Vancouver’s Rental Revolution: How the Secured Market Rental Policy Redefines Land Value
Embarking on the development potential unleashed by the City of Vancouver’s Secured Market Rental Policy can seem like an overwhelming puzzle—yet for landowners and commercial real estate owners in key location corridors across the city, it’s also brimming with opportunities for higher-density projects and lucrative long-term rental returns. By clarifying the policy’s evolution, application statistics, zoning nuances, and key economic insights, this comprehensive guide pinpoints the precise levers that can transform a single-family lot or small commercial parcel into a major income-generating asset. Read on to equip yourself with crucial historical, financial, and planning context that cuts through the complexity, illuminating exactly how you can strategically benefit from Vancouver’s Secured Market Rental framework and secure the future value of your land.
In the discussion that follows, you’ll discover how Vancouver’s Secured Market Rental Policy emerged from earlier rental housing initiatives—namely Rental100 and MIRHPP—and why its targeted upzoning approach represents a major turning point for landowners. You’ll learn about the policy’s economic rationale, including compelling data from CMHC that underscores Vancouver’s pressing need for more rental inventory. We’ll delve into the number of successful applications processed so far, the volume of units approved, and the influence this has on citywide vacancy and affordability. From there, we’ll examine how specific zoning types—especially in RR (residential rental) and C-2 (commercial) districts—create brand-new opportunities for higher-density rental development. Finally, we’ll highlight the long-term implications for landlords and developers alike, including how lenders and financing programs use projected rental values to support construction.
By gaining insights from a specialized independent land broker—someone with deep expertise in multifamily real estate development, valuation, and financing—you’ll be equipped to make decisions that can substantially maximize the returns on your property. Understanding the intricacies of Vancouver’s Secured Market Rental Policy isn’t just a bureaucratic chore; it’s the key to unlocking a future of your lucrative Vancouver real estate. If you’re ready to explore how these opportunities apply to your unique land or development plans, I’m here to offer tailored guidance and ensure you capture the full potential of this transformative policy.
Policy Background & Evolution
Vancouver’s Secured Market Rental Policy emerged from a decade of rental housing initiatives aimed at addressing chronic rental shortages. In 2009, the City launched the Short Term Incentives for Rental (STIR) program as a post-recession stimulus to jump-start rental construction. STIR was a pilot that approved 18 mixed-tenure projects, resulting in ~1,096 new rental units (often alongside strata condos). Building on this, in 2012 Council approved the Rental 100: Secured Market Rental Housing Policy (part of the 2012-2021 Housing & Homelessness Plan) to incentivize 100% rental projects. Rental 100 offered developers incentives – such as density bonuses, parking reductions, and waiver of certain fees (Development Cost Levies) – in exchange for all units being secured as rental for the life of the building. The economic rationale was to overcome the profit disadvantage of rentals (versus condos) by offsetting costs, thus spurring construction of much-needed rental supply .
By the late 2010s, Vancouver’s rental crisis had intensified. Over half of city households were renting (53% in 2016) and vacancy rates averaged below 1% for 30 years. Extremely low vacancy (around 0.9%) reflected decades of almost no purpose-built rental construction (especially 1980s-2000s) when condos became the dominant form of development. In response, the City’s Housing Vancouver Strategy (2018-2027) set ambitious targets for new rental housing – 20,000 new purpose-built rental units in 10 years (4,000 of which below-market rental). One initiative under this strategy was the 2017 Moderate Income Rental Housing Pilot Program (MIRHPP), which invited up to 20 rezoning projects that would be 100% rental with at least 20% of floor area permanently reserved for moderate-income households (earning ~$30–80k). MIRHPP provided extra density in exchange for capped rents on the moderate-income units (e.g. rents targeted to $950 for studios up to ~$2,000 for 3BR in 2018) and attracted strong interest – the 20 project limit was fully subscribed by 2019.
After a decade of these programs, the City undertook a comprehensive Rental Incentive Program Review in 2019. The review found that Rental 100 had delivered a significant number of new rentals (3,245 units in 40 projects), substantially more than the earlier pilot programs (STIR produced ~1,287 rental units). Overall, from 2009 up to 2018, Vancouver had approved ~8,680 new secured rental units through a combination of incentive programs and community plan rezonings. However, the report also noted challenges: the existing programs were complex, had overlapping goals, and faced criticism for the high rents of new units and limited affordability.
