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'This is going to unstuck some projects': Developers react to GST break on purpose-built rentals

One of Aryze Development's purpose-built rental buildings under construction in the Quadra Village area. (CTV) One of Aryze Development's purpose-built rental buildings under construction in the Quadra Village area. (CTV)

Aryze Developments currently has three purpose-built rental buildings under construction in the capital region. Three more are ready to go, but are currently stalled.

“That’s because of how much fees and interest rates have accelerated,” said Luke Mari, one of the owners of the development company.

According to Mari, that's a few thousand units of housing currently sitting in limbo. They may not stay there for long, though, thanks to a recent change by the federal government.

“This plan is going to get more apartments built,” said Prime Minister Justin Trudeau during a Thursday morning news conference in Ontario.

That is where the Liberal government announced that it will be removing the five-per-cent GST from the construction of new rental units.

“This is going to unstuck some projects from us,” said Mari.

It’s good news for a company like Aryze that is working to bring more rental supply into the market.

It's also good news for Pacific Capital Real Estate Group, which runs and owns the Royal Bay development in Colwood, according to Jason Zaytsoff, the company's chief operating officer.

When finished, the project is expected to include 3,500 new homes, including single detached houses, townhomes, condos and purpose-built rentals.

The current economic environment has brought its share of challenges to the project.

“We’ve seen construction costs go up for 40 per cent in the last couple of years, so we can’t deliver a product that’s affordable to people,” said Zaytsoff.

The carrot being dangled by the Federal Government has the developer of Royal Bay rethinking the master plan. Possibly adding additional rental buildings into the project.

“This will definitely make us look at our decisions again as to what we build as condo versus rental,” said Zaytsoff.

Trudeau is hoping the policy will provide a boost to his slumping Liberal party, which has fallen behind in the polls to the surging Conservatives.

“I love to see the competition now between the Liberals and the Conservatives,” said Paul Kershaw, a policy professor at the University of British Columbia.

Kershaw says the Liberals needed to be seen as doing something constructive to address the country's housing crisis. The latest announcement came on the heels of Wednesday’s announcement that the government would use its accelerator fund to add new density to municipalities.

“The body of research shows that supply is the greatest driver of stalling or reducing rental rates,” said Mari. “This move to get projects off the sideline is the greatest thing the feds can do for affordability.” Top Stories

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