Collating receipts last week for the folks who take care of your columnist’s tax filings, the savings the harmonized sales tax (HST) affords both in money, stress and time became visible.
But what’s good for writers isn’t necessarily good for everyone. Indeed, the nine-month-old HST remains a contentious issue for many companies, including home builders, landlords and restaurateurs.
One Vancouver developer, betting that the HST will be rejected in the provincial referendum slated for June 24, won’t charge buyers in its project and instead covers the tax itself.
Wanson Development Ltd. has decided not to charge HST to buyers in its Eight West development in New Westminster. Units in the 160-home project that launched last week start at $168,800 and run upward of $419,000. The homes are typically listed for less per square foot than what older product in the same neighbourhood is fetching.
Bill Morrison, president of marketing firm Pilothouse Inc., said the older resale product is an easier and more attractive prospect for buyers because the rules are clearer.
It’s a different story for new homes, where confusion regarding the rules respecting rebates is not well understood.
The most basic example, he said, is the much-touted commitment by the province that buyers of new homes valued at up to $525,000 would pay no more tax to the province under the HST than prior to the tax’s debut on July 1, 2010.
But Morrison said that even under the most ideal conditions buyers pay $2,100 per $100,000 – an extra 2.1% – in tax to the province under the HST. Under the worst scenarios, the full weight of the HST comes to bear with a price tag in the tens of thousands of dollars.
“What’s happened at the end of the day is the buyer said it’s too expensive,” Morrison said.
To keep unit prices low, Morrison said Wanson has slashed its margins. The homes will include granite countertops and stainless steel appliances, and the company has benefited from the site having been assembled over the past seven years (which helped moderate land costs), but to get product moving in the current tax environment the company had to take a hit.
“We’re going to be taking less in the pocket,” Morrison said. “We have to compete, otherwise we’ll be like most other new-home product and sit on the market. And we’re just not willing to do that.”
The tally of major projects on the go in British Columbia topped $61.8 billion at the end of 2010, virtually unchanged from the preceding four quarters.
The good news in the latest summary of major projects – anything valued at $20 million or more in the Lower Mainland and $15 million elsewhere – is that the number on hold has declined.
Having increased in 2010’s second and third quarters to reach 61, the number of major projects deferred dropped to 56 in the year’s final quarter.
The number of projects on hold leapt above 50 in spring 2009, as the full impact of the lending crunch hit home. In March 2008, there were just 32 projects on hold.
The numbers reflect steady financial investment in B.C. projects, even if the number of projects on the books has dropped.
The sole quarter in the past three years in which the volume of current construction dropped below $60 billion was December 2008. Meanwhile, there are 328 major projects under construction today versus more than 375 prior to October 2008 and the tightening of global lending.
The latest update regarding sales at the Village on False Creek – the project formerly known as Millennium Water – indicates that 118 of the 230 units released for sale in February have sold.
This a drop from the initial figure released five days after the relaunch of the project. Rennie Marketing Systems, which is handling sales, announced at the time that 128 units had sold.
Media received a statement last week explaining that some of these buyers rescinded their offers.
“These homes were, in turn, sold to other buyers,” the statement said. “While additional sales contracts have been entered into, in the interests of maintaining a consistent reporting process these sales will no longer be reported in current or future sales updates until rescission periods have passed and the sales are unconditional.”
In other words – the sales numbers from here have nowhere to go but up.