In November 2019, City Council approved a new Secured Rental Policy (often referred to as the Secure Market Rental Policy) to consolidate and strengthen these rental initiatives. This policy essentially merged Rental 100 and learnings from MIRHPP and other interim policies into a single framework. The Secured Rental Policy’s rationale was grounded in Vancouver’s “rental housing crisis” – it recognized that encouraging purpose-built rental is critical to provide long-term, stable housing for a broad range of incomes, especially given that homeownership was increasingly out of reach. The policy also leveraged new authority granted by the Province in 2018 allowing municipalities to zone specifically for rental tenure. This Residential Rental Tenure Zoning power enabled Vancouver to require rental-only housing in certain districts, paving the way for rental-only zoning schedules in the city’s bylaw.
In summary, by 2019 the Secured Rental Policy represented an evolution: from ad hoc incentives towards a more integrated strategy to stimulate rental housing supply, improve project viability, and gradually incorporate affordability measures, all in alignment with the City’s 10-year housing targets. The policy title “secured rental” signifies that projects developed under it must secure units as rental tenure for 60 years or the life of the building (whichever is longer), ensuring long-term rental stock growth.
Policy Impact & Implementation
Since its adoption, the Secured Rental Policy (SRP) and preceding programs have had a measurable impact on Vancouver’s rental housing stock. During the Rental 100 era (2012–2019), the City saw a steady rise in rental development applications. Rental 100 alone facilitated 40 projects (over 3,200 units) by offering incentives like DCL waivers and expedited processing. When combined with the STIR pilot and rezonings under community plans, Vancouver averaged roughly 1,000 new rental units approved per year in the late 2010s. This was a marked improvement from the near-zero rental production in earlier decades. By 2019, the cumulative effect was evident: the City had shifted from a net loss of rental units (through demolitions of old stock) to a net gain. However, approvals still fell short of the Housing Vancouver targets (2,000 units/year), contributing to a persistent shortfall of rental supply.
After the Secured Rental Policy launch in late 2019, initial uptake was slow, in part due to procedural hurdles and local opposition in some neighbourhoods. The policy’s first version allowed rezoning of low-density sites for rental, but none were approved in the first year. City staff reported that most new rentals were still being built on major streets (arterials), perpetuating an “inequitable environment” where renters were largely confined to high-traffic areas. In response, Council paused and refined the implementation. Significant amendments in December 2021 (branded “Streamlining Rental”) were adopted to jump-start the program. These changes made it easier and faster to build under the SRP: notably, they enabled many proposals to bypass full rezonings. By allowing 6-storey rental buildings in commercial zones outright (via development permit) and creating standardized rental zones for small residential sites, the 2021 update removed regulatory friction. The impact of this streamlining became apparent in 2022–2023, when dozens of new rental projects were submitted across the city under the new provisions. For example, multiple development applications for 6-storey rental buildings on C-2 zoned arterials (such as West 4th Ave and West 43rd Ave) were filed in 2022 as soon as the zoning changes took effect. Likewise, the first rezonings of RS/RT lots to the new RR zones were brought forward in early 2023. The City referred the first two RR rezoning applications to public hearing, signaling that the policy had begun to generate projects in previously single-family areas. While these initial RR proposals were modest in number, they were precedent-setting, demonstrating the policy’s potential to open low-density neighbourhoods to rental housing.
In terms of sheer numbers, Vancouver has seen a record surge in rental housing approvals in recent years. From 2017 through 2022 (the Housing Vancouver period coinciding with Rental 100 and then SRP), the City approved about 12,800 new purpose-built rental units. The year 2022 was a high-water mark, with the largest ever annual total of rentals approved – reflecting both the rush of projects vesting under Rental 100 before it transitioned into SRP, and the new wave of SRP-enabled proposals. This surge indicates that the policy incentives have indeed induced many landowners to pursue rental developments. The Moderate Income Rental Pilot (MIRHPP) also contributed: by 2021, several of the 20 pilot projects had been approved by Council. Notably, a 14-storey project at 445 Kingsway with 215 rental units (20% reserved for moderate incomes) was one of the approved MIRHPP projects. Across all MIRHPP projects, the City anticipated around 1,000+ units, of which roughly 20% would be permanently affordable to moderate-income households. Many of these MIRHPP projects are now proceeding to construction or completion, integrating below-market units into the private rental supply for the first time at scale.
In the broader market, the impact of the Secured Rental Policy can be seen in the composition of Vancouver’s development pipeline. According to City figures, by 2022 over 50% of all new multi-family approvals were rentals rather than condos – a significant shift from a decade prior. This indicates the policy succeeded in rebalancing the “housing supply mix” toward rental, which was a core objective of Housing Vancouver. Moreover, the policy has begun to positively influence the rental vacancy (albeit slowly). The addition of thousands of new units has kept the city’s vacancy rate from worsening and has moderated rent inflation somewhat relative to demand. While Vancouver’s vacancy rate remains very low (around 0.8–1.0%), it likely would be even lower if not for the new supply coming online. Experts note that increasing vacancy toward a healthier level (~3–5%) will require sustained rental construction over many years. The SRP has laid the groundwork for this by establishing a continuous pipeline of projects.
