Vancouver unveils sweeping rescue plan as housing project cancellations loom | Daily Hive

City of Vancouver unveils sweeping rescue plan to prevent widespread housing project cancellations

Construction crane for a new Vancouver residential building. (Lijuan Guo/Shutterstock)

Confronted with a deteriorating development climate marked by high construction and financing costs, weakening rents and sale prices, a growing number of stalled housing projects, and a weak economy, City of Vancouver staff have released a sweeping set of proposed measures aimed at shoring up development viability and preserving the city’s housing pipeline generated by private and non-profit builders.

The extensive recommendations, set to be presented and deliberated by Vancouver City Council next week, outlines dozens of structural, regulatory, and financial changes that together represent one of the most significant development-system recalibrations the City has undertaken in decades.

City staff warn that the ongoing downturn, while offering some very short-term relief to renters and prospective buyers, has created an extremely precarious situation for builders and the overall housing supply that is needed later this decade and into the 2030s, given that projects proposed today take years to realize — going through the review and approval processes, followed by construction. The strength of the development pipeline today will determine future housing affordability — whether new supply can adequately meet the future cyclical resurgence in demand.

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Homeownership options have been chilled due to the collapse in pre-sale activity, with developers not receiving enough commitments and down payments to reach the minimum threshold they need to fully unlock construction financing loan agreements with banks and investors. This inability makes mortgage payments challenging and prevents projects from beginning construction.

For a number of years since just before the pandemic, developers have turned their attention away from the persistently weak condominium ownership market to build secured purpose-built market rental housing. However, such rental housing projects are now also increasingly very challenging to achieve for reasons such as construction financing, with many recent projects beginning construction depending on low-cost loan programs from the provincial and federal governments.

Moreover, all types of construction have been hit by staggering increases in the market cost of construction equipment, materials, and labour — which have seen notable increases this year due to Canada-U.S. trade tensions, adding to the previous pandemic-induced inflation — in addition to the city’s high land costs.

According to City staff, rents for newer buildings have fallen between four and seven per cent year-over-year across Metro Vancouver, and benchmark condominium prices have dropped roughly five per cent. The moderation is good news for households, but City staff stress that without parallel reductions in input costs, a contracting market threatens to halt new construction, wipe out the affordability impact of the most recent housing supply gains, and reduce employment in construction and related sectors.

City staff describe the present moment as one requiring “sustained policy action” to maintain momentum toward the city’s affordability and supply objectives.

They estimate that more than 20,000 new homes in 250 active applications could benefit from the combined rescue package measures of City-related cost reductions and process relaxations and improvements, reducing city-wide development costs by a combined total of up to $100 million.

City staff assert these changes — like using standardized approval conditions, speeding up sewer system reviews, and allowing more flexibility in how parking is designed — could cut four to six months off the municipal review and approval process. They could also slash the cost of required off-site work by as much as half, saving developers between $1.6 million and $5.8 million on each project.

City staff state that these interventions are essential not only to meeting the municipal government’s Housing Vancouver approval targets — including 35,500 new secured purpose-built rental homes over 10 years through 2033 — but also to hitting the provincial government’s legislated Housing Supply Act mandate of 28,900 net new homes completed within Vancouver’s jurisdiction by 2028.

The new Rental Development Relief Program

At the heart of the City staff recommendations is a proposed two-year Rental Development Relief Program (RDRP), a new initiative intended to rescue mid-rise building and high-rise tower rental housing projects that are faltering under current economic conditions.

The program would relax affordability requirements for required below-market rental housing units by aligning starting rents with the Canada Mortgage and Housing Corporation’s (CMHC) city-wide averages. Under current rules, below-market rental housing must be priced at least 20 percent below CMHC averages, a standard that City staff say has become unsustainable as construction and borrowing costs have surged.

While the revised rents would still be significantly lower than those found in newer buildings, the adjustment is expected to make a material difference — just enough to nudge many proposed projects back into the realm of financial viability, away from the pit of cancellation.

The RDRP also introduces the possibility of modest building height and density increases and grants a full waiver of city-wide and area-specific Development Cost Levies (DCLs) for qualifying rental housing floor area.

In exchange for these relaxations, developers pushing proposals forward would face a strict deadline of Dec. 15, 2027 to secure City Council approvals and begin construction (within 24 months of rezoning approval), ensuring that benefits translate into real homes rather than sitting dormant on paper.

New design changes, including enabling some windowless bedrooms

City staff also propose extensive standardization of the municipal government’s apartment design regulations. For years, rules governing storage, unit size mix (number of bedrooms), natural light access, balconies, and shared amenity spaces have existed primarily in guidelines rather than bylaws, resulting in drawn-out negotiations and inconsistent outcomes.

Instead, City staff seek to end this practice by embedding clear, predictable standards directly into zoning regulations.

The proposed shift includes simplifying residential storage requirements, eliminating maximum exclusions for balconies and amenity areas, and requiring that at least 35 per cent of all homes in new apartment buildings contain two or more bedrooms, with five per cent being three or more bedrooms in both strata market condominium ownership housing and secured purpose-built rental housing — compared to the current requirement for 10 per cent in strata and 10 per cent in rental (with no minimum).

As well, the changes will introduce some new limited flexibility for windowless (inboard) rooms.

These changes, City staff argue, will reduce uncertainty, shorten review times, and reflect a more modern understanding of livability and design.

