Tax …
B.C. Municipal Affairs and Housing Minister Selina Robinson told media following her presentation to the Urban Development Institute (UDI) last November – a presentation that acknowledged the presence of protesters outside clamouring for more affordable housing – that they should watch the province’s 2018 budget for measures targeting speculation.
When the budget came down last week, it included a 30-point plan prefaced by Robinson’s commitment to address housing affordability, not just in one budget but in future spending commitments, too.
“Home prices didn’t spike overnight, and our housing problems can’t be fixed with a single budget,” she said.
The first steps include a new tax on homeowners who don’t file income tax in B.C., whether or not they live in their properties at any point during the year. The measure links property ownership with contributions to the public purse and will apply in the Metro Vancouver, Fraser Valley, Capital and Nanaimo regional districts as well as in the municipalities of Kelowna and West Kelowna.
Victoria is also expanding the tax owing on purchases of real estate by foreign nationals beyond Metro Vancouver to the regional districts where the speculators’ tax is applied, including all of the Central Okanagan Regional District (not just Kelowna and West Kelowna). The rate will be 20%, an increase from the 15% rate levied when the tax was introduced in Metro Vancouver in August 2016. Both measures are in keeping with promises the BC NDP made during the 2017 election campaign.
Complementing taxes on foreign nationals are new taxes for residential property owners regardless of nationality if their homes are worth more than $3 million. These include boosting the property transfer tax to 5% from 3% and increasing the school tax.
Six measures also aim at closing loopholes and preventing tax evasion through real estate. A key element includes adjusting the treatment of residences in the 45-year-old Agricultural Land Reserve (ALR) to prevent the abuse of farm properties and ensure they’re used for farming. Construction of mega-mansions has been a prominent issue in feedback to the province’s ongoing consultation on the revitalization of the ALR, and changes to property tax policy will ensure farm properties are used for farming.
… and spend
While critics feared the budget would focus exclusively on demand-side measures to address affordability issues, 17 of the 30 points intended to address housing look at increasing supply and securing housing for B.C. residents.
Responding to the budget, UDI applauded the province’s plans for nearly $7.5 billion worth of investment in new housing, but claimed that tax increases would do nothing to increase affordability, an issue it maintains is driven by supply rather than demand.
“We are extremely concerned new and far-reaching housing tax increases will not have a positive impact on affordability,” said Anne McMullin, president and CEO of UDI.
Indeed, a glance at the Real Estate Board of Greater Vancouver’s benchmark price for housing in the region shows a 12.6% increase since the province introduced a heightened tax on foreign nationals’ purchases of residential properties in Metro Vancouver. The increase occurred even as foreign nationals’ participation in B.C.’s housing market dropped.
During 2017, the involvement of foreign nationals in residential purchases averaged 3.5% in Metro Vancouver and 2.9% in all of B.C. This compares with a participation rate in July 2016 of 15.1% in Metro Vancouver and 9% in the province as a whole.
Meanwhile, in Vancouver …
While the province claimed ownership of the issue of housing affordability in its annual budget, Vancouver Economic Commission staff saw Amazon’s quest for a second headquarters as an opportunity to address the local housing supply.
The commission’s recently released bid for HQ2 touted Vancouver as an idyllic alternative to Seattle given that it “has three times the number of homes for sale under US$500,000, compared to Seattle.” While market research firm Urban Analytics Inc. has reported record-low levels of standing inventory, commission staff say recent completions have “resulted in a greater diversity of affordable housing options across the region.”
Regardless, Amazon’s consideration of Vancouver for HQ2 was an opportunity to address the housing crisis.
“Amazon’s role in not only defining the urban centre but collaborating with Vancouver to develop a blueprint for the future across areas such as … affordable housing will be pivotal,” the bid stated. •
Note: An earlier version of this column contained an incorrect figure for the increase in the benchmark price for housing in Greater Vancouver. That number has been corrected.