That said, affordability outcomes under the policy have been mixed. Most SRP projects are market rentals targeting rents near the top of current market ranges (since no explicit rent controls are imposed on Rental 100/SRP units aside from those using MIRHPP or below-market bonus). Critiques have pointed out that many Rental 100 projects initially offered rents too high for median-income renters, labeling them “luxury rentals.” The City has countered that even market-rate new rentals serve an important role – they increase overall supply and over time, as the buildings age, their rents will become more affordable relative to newer stock (a concept known as filtering). The Secured Rental Policy reinforces this by securing tenure: these units cannot be stratified or sold, so they will remain rental housing in the long term, contributing to the city’s permanent rental inventory. In addition, the SRP now incorporates below-market units in certain cases. Projects taking advantage of extra height (e.g. a 6th storey) in low-density areas are required to include 20% of floor area at specified affordable rents, as carried over from the MIRHPP model. This ensures a portion of new stock serves moderate-income households. While the quantity of below-market units delivered so far is modest, it sets a precedent for mixing affordability into private developments.
In summary, the Secured Market Rental Policy has begun to increase rental housing production significantly, with thousands of units approved and many under construction. It has broadened the geographic distribution of rentals (incrementally moving new projects into side streets and low-density zones, beyond just busy arterials). However, the full market impact – in terms of easing the vacancy rate or lowering average rents – will unfold over a longer term as more projects are built out. The policy’s success is evident in the development industry’s uptake: Vancouver landowners and developers are now actively exploring rental projects where previously condominium development was the default. This represents a major policy shift in Vancouver’s approach to housing growth.
Zoning & Development Potential under the Policy
A cornerstone of the Secured Rental Policy is its innovative use of zoning to unlock development potential for landowners in exchange for providing rental housing. Two broad zoning strategies are employed: (1) changes to existing commercialzones (C-2 series) to permit taller rental buildings, and (2) creation of new residential rental zones (RR series) to enable multi-family rentals in traditional low-density areas. These zoning tools essentially grant landowners upzoning (greater density/height than otherwise allowed) if they commit to 100% rental tenure. Below, we analyze these in detail:
C-2 Zones (Neighbourhood Commercial)
Vancouver’s C-2, C-2B, C-2C, and C-2C1 districts are mixed-use zones typically found along arterial roads with shops at grade and apartments above. Prior to 2020, these zones generally allowed up to 4-storey development (commercial + 3 storeys residential, often condos). Under the Secured Rental Policy, the City amended the C-2 bylaws to permit up to 6-storey residential buildings as a conditional use if all the housing is rental. In practical terms, this means a property owner in a C-2 zone can build two extra floors than normal, but only for a rental project. Crucially, this can be done without rezoning – the extra height and density for rentals are built directly into the zoning code. Developers can apply for a development permit for a 6-storey rental building and get approved through the standard (shorter) process that a 4-storey condo would go through. This streamlining is a major incentive, saving time and cost. The C-2 amendments utilize the new rental tenure zoning power: the bylaw schedules actually specify unique regulations for “residential rental tenure” development, distinguishing them from strata developments on the same site. For example, C-2 rental projects may have higher Floor Space Ratio (FSR) limits and relaxed setbacks compared to condos. According to the City, this change brings parity so that “six-storey rental buildings follow the same approval process as four-storey condo buildings”, removing a key disincentive for choosing rental.
The outcome is that many under-built commercial lots now have newfound capacity: a one-storey strip mall or a 2-storey building can be redeveloped into six floors of rental apartments over retail. This density bonus can significantly increase land value for owners, as it potentially doubles the achievable residential floor area on a given lot (from 3 floors to 5 or 6 floors of residences). It effectively “writes in” an upzone for rental on all C-2 properties citywide. By making rental projects more attractive (relative to condos) in these zones, the City expects a large portion of new development along main streets to tilt toward rental. Early evidence suggests landowners are responding – numerous development applications in 2022–2024 for 6-storey rentals on C-2 sites (e.g. on Kingsway, East Hastings, West 41st, etc.) have been submitted, whereas previously most proposals in those areas were condos.
