The James Bay Rental Housing Crisis

By V Adams

The Situation in Victoria

The City of Victoria has identified two top strategic priorities – housing affordability and homelessness.

With a vacancy rate of 0.6%, a fast dwindling rental housing stock, and low-interest rates encouraging the growth of luxury condominium developments catering to baby-boom retirees and investors, the face of the downtown and indeed James Bay is changing before our eyes.

Victoria is now ranked the second least affordable place to live in Canada. The 2016 Demographia International Housing Affordability Survey indicates that a home in B.C.’s capital city now has a price tag that is more than 6.9 times the median household income of the area. In their view, a home in Victoria is “seriously unaffordable” to many buyers and is certainly well beyond the financial means of most renters.

According to the City’s 2014 Annual Housing Report there are 41,705 households in Victoria, of which 60 per cent (24,820) are renters, twice the regional average, compared to approximately 30 per cent of households (1.1 million people) that rent in the province of B.C. According to David Hutniak, CEO of Landlord B.C., “rentals generate $10.6 billion in economic activity annually in this province.” (Source: “Rental Crunch: It’s big business, but there are lots of sensitive issues”, The Province, December 5, 2014).

Victoria is thus focusing its efforts on increasing homeownership and growing the property tax base through residential infill and densification of lots in the downtown area and adjacent neighborhoods primarily through the construction of premium-priced multi-storey strata title condominiums and, more recently, a number of purpose-built high-rise market rental units.

The Situation in James Bay

James Bay, the oldest neighborhood in the City of Victoria and once one of its poorest, is now home to more than 11,000 residents, of whom 69 per cent are tenant households. Twenty-nine percent of our population (3,235) is over 65 years of age, representing the largest proportion of seniors of any neighborhood in the city. Many seniors live in apartments, condos, and in the ten long-term care and independent/assisted living residences located in the community.

Working people, couples who have sold their home and prefer maintenance-free living, seniors living alone on fixed incomes, and young families represent the typical households that currently occupy the rental units in James Bay.

According to the 2006 Census, there were a total of 6,695 housing units in James Bay of which 455 (7%) were single detached houses, 715 (11%) were townhouses, 190 (3%) were duplexes and 5,290 (79%) were apartment units. With regard to tenure, 1,995 (30%) of units were owned by residents and 4,700 (70%) of the housing units were rented by residents (Source: “Planning Senior-Friendly Neighborhoods: A Comparative Analysis of James Bay and Fernwood, Victoria, British Columbia”, Johannes Bendle, Master’s Thesis in Urban and Regional Planning, Queen’s University, May 2012, p. 15-16.)

Today, our neighborhood has approximately 3,663 rental units (22 per cent of the city’s total rental housing stock), most of which was built more than 50 years ago. (Source: Rental Market Report, Victoria CMA, CMHC, Fall 2015, p. 26.)

It is important to note that James Bay has traditionally had a greater proportion of higher density forms of housing (such as apartments) than other neighborhoods and the Victoria average. (Source: James Bay Survey Final Report November 9, 2009, JBNA). However, over the past decade, the rental housing stock in the neighborhood has declined by more than 30 units.

Rental housing tends to accommodate low to moderate income households. The average James Bay renter household income is $46,346, with an average monthly rent and utilities bill of $981. Fifty per cent of renter households (2,310) spend more than 30 per cent of their pre-tax income on housing, while 26 per cent of tenant households (1,285) spend more than 50 per cent of their pre-tax income on shelter. (Source: By way of comparison, a recent B.C. Non-Profit Housing Association report states that 45 per cent of the province’s renters are now paying more than 30 per cent of their income on rent. Note: The 2009 JBNA Community Survey reported that 4.8 per cent of the James Bay population currently resides in publically subsidized housing.

The local media highlighted several well-attended neighborhood meetings held in January to address a potential ‘renoviction’ housing crisis in James Bay. The focus of this concern was more than 600 James Bay tenants facing displacement and/or significant rent increases due to renovations being undertaken by the new owner of their apartments, Starlight Investments. (Source: “Councillors seek solution for worried James Bay Tenants”, Times Colonist, January 10, 2016).

This multi-billion dollar global real estate corporation recently spent several hundred million dollars to acquire key multi-storey apartment complexes in the Lower Mainland and Victoria. In 2014-15, Starlight Investments spent over $100 million to acquire six multi-storey apartment blocks, comprising more than 16 per cent of the total rental housing stock in James Bay. To put this in perspective, this private equity real estate firm just purchased the equivalent of what Victoria taxpayers are now shelling out for a new Johnson Street Bridge to span the Gorge Waterway.

Nine years ago, the press reported that tenants living in James Bay Square, (a prominent 177-unit multi-storey apartment block at Menzies and Simcoe Streets), made a number of complaints to the building management about delays in making crucial repairs, unreliable boilers, no heat, robberies, brown water and accumulated garbage. This real estate asset was then managed by TransGlobe Property Management (another company owned by the Principal of Starlight Investments).

The article further indicated that “TransGlobe became one of Victoria’s biggest landlords last year when it started buying rental buildings throughout B.C. The company has more than 1,000 rental units in the city and pledged to double that number by 2010.” (Source: “James Bay tenants fired up over Ontario landlord”, Times Colonist, November 25, 2007).

What is happening?

Contrary to the notion that tenants are transients who take little pride in their dwellings, James Bay apartment dwellers are long-term residents, in some cases three decades or more. While the average rent increased by 1.9 per cent for all rental units in Victoria in 2014, James Bay tenants saw the highest rent increases in the city with an average of 3.2 per cent. This suggests that many long-term renters are being displaced by new tenants who are not subject to BC rental increase guidelines.

