Global News investigation uncovers major flaw in affordable housing project

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WATCH: A Global News investigation has revealed a flaw in an affordable housing project that has allowed people who were supposed to live in the units to rent them out – Feb 17, 2017

The provincial government is promising serious change, following a Global News investigation that revealed a major flaw in an affordable home-ownership project.

In late 2015, a new condo development — Sequel 138 — opened in the Downtown Eastside. The controversial project featured 18 affordable housing units and 79 condos for sale. Only buyers with a combined household income of less than $85,000 a year qualified to get into one. In return, they paid little to no down payment.

Last November, a Global News investigation found some of the units were being rented — a serious problem, given the agreement owners signed. All buyers signed a covenant with B.C. Housing and one clause clearly states for the first two years owners wouldn’t use the property for anyone but themselves.

READ MORE: Owners take advantage of low-cost housing program in Vancouver’s Downtown Eastside

BC Housing says it’s own investigation revealed 39 of the 79 condos are being rented, leaving housing advocate Justin Fung to question the effectiveness of the home-ownership program.

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“What started off as a very good intention didn’t have the right controls in place in order to ensure that it was addressing the need that was there,” Fung said.

Rich Coleman, the minister responsible for housing, admits the covenant the ministry had owners sign wasn’t clearly worded.

“Frankly, what happened, was that the clear clause that should have been in there wasn’t clear enough. They said they would sign a covenant and they wouldn’t rent them for two years, but there wasn’t a mandatory piece to that clause,” Coleman said. “That will not happen again.”

However, NDP Housing critic David Eby questions why it had to happen in the first place.

“The fact that this was done so poorly, so incompetently, frankly, really says to me that the government has done a half-hearted effort at best and maybe wanted this thing to fail,” Eby said.

Coleman says the government won’t do a project like this again, at least not without a stronger covenant.

It’s still unclear why so many owners did not end up living in the units they purchased.

One owner who chose to rent contacted Global News, saying some of the owners who bought didn’t know what they were getting into and that they had to come up with more money for the down payment than they initially thought. It’s not clear how many found themselves in this situation.

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Advocates say a fuller understanding of what went wrong means a better chance of avoiding a repeat.

“We want to make sure that if we are going to put energy and funds towards affordable homes that they are being used as such,” Fung said.

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