RR Zones (Residential Rental Districts)
Perhaps the most ground-breaking aspect of the policy is the introduction of new residential zones dedicated to rental housing, referred to as RR-1, RR-2, and RR-3 (with sub-districts). These were approved by Council in December 2021 as part of SRP implementation. The RR zones apply to areas traditionally zoned RS or RT (single-family or duplex) that meet certain location criteria (generally within an easy walk of frequent transit, shopping streets, and other amenities). In the past, landowners in an RS zone (for example) could only develop a single detached house (or duplex) on their lot, severely limiting density. Under the SRP, eligible owners can apply to rezone their property to an RR zone, which then allows a multi-unit rental project. The RR zones are structured by scale: RR-1 is tailored for low-form multiplexes and townhouses, while RR-2 is for low-rise apartments, and RR-3 for mixed-use or larger sites.
RR-1 Zone
Intended for small-scale infill in house-scale neighbourhoods, RR-1 permits rental triplexes and townhouses up to about 3 or 4 storeys, depending on lot size. The idea is to introduce gentle density while maintaining a lower height profile on residential streets. For example, on a standard lot, an owner might build a four-unit townhouse (each unit with its own entrance) or a stacked triplex, all of which must be secured rental. The RR-1 zone specifies various minimum lot sizes for different building types (e.g. a 4-unit townhouse requires ~3,230 sq ft) and allows multiple townhouses on larger assemblies. This creates a path for clustering several rental townhomes where only one house stood before. Importantly, these forms produce a “neighbourhood fit” – 3-storey townhouses under RR-1 will look similar in scale to large heritage houses or new strata townhouses, thus aiming to minimize neighbourhood resistance.
Yet from a land value perspective, RR-1 still offers a boost: an RR-1 fourplex or rowhouse development will have higher FSR than a single house (often around 0.9 to 1.2 FSR, versus 0.7 in RS zones), making rental projects financially feasible while modest enough to get community acceptance.
RR-2 Zones (RR-2A, 2B, 2C)
These districts enable mid-rise apartment buildings on residential sites, mainly along or adjacent to arterial roads. The RR-2 zones are differentiated by height and affordability mix. RR-2A allows apartments up to 4 storeys (all rental), RR-2B allows 5 storeys (all rental), and RR-2C allows 6 storeys if at least 20% of the floor area is secured as below-market rental. In essence, an owner of a site within an “arterial rental area” can rezone to RR-2A and build a four-storey rental apartment by right, or, for more density, provide some affordable units and go to six storeys under RR-2C. The RR-2 zones also contemplate mixed forms on deep sites – for instance, a 6-storey apartment at the front and 3-storey townhouses at the rear can be combined under RR-2C on a large lot. This flexibility is meant to handle transitions to lower-density neighbours behind.
The densities in RR-2 zones are significantly higher than RS. A typical RS lot might allow ~0.7 FSR for a house; under RR-2C, an assembly of lots could achieve on the order of 2.0+ FSR for a 6-storey rental apartment. This is a major upzoning, potentially triple the floorspace, which in turn increases the land’s redevelopment value. It essentially “unlocks” single-family land for apartment use – a game-changer for landowners who could see their properties’ value reflect multifamily potential rather than just single-house value. Of course, rezoning is required, but the City has standardized the rules (through the district schedule and corresponding design guidelines) to make the rezoning process more predictable and efficient. The goal is that rather than negotiating a custom CD-1 rezoning (which can be slow and uncertain), applicants can apply under the prescriptive RR-2 framework and follow a clear set of form and affordability requirements, expediting approval.
RR-3 Zones (RR-3A, 3B)
These are applied to certain mixed-use or larger sites in low-density areas, such as local shopping node sites embedded in neighbourhoods. RR-3A permits up to 4 storeys of residential with ground-floor commercial use (i.e. a small apartment building with shops or services at grade), and RR-3B permits up to 6 storeys mixed-use if 20% of floor area is below-market rental. Essentially, RR-3 is like a hybrid of RR-2 (apartment) and a neighbourhood commercial zone, allowing a corner store or retail space as part of the rental project. This is useful for sites that might already have a commercial zoning or a legacy store (for example, a corner grocery in a residential area could be rezoned to RR-3B to allow a 6-storey rental building with a modern shop at grade). The development potential here is similar to RR-2 in height/FSR, but with an added community benefit of preserving local commerce. For landowners, it means even small commercial lots can gain extra height if they do rentals. By enabling mixed-use rental buildings, the policy supports “complete communities” – adding both housing and services – in line with Vancouver’s planning goals for walkable neighbourhoods.
In summary, all “RR” zones provide landowners a pathway to achieve far greater density than the status quo zoning, on the condition that the housing is rental. This public policy trade-off – upzoning for rental tenure – is designed to stimulate private development of rentals by improving project economics.