Tenants often have little or no protection under the Province’s Rental Tenancy Act which does not restrict a new owner from increasing rents often 30-40 per cent above the current rate following renovations.  The refurbished units of Starlight Investments are now being marketed as ‘condo-like lifestyle properties’ with minimum rents as follows (utilities not included): $1,080 (studio), $1,325 (1-bdrm), $1,885 (2-bdrm), $2,070 (3-bdrm) and $3,765 (penthouse).

Without security of tenure, occupants may face ‘renovictions’ or have safety, noise, and health concerns during the owner’s upgrading phase which may take 12-24 months to complete. Not surprisingly, the fear of homelessness grips modest income tenants the most when they know that BC Housing rent supplements like the Shelter Aid for Elderly Renters (SAFER) will be insufficient to cover the new rent for a refurbished unit. With few affordable rental units available in the city or elsewhere on Vancouver Island, the growing prospect of being without a roof over their heads weighs heavily on the minds of frail residents.

Little or no purpose-built rental housing has been constructed in James Bay since the 1970s. Yet, the neighborhood has seen the unabated growth of multi-family units converted to strata-title properties. It has also witnessed the deterioration and demolition of older 2-3 storey apartment blocks along with smaller bungalows or older rented dwellings to make way for condo developments along Michigan, Douglas, Oswego, and Dallas Road. More recently, aging government buildings on Superior Street have been dismantled to accommodate a new multi-million dollar development, the 6.2-acre multi-use commercial-residential-and government “Capital Park” project.

The average price of a condo in James Bay is now $460,000 while the average single-family home goes for $677,000. A quick glance at a real estate agent’s website will reveal at least 30 properties for sale, and more than a few multi-million dollar gems with waterfront views. By way of comparison, in 2014, Starlight Investments paid $247,945 per unit for the six decades-old 73-suite “Seaview Towers” property on Dallas Road. It is now refurbishing this asset and positioning it as a premium rental property for tenants and investors. Source: CBRE Group.

While Victoria is a “hot real estate market” for expensive single family dwellings, the fastest growing segment of the homeownership market is the strata condominium. In 2014, Victoria’s burgeoning condominium market increased to 11,730 units. Approximately 24 per cent (2,844) of the total condo universe now comprises the secondary rental market. While these units may have been added to the rental housing pool, the premium rents charged by condo owners are often beyond the budget of many working people.

There are some condos purchased by buyers that remain unoccupied as investment properties. Other condo owners generate income by marketing their properties as self-catered short-term rental suites. While there are 58 hotels in Greater Victoria not to mention bed-and-breakfast options, the hospitality industry faces new competition from a growing number of condo rental accommodations now being offered to Snowbirds and American tourists which are promoted though websites such as Airbnb, VRBO and HomeAway.

By using their strata properties as vacation rentals, condo-owners can garner even higher rates of return (an average $126 per night with some properties charging as much as $1,500 per night). Currently there are more than 500 vacation rental listings for Victoria, including 45 in James Bay, the majority of which are newly-constructed luxury condominiums. Over the December holiday period, one leading online guest-lodging service listed 161 vacation rental units available in James Bay with an average of $152 being charged per night per property.

The condo vacation rental market is neither licensed nor regulated as a segment of the hotel/hospitality industry. The growing trend towards short-term tourist accommodation may well be seen as a factor in reducing the availability of affordable rental units to tenants wishing to live close to downtown employers.

The existing rental crunch will only be further exacerbated by the expected arrival of more than 4,000 newcomers annually to the Capital Region.  While the total labour force in 2006 in James Bay was 4,945 employed in the retail, service, hospitality, and marine industries, there is also a public sector segment. An additional 1,300 government employees will soon be working in the new Capital Park complex being built in the former Legislative Precinct.

What lies ahead?

For the past several decades, governments at all levels have provided many homeownership incentives through home buyer tax credits, renovation tax credits, homeowner grants and subsidies as well as property tax deferment programs. To a lesser extent, they have made modest investments into renovating existing social housing or constructing new housing for seniors, those with disabilities, and those living in remote areas. However, they have done little to sustain the affordability of rental housing (other than social housing) as a viable and necessary option for almost one third of Canada’s population.

The Supreme Court of Canada last year refused to hear a landmark Charter challenge on the right of homeless people to affordable housing. While over a hundred homeless individuals camp out on the provincial courthouse lawn in Victoria demanding a decent place to live, B.C.’s own legislature offers them but a handful of temporary “transitional housing and shelter” options.

At the same time, the provincial government does little to protect the rights of tenants, particularly those facing ‘renovictions’ or condo conversions, and ignores demands from residents to curtail the rampant real estate speculation in major urban centers that is driving up the cost of homes and rental units well beyond their ability to pay.

Senior governments are now pledging to invest millions of taxpayer dollars in temporary shelters for the homeless (many of whom need support to deal with mental illness and addictions) or they are proposing more social housing for low-income seniors and those with disabilities. While these may be admirable initiatives, little is being done outside these modest programs to provide affordable housing options for those who earn between $20,000 and $65,000 per year – those who do not wish to own a home or those who are unable to secure a down payment and finance a mortgage to purchase a home (including many young families and middle-income professionals).

The plight of the most visible homeless people in our city is clearly an indictment of a society that recognizes the right to housing for everyone in words but not in deeds.

The growing tsunami of displaced renters may soon have no choice but to join the swelling ranks of the un-housed members of society. Will this be the straw that breaks the camel’s back in order for all parties to work together to address this most pressing social issue?