The harmonized sales tax may cause rental-housing stocks to crumble across the province, according to an industry leader.

Marg Gordon, CEO of the B.C. Apartment Owners and Managers Association, said landlords, already paying GST on costs such as labour and materials will face a seven per cent increase in those expenses with no way of recouping the cash.

Rent controls limit increases to 3.7 per cent for 2009.

The outcome, according to Gordon, will be cash-strapped landlords struggling to finance upgrades and applying for the maximum annual rent increases.

Gordon added incentives for developers to build rental housing have been "destroyed" because razor thin profit margins will be shaved to the bone.

The City of Vancouver created a Short Term Incentives for Rental Housing program to lure developers into the rental market.

Coun. Geoff Meggs said the initiative doesn't place ceilings on rents in this round of development, which approved 50 units to date with potential for about 1,000 others.

Still, Meggs found Gordon's assessment "disturbing."

Dahrm Makwana reports for Vancouver 24 hours