Land Value Implications
Generally, when a property is rezoned from RS/RT to RR, its value will start to be based on multi-family use, which can be substantially higher. However, the boost is partly offset by the fact that the units cannot be sold individually (no strata), meaning developers must rely on rental income yield rather than upfront sales. The City tries to calibrate the incentive such that projects are just profitable enough to attract development without yielding excessive windfalls. Notably, Vancouver does not charge Community Amenity Contributions (CACs) on these routine rental rezonings (which it normally would on market condo rezonings), so that is another incentive – rental projects are relieved of costly CAC payments, making the land lift from rezoning more likely to go into the project’s pro forma (and indirectly support slightly lower rents or inclusion of moderate units). Additionally, the City offers Development Cost Levy (DCL) waivers for eligible rental projects (those meeting maximum rent limits), further reducing costs. All these measures – extra density, no stratification, no CAC, DCL waiver – align to improve viability for rental construction.
To illustrate the development potential concretely: Under the SRP’s zoning framework, a single-family lot near an arterial that might currently contain an older house could be transformed into a 4- or 6-plex rental (via RR-1) or combined with neighbours to build a 15-20 unit apartment (via RR-2) that simply was not possible to zone before. Likewise, an under-utilized two-storey commercial parcel can now sprout a six-storey rental building by right (in C-2). These changes are expected to over time create thousands of new units. The City’s mapping of eligible areas shows hundreds of single-family blocks that could be rezoned to RR, predominantly within a block or two off major streets and around local commercial hubs. This represents a significant upzoning of land across the city, arguably one of the most extensive in Vancouver’s history focused on rental tenure. It gives landowners new opportunities: those who previously had little incentive or ability to redevelop (because condo rezoning in these areas was politically difficult or not allowed) now have a viable path to add value by creating rental housing. For example, City analysis noted that prior policies confined apartments to busy roads, but the SRP opens up many side streets for low-rise rentals, a move urbanists hail as a step toward more equitable growth.
From the landowner’s perspective, the SRP’s zoning can substantially increase development yield. Taking advantage of it requires navigating the rezoning (for RR zones) or development permit (for C-2) process with City Hall, and adhering to requirements like unit mix (family unit minimums), energy efficiency, and potentially below-market unit set-asides. Yet, for many sites, the “density bonus” for rental makes projects financially attractive where they wouldn’t have been under previous zoning. In effect, Vancouver has created a parallel zoning system that encourages rental housing in exchange for more height/density – a policy approach that other cities in BC are now studying as well.
Market & Economic Considerations
The Secure Market Rental Policy does not operate in a vacuum – its effectiveness and uptake are closely tied to broader market forces in Vancouver’s housing sector. Key considerations include current rental market trends (demand, vacancy, rents), affordability pressures, and the financial metrics that lenders and investors use to evaluate rental development. Below, we explore these factors and how they interact with the policy:
Rental Demand & Vacancy
Vancouver’s rental market has been extraordinarily tight for many years, and recent data (2022–2024) show it becoming even tighter due to surging demand. According to Canada Mortgage and Housing Corporation (CMHC), the city’s purpose-built rental vacancy rate fell to 0.9% in 2022, down from an already low 1.1% the year before. By late 2023, vacancy in the City of Vancouver had ticked even lower to 0.8% – effectively meaning the rental market is fully occupied, with virtually no slack. A healthy market is usually around 3-5% vacancy, so Vancouver’s 0.8–1% indicates extreme supply-demand imbalance. CMHC attributes the recent tightening to record immigration and worsening homeownership affordability, which have pushed more people into the rental market even as some new rentals have been built. For example, in 2023 Vancouver led the region in adding new rentals, yet demand still outpaced supply, resulting in the vacancy rate inching down rather than up.
Rental rates have correspondingly soared. CMHC’s Rental Market Report shows that the average rent for a two-bedroom apartment in the City of Vancouver jumped by ~9% from 2022 to 2023, reaching an average of $1,884 per month (all unit sizes). (It’s worth noting this includes older buildings – asking rents for new constructions are significantly higher, often well above $3,000 for a two-bedroom in prime areas.) These trends underscore why the City pursued aggressive rental initiatives: to increase the supply and eventually relieve the pressure that keeps vacancies so low and rents climbing. In economic terms, Vancouver’s rental demand is relatively inelastic – driven by population and income growth, it has outstripped supply for decades. The Secure Rental Policy aims to boost the supply side by enabling more projects, which, if successful, should gradually improve vacancy rates and moderate rent growth. Indeed, if the 12,000+ units approved from 2017-2022 all come to market by this year, that influx could start moving the vacancy needle upward. A higher vacancy would mean more choice for renters and potentially more competitive rents (or at least slower increases), improving affordability over time. However, in the short term, as new SRP-facilitated buildings are leased up, they often command top-of-market rents (being new product). This means that while the quantity of rentals increases, the affordability issue isn’t immediately solved for low- and moderate-income renters. The City recognizes this and thus pairs supply growth with affordability measures (e.g. below-market requirements in some projects, pursuing senior government subsidies for non-market housing, etc.).
