When the supply of developable land is tight, opportunities remain for "new" stratified developments. Conversions from previously occupied rental properties to strata lots may be the most suitable option for urban developers looking for opportunities in today's real estate market. As the vacancy rate for rental housing in B.C. remains low however, municipalities are seeking to protect the existing supply. Accordingly, developers looking at conversion as an option should be aware of each step in the conversion approval process.
What is it?
A "strata conversion" occurs when a strata plan is registered at a Land Title Office in respect of a previously occupied, unstratified building, subdividing a single legal parcel into two or more strata lots plus common property. Conversions include both conversions of previously occupied residential buildings containing rental suites as well as conversions of previously occupied commercial, retail, office, industrial, institutional, recreational, or mixed-use buildings which have never contained residential accommodation.
Opposition in the Lower Mainland to the residential rental type of conversion, the focus of this article, has increased in recent years with a growing perception of a difficult rental market for residential tenants. Opponents of strata conversions argue that a moratorium on conversions, or at least a requirement on developers to include rental units in converted developments, must be implemented in order to preserve the otherwise decreasing number of available rental properties. However, the availability of rental units may not be shrinking as fast as is widely believed; vacancy rates calculated by organizations such as CMHC fail to include investor-owned condos that are rented out and unregistered basement suites – two major sources of rental accommodation. Some have estimated that these two sources account for as much as half of the City of Vancouver’s rental units.
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