Vancouver City Council approved a broad suite of actions to keep rental and strata housing developments moving forward in challenging market conditions.
Like elsewhere in Canada, the city is facing rising construction costs, inflation, and high interest rates, which are making it increasingly difficult to build new housing. Current market conditions are putting pressure on the financial feasibility of many housing projects—particularly rental and strata developments aimed at middle-income households.
Construction cost escalation has far outpaced consumer inflation since the pandemic, and other factors such as impending tariff implications and elevated interest rates continue to challenge new housing projects. A lack of supply will exacerbate affordability pressures as the cost of new homes may climb even further out of reach.
“Vancouver currently leads the region in rental housing delivery, with the City accounting for 44% of all rental housing starts in Metro Vancouver,” said Mayor Ken Sim. “Over the course of this term, we’ve approved over 21,000 housing units and amid shifting economic conditions, it’s important that housing projects are able to begin construction quickly. The changes passed today will give builders more flexibility to move forward and build urgently needed homes.”
Targeted, immediate actions will support development viability by easing cost pressures and improving flexibility, while maintaining funding for critical infrastructure. These are the first in a series of changes to ensure that housing can continue to be delivered in a high-cost environment.
Proposed financial measures include:
- Flexible development cost levy (DCL) payment: developers would be able to pay DCLs over $500,000 in three equal installments, easing early-stage financial strain.
- Deferral of major Community Amenity Contributions (CACs): the required upfront cash CAC payment at rezoning enactment would be reduced from $20 million to $5 million. The balance could be deferred, with interest, and secured through surety bonds or letters of credit.
- Expanded use of surety bonds: Developers would be able to use pay-on-demand surety bonds as an alternative to letters of credit, unlocking capital that would otherwise be tied up towards getting housing projects into construction; and
- Removing inflationary increases: Vancouver would forego the scheduled 3.2% inflation adjustments for 2025, as well as last year’s inflationary adjustment of 5.7% for CAC targets and density bonus contributions.
“In addition to the financial tools approved today, we’re advancing improvements to make the development process more efficient and predictable — because we know that time and uncertainty add cost,” added Josh White, general manager of planning, urban design and sustainability. “By speeding up reviews and clarifying requirements, we’re helping projects move forward with greater confidence.”
Work underway to enhance efficiency and predictability for housing projects includes: a faster, clearer rezoning process; improving sewer review to reduce costs and delays; and updates to Community Benefits Agreements to support local hiring and social outcomes on large projects. Vancouver is also allowing larger floor plates in taller buildings and mass timber projects, which can make construction more efficient and reduce costs, while still meeting design and livability goals.