Affordability & Rental Rates
One critique often levied is: “These new rentals aren’t affordable.” It is true that the initial rents in new market rental buildings are high – typically affordable to middle or upper-middle incomes, not low incomes. For example, rents for a brand-new studio in Vancouver might be $1,800+, one-bedrooms $2,200+, which are out of reach for many renters. The City’s stance is that new supply, even at market rent, has a long-term affordability benefit. Over years and decades, as the building ages without luxurious upgrades (since it remains rental), its rent growth tends to lag the newest buildings, making it relatively affordable in the future (this is the natural filtering process).
Moreover, by adding supply at the high end, the policy can indirectly take pressure off older, cheaper units – if a high-earning renter can find a unit in a new building, they’re not outbidding a lower-income renter for an older basement suite, for instance. That said, the City didn’t rely solely on trickle-down; it explicitly built in affordability targets. The Housing Vancouver Strategy called for 20% of new rental units to be below-market. Through MIRHPP and now SRP’s bonus density option, many new projects include a set of moderate-income units with rents capped (for example, initial rents tied to 30% of household incomes $50k-$80k, translating to rents like $1,600 for a two-bedroom). These caps remain controlled by a housing agreement, keeping those units affordable in the long term (often with annual rent increase limits). While only a subset of projects choose the below-market route (since it usually is required only when utilizing the maximum 6-storey RR-2C/RR-3B option), it is a critical piece for affordability. Essentially, the policy tries to balance economic feasibility with affordability: allowing enough market units/density for the project to be viable, in exchange for some discounted units to serve moderate incomes.
Another aspect is how the broader market conditions affect the viability of rental construction. As of 2023-2025, interest rates have risen and construction costs remain high, which puts pressure on project pro formas. High rents (as noted above) help counterbalance this by increasing revenue projections, but there are limits to what renters can pay. The policy’s incentives (density, fee waivers) are crucial to tip the balance. For example, without a DCL waiver, a project might have to charge even higher rents to cover those fees. The City sets maximum rent thresholds for DCL waivers based on CMHC averages – currently those maximums are in the range of ~$1,800 for a studio, ~$2,500 for a 2-bedroom (varying by location). Most projects utilize these waivers, agreeing to keep initial rents at or below those levels. This essentially pegs many new “market” rentals to middle-income affordability on day one (albeit still not low-income affordability). It’s a trade-off: developers get cost savings, and the City gets some rent moderation.
Lender and CMHC Financing Criteria
A critical piece of the puzzle for landowners to understand the value of their land is how the development of these rental buildings are financed. Unlike condo projects, which can secure bank financing more easily (due to pre-sales and quicker return of capital), rental projects often require carrying debt for a longer period and rely on future rent income to pay it off. Lenders – whether private banks or programs via CMHC – therefore scrutinize the projected rental income and operating costs carefully to ensure the project will be financially sound.
Two key metrics often used are the loan-to-cost ratio and the Debt Service Coverage Ratio (DSCR). Typically, for construction financing of rentals, lenders might lend around 60-75% of the project cost up front, ensuring the developer has equity in the deal. They also require that once the building is complete and leased (at “stabilized rents”), the net operating income can cover the mortgage payments with a cushion. A common requirement is a DSCR of about 1.20–1.25 (or higher), meaning the net income must be at least 1.2 times the debt service (mortgage payments). CMHC-insured loans are a bit more lenient, sometimes allowing DSCR as low as ~1.1 for affordable housing projects, but private lenders often want 1.3 for safer margin. In practice, this means the underwritten (conservatively estimated) rents determine how large a loan the project can support. This often forms the foundation for residual land value calculations, an essential measure for every landowner to understand.
