'Ignored for too long:' B.C. NDP government takes aim at housing costs with tax measures
Budget introduces tax on speculation, raises foreign buyers tax and widens its scope
Stabilize, crack-down, build and protect — key tactics the provincial government says it will use to put a dent in B.C.'s housing crisis.
On Tuesday, B.C.'s NDP unveiled its first full budget since taking office seven months ago and along with it came a separate 33-page publication on how the government plans to make housing more affordable.
"The problem has been ignored for too long and the consequences are being felt throughout B.C. with housing costs skyrocketing," said Finance Minister Carole James as she presented the budget in the legislature.
Recent statistics from the Real Estate Board of Greater Vancouver show the average price of a detached home was $1.6 million and the average price of an apartment was $665,400. Vacancy rates for renters are at one per cent or lower in most cities across B.C., including Victoria and Kelowna.
In today’s <a href="https://twitter.com/hashtag/BCBudget?src=hash&ref_src=twsrc%5Etfw">#BCBudget</a>, we’re stabilizing the housing market by adding a new tax on speculators who are driving up the cost of housing, and increasing the foreign buyers tax to 20% from 15%, while expanding it to many other parts of BC. <a href="https://twitter.com/hashtag/vanre?src=hash&ref_src=twsrc%5Etfw">#vanre</a> <a href="https://twitter.com/hashtag/bcpoli?src=hash&ref_src=twsrc%5Etfw">#bcpoli</a> <a href="https://t.co/L4tCtjDFlP">https://t.co/L4tCtjDFlP</a> <a href="https://t.co/COf59MTbmt">pic.twitter.com/COf59MTbmt</a>—@BCGovNews
The government says it will take bold steps to curb demand, reduce tax evasion, close real estate loopholes and target property owners who do not pay taxes in B.C.
It will introduce a speculation tax in Metro Vancouver, the Fraser Valley and regional districts in Nanaimo and Victoria along with Kelowna and West Kelowna.
It applies to foreign and domestic home owners who do not pay income tax in the province, including those who leave their homes vacant.
James admits the tax is a "bold move," but one that will penalize people who park their capital in B.C.'s housing market simply to speculate, which she says drives up prices and removes rental stock.
Beginning this year it will cost $5 per $1,000 of assessed value. In 2019, that rate rises to $20 per $1,000 of assessed value.
The province will also expand the existing 15-per-cent foreign buyers tax, which was introduced in 2016 in Metro Vancouver. It now rises to 20 per cent and will expand to include Nanaimo, Victoria, the Fraser Valley and the Central Okanagan.
Principal residences and long-term rentals will generally be exempt.
Other measures put in place to curb rising prices include increasing the property transfer tax on homes worth more than $3 million from three per cent to five per cent, and increasing the school tax on homes assessed over $3 million.
The province says fraud and corruption are playing a role in distorting housing prices across the province.
As part of Budget 2018, it's vowing to build a database of pre-sale condominiums which will require developers to collect and report about the assignment of these sales.
The government hopes the data will prevent multiple resales of the units before they are occupied. It also says it will help with taxation at the provincial and federal levels.
The province will also move to prevent numbered companies, off-shore and domestic trusts along with stand-in owners from hiding who is actually buying properties.
It will also amend the Property Transfer Tax Act to collect more buyer information, close property tax loopholes on Agricultural Land Reserve lands and work with federal government to prevent tax evasion and money laundering.
"These changes will return a sense of fairness to the real estate market," said James.
The province is committing $6 billion over the next 10 years to build 114,000 affordable homes.
It says it will also built rental housing for "the missing middle," people like teachers, service-industry workers, nurses and tradespeople, many of whom currently live far from where they work due to housing prices.
The B.C. NDP also says it will provide housing for women and children affected by violence, Indigenous people and the homeless.
While much of the government's housing plan was widely praised on budget day, some groups say the province isn't doing enough to add supply.
The Business Council of British Columbia wants the province to do more to speed the pace of development, while the B.C. Poverty Reduction Coalition says not enough money has been earmarked to create housing for the province's most vulnerable.
The budget does not increase welfare or disability rates.
"I'm disappointed that the government has chosen not to prioritize the poorest people in our province," said Trish Garner with the coalition.
The budget also addresses problems faced by renters, such as rising prices and fixed-termed leases.
While the government has already addressed fixed-term leases and geographic rent increase clauses, it will now increase funds — $116 million over three years — to bolster programs that make housing more affordable to low income seniors and families who rent.
The province will also create a new organization called the HousingHub which will look for partners in the non-profit sector, such as churches to redevelop land and create new housing.
Despite the detailed plan however, James is still asking for patience from residents desperate for relief.
"The scale and the complexity of our housing affordability challenges mean change will not happen overnight," she said.
With files from Canadian Press