Almost 700 apartment units will be able to escape a city moratorium on condo conversions that is meant to protect rental housing availability.

The two year ban on conversions came into effect recently because the apartment vacancy rate for two-bedroom units dipped below 2 per cent in 2014. But that moratorium doesn't cover conversions already approved by the city. There are 683 units already approved that won't be subject to the ban.

A leading city poverty advocate says that exemption will be a huge blow to the intent of the moratorium and hurt affordable housing.

Lowest vacancy rate since 2002

2014 was the lowest vacancy rate for Hamilton apartments since 2002. (City of Hamilton/CMHC)

City policy stipulates the vacancy rate has to be higher than 2 percent when an apartment is converted to a for-sale condo, and must still be above 2 per cent after the conversion. A healthy rental market has between 2 and 3 per cent of its apartments sitting vacant. 

The most recent data show that only 1.6 per cent of the two-bedroom apartments in the city of Hamilton were vacant last year. So any conversions of buildings that have many two-bedroom units will "not be permitted for 2015 and the next 24 months," according to city housing services staff. 

But that moratorium would only affect the 157 units that the city is currently considering or that are in the application process.

For the other 683 units, because they've already received what the city calls "draft approval," the landowner is entitled to go through the process to convert the apartments to condos, said city spokeswoman Ann Lamanes. The new moratorium due to vacancy rates does not apply retroactively, she said.

Arun Pathak, president of the Hamilton and District Apartment Association, opposes the moratorium and landlords should have the right to do what they want with their building.

But local poverty advocate Tom Cooper said the number of units already grandfathered in for conversion is "disappointing." Any of them that go forward will worsen the already low vacancy rate. 

"It will be a huge hit," Cooper said. "It's going to create a very tight rental market. Many households are scrambling to find affordable, safe rental housing."

For comparison, over the last 12 years, just over 1,400 units have been converted.

'Fear of coercion'

ii-durand-apartment-300

About 700 apartment units have already been conditionally approved to be turned into condos despite the vacancy rate being at a 12-year low. (CBC)

Even for the 157 units that haven't received draft approval yet, the landlords could still take advantage of a loophole the city provides. If the landlords can convince 75 per cent of the tenants in a building to support the conversion, the city will allow it. The city says the converted units can provide some affordable homeownership options.

City housing policy analyst Kirstin Maxwell said last week the staff is working on guidelines to "make sure the tenants know their rights." They want to address a "fear of coercion," she said. 

Affordable housing advocate Renee Wetselaar has that fear. Wetselaar is a senior social planner at Hamilton Social Planning and Research Council. The group worked to educate tenants at 181 John St. N. and 192 Hughson St. N. after they'd been offered cash — $2,000 in some cases — to move out so the landlords could renovate the building. 

She said the 75 per cent exception is "problematic." 

"There are many ways that tenants could be coerced into signing such an agreement and we all know what kind of bullying tactics landlords can use," Wetselaar said.

Converted condos can provide a relatively affordable way into homeownership for some tenants, Cooper said. But he urged the city to review the 75 per cent exception due to all of the 683 units that could already be converted without that. And he said the potential for building structural problems adding to condo fees can quickly make an affordable option less affordable.

"We know housing prices have been increasing significantly in Hamilton, putting a squeeze on tenants already," Cooper said. "I would think we really as community need to look very carefully at this."

In the city's planned tenant education, Wetselaar said she'd be looking for support to come "in as many ways as possible, using popular education methods and translation support as needed."

The vacancy rate does not count the "secondary rental market," which means a large portion of what makes up the rental market in Hamilton — duplexes, split-level houses, rented private condos — is left out.

The numbers the city is basing its policy on reflects only the vacancy and rents charged in buildings with six units or more built specifically to be rented as apartments

Corrections

  • An earlier version of this story misstated the address of the buildings where tenants were offered cash to move. We regret the error.
    Apr 24, 2015 12:45 PM ET