If a developer assumes very high rents to make the numbers work, the lender will likely scale that back to more market-average rents in their assessment, or include a contingency for vacancies. For instance, if the pro forma assumes an average unit rent of $2,000 but the market analysis and CMHC data suggest $1,800 is more realistic, the lender will use $1,800 in their DSCR calculation. This ensures the project isn’t over-leveraged. For SRP projects, especially those including moderate-income units at below-market rents, the blended average rent might be lower, which can make it harder to meet DSCR requirements – effectively the affordable units reduce the project’s income. To offset this, developers often seek CMHC’s Rental Construction Financing Initiative (RCFI) or other insured loans, which offer more favorable terms for projects that include affordability. CMHC’s RCFI, for example, can offer loans up to 95% of cost with 50-year amortizations at low interest, if the project meets affordability and energy efficiency criteria. One criterion is indeed that at least 20% of units be below a certain rent threshold (aligned with median incomes), which dovetails with the City’s 20% moderate income requirement for 6-storey projects. Many SRP projects thus can qualify for RCFI or the newer CMHC MLI Select insurance program, leveraging these to secure higher loan amounts.
For landowners, this means that selling to a rental developer requires determining which buyer are experienced developers and which investors understand these financing programs. Selecting an inexperienced developer or investor unfamiliar with these financing requirements risks project failure, potentially resulting in substantial financial losses, wasted time, and damage to the landowner's reputation.
It’s also worth noting how appraised values and cap rates play into financing. Lenders (and appraisers) will value the completed rental building based on its income, using a capitalization rate (expected return). In Vancouver’s strong market, cap rates for new rental buildings might be around 3-4%. This means a building generating $500,000 in annual net income would be valued roughly at $13–16 million. Lenders might lend ~70% of that value. So if the development cost is, say, $15 million, and the appraised stabilized value is $14M, there is a gap – that gap must be filled by equity or mezzanine financing. The policy’s effect is to increase the income (by allowing more units) which raises the appraised value. For example, getting a 5th and 6th storey of units could add significant income, making the project value high enough that a loan can cover more of the construction cost. This is why upzoning is a powerful incentive: it directly improves the financial feasibility by boosting future revenue potential.
Landowners considering selling their site that is eligible under SRP should hire a land broker able to conduct a detailed feasibility analysis (often called a pro forma), taking into account: construction costs, soft costs (design, permits, city fees), the DCL waiver savings (which can save ~$10-15 per sq ft of buildable area if eligible), prevailing market rents in their area, and a contingency for interest rates. They will find that projects are usually margin-tight – often requiring careful cost control and sometimes modest returns initially, with the payoff being long-term hold of an income-producing asset that appreciates.
Landowners who opt to navigate these complexities on their own risk leaving substantial revenue unclaimed. Failing to recognize the advantages that CMHC-backed financing brings—like extended amortizations of up to 40 years, higher loan-to-value ratios (potentially 85% versus the typical 65-70%), and more accessible DSCR thresholds—could mean walking away from the extra funds that specialized buyers are prepared to pay. In other words, you might sell below true market potential if you underestimate how valuable these financing perks are to developers. By working with a knowledgeable broker who understands both the policy and lending intricacies, sellers can capture a sale price that truly reflects the site’s inherent value.
In this heated market—where ultra-low vacancy rates and soaring rents fuel strong investor interest—landowners who don’t take advantage of specialized guidance risk leaving untold profits on the table. Institutional investors are targeting Vancouver’s rental sector because it promises stable, long-term returns. That means owners have multiple pathways to realize gains on their property—whether it’s selling land post-rezoning, partnering to develop, or building and holding for a lucrative future sale. But the “value out of thin air” offered by the Secure Rental Policy only holds if you can capitalize on rezoning and secure lender confidence through a solid plan. Without an expert broker skilled in aligning your site with the right investor or development partner, you could easily stumble into a suboptimal deal and miss out on the policy’s true wealth-generating potential.
Interaction with Rental Market Trends
It is important for landowners to align their projects with market conditions. CMHC’s latest market reports (2022-2024) indicate that demand will remain robust: Vancouver’s population is growing (international immigration, interprovincial migration) and the ownership housing affordability index is at historic lows, keeping people renting longer. This suggests that by the time a rental project initiated now is completed (say 2-3 years from rezoning to finish), there will likely be even more renters competing for units. In other words, the market absorption risk in Vancouver is relatively low – vacancy might rise slightly if a lot of supply hits at once, but from 1% to maybe 2%, which still means units get filled.
For landowners, this is a reassuring trend: the risk of building a rental and not finding tenants is minimal in the near term. The bigger risk is on the cost side (construction inflation, interest rates). Fortunately, construction capacity in Vancouver has grown and material costs have started to stabilize after the peaks of 2021-22. If inflation in construction is contained and rents remain high, the economics could even improve going forward. Some developers are timing their SRP projects to start construction as costs level off, to deliver units into a market that is undersupplied.
