New taxes on non-Nova Scotian homeowners met with mixed reviews
Latest stats show 4 per cent of residential properties are owned by non-residents
New measures to target Nova Scotia's housing crunch, introduced with the Progressive Conservative government's first budget, are receiving mixed reviews from those who work in and study the market.
The measures include new taxes to be applied to non-resident homeowners — meant to cool a hot housing market with limited supply.
The supply shortage has been worsening for years, but has become more acute during the pandemic. Tammy Hines, president of the Nova Scotia Association of Realtors, says there have been no recent signs of improvement.
"We still are in the lowest inventory that we've had, I believe, historically, in 30 years," said Hines. "We've been in even more of a crunch in the last few months than what we were even last year at this time."
Hines said she is struggling with what to make of the new tax measures — a five per cent deed transfer tax when a non-resident purchases a residential property, and a two per cent tax on the assessed value of buildings with three or fewer units owned by non-Nova Scotians.
"We really don't see where that is going to increase the inventory," she said.
Hines said she suspects the impact will be greatest in rural areas, where non-residents tend to buy seasonal homes.
"But that's not necessarily where the statistics are showing us there's the biggest shortage of housing," she said.
Most non-resident owners are outside Halifax
Every part of the province is facing housing shortages to varying degrees, but there's a concentration of need in the Halifax Regional Municipality where there's an estimated shortfall of up to 25,000 units.
Statistics Canada reported that in 2019, non-resident ownership rates in Nova Scotia were four per cent — higher than both Ontario (2.2 per cent) and British Columbia (3.2 per cent) where taxes on foreign buyers were introduced in 2016 and 2018, respectively.
The same report showed the rate was highest outside HRM.
Statistics collected by the Nova Scotia government in 2020 tell the same story.
Two years ago, 3.6 per cent of residential properties were owned by non-residents. In Halifax, the rate was 2.4 per cent, while the highest rates were recorded in rural areas. The two highest figures were in parts of Richmond County, Cape Breton (14 per cent non-resident owners) and the Municipality of Shelburne (12.8 per cent).
Hines said she doesn't think the overall rate of non-resident ownership was significant enough for the new taxes to make a marked difference on the housing market. She said the bottom line is that Nova Scotia needs to create more supply.
"We've been advocating now for quite some time to help move forward the new developments and get rid of a lot of the red tape," she said.
Hines said news that nine areas in the Halifax region will be fast-tracked for housing developments is "definitely going to help."
Catherine Leviten-Reid has a different interpretation of the stats on non-resident home ownership, however.
The Cape Breton University professor said while 3.6 to four per cent might seem like a small share, the non-resident owner taxes could still be effective tools, especially the deed transfer tax.
Leviten-Reid said she was pleased to see it introduced, but skeptical about the five per cent rate, since B.C. and Ontario's foreign buyer taxes are quadruple that.
"It's also going to be worth tracking to see what kind of an effect this actually has on the market," she said.
Other housing measures in the budget
This week's budget also saw new money allocated to reducing homelessness, including $9.6 million for supportive housing projects and $7.1 million for unspecified support for people with nowhere to live. Leviten-Reid counted that as a small win.
"I was happy to see funds in the budget for supports for people who have experienced homelessness," she said. "Funding in this area is not just about bricks and mortar stock, but absolutely about supports."
She said the amount, however, should have been about twice as much.
Leviten-Reid said she is also hoping to see more money earmarked for new builds, with an emphasis on facilitating housing developments by non-profit groups, rather than for-profit developers.