Tax incentives needed to encourage rental projects
Written by Lethbridge Herald
Monday, 06 October 2008
The city’s acute shortage of rental units for low-income tenants is unlikely to improve unless federal tax regimes are changed to make such projects more attractive to developers, says an official representing local home builders. “You just cannot make enough money as an investor in a rental property to justify investing in it and so rental properties don’t get built,” said Bruce Galts, president of the Lethbridge regional office of the Canadian Home Builders’ Association. “You see that as a trend across Canada over the last 15 years. When you do bring a multi-family project to market, it’s going to be a condo. Very rarely do you see a rental property. Not everybody can afford to buy something, so how do you bring a rental property on? You have to find another solution.” A delegation from the association told city council Monday local builders are seeing no interest from developers in building apartment buildings for use as rental properties. The problem, he said, is the high cost of building coupled with the fact revenue from rental properties is taxable as income to those who own rental properties. The issue is beyond the city’s capacity to deal with, he added, suggesting provincial and federal governments need to step up with incentives and tax breaks. Lethbridge has had a zero vacancy rate for rental units for the past two years. Council met Monday as community issues committee. “There’ s a huge need for multi-family rental accommodations in this city, as in others, and we need to make it easier for developers to make a dollar on that,” said Lethbridge Mayor Bob Tarleck, echoing the need for federal tax incentives. “I think some people respond to the condominiumization of buildings by blaming the owners of the buildings and suggesting that we need to restrict that. I don’t think that’s the real answer. We need to create situations in which it’s fiscally attractive,” he said. “If it’s not financially attractive with existing buildings, why would you invest in new apartment buildings?
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