The new Attainable Home Ownership Pilot Rezoning Policy

Another notable recommendation is the launch of an Attainable Home Ownership Pilot Rezoning Policy (AHOPRP). In response to City Council’s push to create new ways to achieve homeownership for middle-income and first-time buyers, City staff propose permitting four-storey strata market ownership condominium housing developments on certain sites off arterial roads — sites usually reserved for secured purpose-built rental housing forms.

A pilot project for the policy would require that 20 per cent of a building’s floor area be delivered as below-market ownership housing units. These units would rely on a shared-equity model administered by the provincial government — a crucial factor given that the City does not have the operational capacity to run such a program itself.

But this would build on the provincial government’s Affordable Housing Initiative (AHI) in partnership with local First Nations for their Heather Lands project on the Cambie Corridor.

“The proposed pilot leverages Provincial administrative capacity and expertise and generally aligns with the program parameters of the Attainable Housing Initiative (AHI) Heather Lands, including buyer eligibility and future resale considerations,” state City staff.

“Unlike the AHI Heather Lands, the Province has not yet committed funding for the implementation of this pilot. Given the City is not resourced to administer an AHO program, it is critical to secure Provincial support to administer the program. City staff have discussed the pilot with Provincial staff and, should Council approve the proposal, will continue to work with the Province to confirm their partnership.”

This more affordable strata home typology would be reserved for buyers meeting provincial income limits — up to approximately $136,000 for smaller units and $201,000 for larger units — reflecting an effort to create ownership opportunities for households currently priced out of Vancouver’s market.

Such a pilot project would remain open to developers through December 2027.

Temporary 20% cut to building development fees

Financial tools are also a major focus of City staff’s recommendations, such as a temporary 20 per cent reduction in Development Cost Levy rates city-wide — a significant move that would directly reduce development costs across residential and non-residential projects.

Although the reduction will shrink the municipal government’s available revenue for growth-related infrastructure and amenities by an estimated $45 million over the next capital plan period, City staff emphasize that the change strengthens the City’s eligibility for new federal housing-enabling infrastructure funding and could prevent further project cancellations. City staff note that without such targeted relief, many developments may not proceed in today’s environment.

Complementing this reduction, City staff call for an overhaul of the existing DCL deferral program. Under current rules, large projects can pay DCLs in three instalments. Moving forward, the revised system, aligning with provincial regulations that take effect in January 2026, would allow developers to pay just 25 per cent before receiving their first building permit, deferring the remaining 75 per cent until either building occupancy or four years have passed. Surety bonds for security could also be used instead of tying up potential construction financing in letters of credit.

City staff describe this as a major cash-flow improvement for developers, but acknowledge that it creates a substantial temporary revenue gap for the city — potentially as much as $300 million. To mitigate this, City staff propose a 10-year interim financing plan that would be repaid through future DCL collections. Even with mitigation, City staff note that some of the municipal government’s planned infrastructure and amenity projects may need to be phased or delayed.

All of this is in addition to the June 2025-approved measure by City Council of deferring DCLs and cash community amenity contribution (CACs) payments.

Changes to public art and Transportation Demand Management requirements

This new rescue package for Vancouver’s housing supply extends beyond general building development fees.

City staff recommend adjusting the Public Art Policy, with many types of projects required to provide a cash contribution or on-site public art component. City staff want to increase the discount on cash-in-lieu contributions from 20 per cent to 40 per cent for eligible rezoning applications, a change expected to reduce costs by as much as $200,000 per project. They also suggest the temporary suspension of mandatory Community Benefits Agreements for developments yet to be enacted, citing concerns that CBA requirements can add unpredictability and delay during a period when project viability is already fragile.

Other proposed changes include eliminating the need for Transportation Demand Management (TDM) plans on most new development permit applications submitted after Dec. 10, 2025, a shift expected to save an average of up to $4,300 per residential unit in construction costs and shorten permitting timelines.

Essentially, TDM plans are building design and/or operational strategies put in place by a developer to help encourage building occupants to minimize private vehicle use, with TDM strategies particularly increased when fewer vehicle parking stalls are provided. Examples of TDM strategies include providing building occupants with free TransLink monthly public transit passes (often to most occupants over the first six months, one year or two years of the building’s life), car share services, bike share station space, bike share memberships, free public transit passes, and additional secured bike parking spaces.

City staff highlighted numerous ongoing improvements under the city’s Permit Improvement Program, such as streamlined sewer capacity reviews, reduced reliance on individual traffic studies, and simplified typical engineering conditions for new standardized zoning districts. Collectively, City staff state these reforms have already saved developers millions of dollars and months of processing time, and further efficiencies are expected as the program continues.

Looking ahead, City staff outlined several initiatives set to come before City Council in 2026, including realizing the Vancouver Plan’s Villages Planning Program, which will rezone 550 to 600 blocks for six-storey mixed-use and residential buildings, and the Financing Growth Update, which will redesign the City’s entire development contribution system in response to new provincial legislation. Both are expected to reshape how Vancouver funds growth and delivers public amenities in the coming decade.

City staff state that the proposed measures, taken together, are intended to stabilize the development landscape during a volatile period while laying the foundation for longer-term system modernization.

Failure to support the real estate development market during this period of economic stress, they caution, could lead to delayed construction, lost jobs, and a deeper housing shortage in years to come.

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