contained in Bill 40 introduced in the Manitoba Legislature. 
There were no groups opposed to this report at the meeting. Unless anyone is planning to come out to the EPC or city council meetings later this month to protest the report, it would now appear that no one is taking issue. 
The one recommendation which did not receive approval from the standing committee was a call to investigate the possibility of developing a down-payment assistance program for first-time buyers to help free-up more rental units. 
Saskatoon has developed a program along these lines. While in Manitoba, the province has been offering down-payment assistance through its Affordable Housing Initiative. It can be presumed the city councillors feel the province is the more appropriate level of government to alleviate the rental shortage in our province. 
The Manitoba government in all likelihood will pass Bill 40 this month which, amongst many proposed changes to the Condominium Act, calls for municipalities, including the City of Winnipeg, to limit and/or impose condo conversion moratoriums. When vacancies are low, this does not mean all local governments will fall in line. 
When you think about it, the province is the main level of government responsible for housing needs based on resources and  revenues. They also are the leader in consumer protection, which was evident this year with the government’s “Let’s Make a Deal” program. While the province is taking more steps through legislation to slow down and make it more difficult to convert apartments to condominiums, it is proposing to download the responsibility of imposing the ultimate hammer to  local municipalities, which may be considered a little disingenuous. 
Do municipalities really have the wherewithal and know-how to do this without being able to reasonably and effectively change the outcome of historically low vacancy rates? 
They can help, but the province is more directly responsible through its immigration, housing and rent regulations and policies.
In the WinnipegREALTORS® recently-released discussion paper on Manitoba’s rental housing shortage, it indicate all levels of government have a role to play, but certainly did not lay the problem of condo conversions at the doorstep of municipalities. In fact, it said limiting condo conversions is more a stop-gap measure that does not really get at the more critical issue of alleviating the rental shortage. 
Here are some excerpts from the discussion paper.
“The charge that the condo trend is responsible for rental shortage is somewhat misleading. Given owners’ lack of control over their rental investments, it is not surprising that they would turn to markets that offer much greater freedom, higher returns and much lower assessed property taxes than the rental market.  In this way, condo conversions have been made a scapegoat — the reason rental housing is being lost is due to a much bigger picture and one not simply solved by any knee-jerk reaction ungrounded in good fundamentals.
“It is unrealistic to expect a tight rental situation can be solved at the expense of homeownership. In many instances, they offset each other, as someone moving into homeownership frees up a rental unit. Further to this point, in other jurisdictions it is common for individual investors to buy up several condo units and put them on the rental market, which works to mitigate some of the rental stock loss.
“The central problem in the rental market has been the long term lack of new rental housing being built. Last year showed some promise, with Broadstreet Properties erecting 313 new rental units in Sage Creek and Crystal Developers adding 130 new units in its first of four apartment buildings along Sterling Lyon Parkway. But the 2010, CMHC fall rental vacancy rate survey indicated Manitoba’s rental shortage has actually worsened with the vacancy rate dipping below one per cent.  
“Condo conversions are an important part of a functioning rental market as they play a role in improving older buildings as well as offering affordable ownership opportunities. They also offer the smaller investor an opportunity to become a landlord. In a balanced market, new additions to the rental stock will offset the rental units lost to condo conversions. Unfortunately, the rental market in Manitoba is not balanced, meaning that new construction of rental units is so low that it is not keeping up. To blame condo conversions means punishing the suppliers and investors — this does’t make sense given that the problem lies in a dysfunctional market.” 
Further to what was reported in  theWinnipegREALTORS® rental housing discussion paper, the Winnipeg Public Service report on apartment-to-condominium conversions makes another valid point on restrictions: Renters can just as easily be displaced as a result of rental building upgrades and the resulting associated permissible rent increases, than from an apartment conversion to condominiums. 
Another point made is that: More restrictive legislation limiting the loss of rental units to condominiums may work short-term, but it could also “result in some rental complexes facing the end of their life-span not receiving necessary reinvestment and being left to deteriorate until safety and property standards necessitate that the buildings be vacated. Also, this may result in an additional disincentive for the construction of new rental units.”
WinnipegREALTORS® is advising the provincial government to slow down in its haste to protect renters by imposing more restrictions on apartment owners. For just similar to rent controls, the very thing it feels may help renters can end up hurting them. 
Increasing the rental supply has to be the province’s top priority, but nothing in Bill 40 encourages investors to build new rental units.