In summary, lenders and CMHC look at projected rental value through a conservative lens, ensuring projects are viable. They typically require moderate leverage and sufficient income coverage. The Secure Rental Policy improves those projections by granting more density (hence more rental revenue) and reducing certain costs (fees, etc.), which increases the likelihood a project meets the bank’s criteria. At the same time, Vancouver’s strong rental demand and low vacancy provide a favourable backdrop – lenders know there is a deep pool of tenants, which reduces lease-up risk. As long as a project is well-located and competitively designed, it should achieve the rents pro formaed. CMHC’s market data back this up: Vancouver has one of the highest average rents and lowest vacancies in Canada , meaning new supply is generally absorbed quickly. Lenders will also consider location-specific factors (neighbourhood desirability, proximity to transit, etc.) which the SRP already emphasizes by focusing eligible areas near transit and shopping – effectively the policy and good lending practices align on site selection being in high-demand areas.
All of these factors point to substantial upside for Vancouver landowners, provided they seize every advantage and steer clear of avoidable pitfalls. Overlooking the policy’s intricacies or failing to leverage the right “cards” can easily squander valuable profit. A broker who truly understands the Secure Rental Policy and its financing nuances is your best line of defense against missed opportunities—and your key to realizing the full potential of your land.
Final Thoughts: Capturing Untapped Wealth
In short, Vancouver’s Secure Market Rental Policy is a policy-based gold mine for property owners—provided they know how to navigate it. By capitalizing on the City’s incentives and leveraging low rental vacancy rates, you could unlock a level of density and rental income that transforms a modest lot into a highly lucrative multi-family asset. Yet doing this without understanding the intricacies of rezoning requirements, tenant restrictions, and complex financing structures leaves you at serious risk of walking away with far less than your property is truly worth.
Expert guidance is crucial to ensuring that you retain every possible dollar of profit. Missing even a single step in the SRP process, or overlooking how lenders assess rental yields, can severely undermine your site’s ultimate value. By working with a professional well-versed in the policy and intimately familiar with Vancouver’s competitive rental market, you’ll secure the highest potential for your property—and avoid the pitfalls that cause so many landowners to leave money on the table.
Sources:
Below is the list of sources, including hyperlinks for easy reference:
1. City of Vancouver. (2024). Secured Rental Policy – Incentives for New Rental Housing (Council-approved policy, originally adopted 2012, last amended June 30, 2024). Vancouver, BC: City of Vancouver.
2. City of Vancouver. (2019). Rental Incentive Program Review (CitySpaces Consulting report, July 2019). Vancouver, BC.
3. City of Vancouver. (2021, Dec 14). Streamlining Rental – Council Approval Highlights. Shape Your City Vancouver (public engagement website).
4. City of Vancouver. (2024, Feb 8). Updated Rental Market Data from CMHC for 2023 (Staff memo to Mayor & Council). Vancouver, BC. Link (general policy and data page).
5. City of Vancouver. (2023, Feb 3). Updated Rental Market Data from CMHC for 2022 (Staff memo). Vancouver, BC. Link (general policy and data page).
6. Government of British Columbia. (2018). Amendments to Local Government Act – Residential Rental Tenure Zoning (Provincial legislation overview). Victoria, BC.
7. Acton Ostry Architects. (2019, Aug 13). MIRHPP Rezoning Application – 445 Kingsway (Project description with unit mix and rents). In N. O’Connor, Vancouver Courier/Vancouver Is Awesome. Link (main site).
8. Lee, J. (2021, Oct 25). Confining Rental Homes to Busy Roads Is a Devil’s Bargain. The Tyee. (Discusses 2019 SRP initial outcome and 2021 revised policy).
9. City of Vancouver. (2022). 2022 Housing Vancouver Progress Report (Housing units approval statistics 2017-2022).Vancouver, BC. Link (Housing Vancouver).
10. Goodman Commercial Inc. (2021, Oct 28). At last: Vancouver City Council to vote on the future of new rental housing. Goodman Report Newsletter. (Real estate industry perspective on SRP incentives).
11. Canada Mortgage and Housing Corporation (CMHC). (2024, Jan). Rental Market Report – Vancouver CMA, 2023. Ottawa, ON: CMHC.
12. Canada Mortgage and Housing Corporation (CMHC). (2023, Jan). Rental Market Report – Vancouver CMA, 2022. Ottawa, ON: CMHC.
13. Levelup Mortgages. (2023). Everything You Need to Know About CMHC Financing for Multi-Unit Properties (Blog post). (Explains CMHC loan criteria like DSCR and LTV for rentals).
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