Friday, 22 February, 2019

Mixed messages on BC's efforts to cool the hot housing market

B.C. Finance Minister Carole James delivers her first full budget Feb. 20 2018 B.C. Finance Minister Carole James delivers her first full budget Feb. 20 2018
Nellie Chapman | 22 February, 2018, 05:37

A new property transfer tax on homes worth more than $3 million will bring in $81 million more in each of the coming three years.

James said a raft of new measures are meant to "moderate" the surge in housing prices, which she said had emerged as one of the top concerns of both residents and businesses struggling to recruit workers due to the high cost of living. Small businesses with payrolls less than $500,000 are exempt; the tax is on a sliding scale for companies with payrolls above $500,000, to a maximum of 1.95 per cent. Sales slowed for several months before rebounding and prices have continued to rise. Few specifics were available Tuesday: Will the speculation tax have the desired moderating effect?

In an effort to ease the region's restrictive real estate market, B.C. will expand the controversial foreign buyers tax to Victoria and Nanaimo and introduce a speculation tax for vacant homes. Satellite families, or households with high foreign incomes that pay little local income tax, will also face the levy.

On-campus housing at below market rates is crucial for students and new beds will help free up rental spaces in the community, she said.

Public outrage has been further stoked by fresh media reports alleging Vancouver casinos and real estate have become vehicles in recent years for laundering the illicit proceeds of high-rolling Asian gamblers and drug dealers with links to the Chinese fentanyl trade. Now this tax only applies in Metro Vancouver. The hope was that the tax would deter overseas buyers-including many Chinese-who were taking advantage of the weak Canadian dollar to purchase investment properties.

The expansion of child care facilities and the improvement of care will provide immediate relief to tens of thousands of families, according to the province, who say these steps - in addition to lowering fees for parents and increasing the number of qualified early childhood educators - will drop fees at licensed child care centres for infants and toddlers, and for children between the ages of three and five years old.

The government will also eliminate medical services plan premiums from January 1, 2020.

It remains unclear how the speculation tax will affect people who have more than one home or hold a vacation property in B.C.

In its first provincial budget in 16 years, the B.C. NDP is focusing on childcare spaces, affordable housing and speeding up the elimination of Medical Services Plan premiums.

Building 2,500 new Supportive Homes for People Struggling with Homelessness: Within this total, the province is promising an additional 2,500 new homes with 24/7 support for people who are homeless or at risk of homelessness.

Finally, some good news for those who depend on BC Ferries.

British Columbia's government is doubling down on its bid to lower Vancouver housing prices by curbing foreign demand, which could drive wealthy Chinese home buyers to other markets.

The NDP will power its major spending initiatives with more than $5.5 billion in new taxes announced during its first year in government.

Finance critic Tracy Redies doubted the government would be able to reach its affordable-housing goals.

However, in my opinion, the budget does offer a broad range of specific actions and intentions, which could help improve housing affordability over time, provided there is a better balance between demand and supply. But he said on Wednesday the B.C. government has only followed half of the prescription they recommended.

Thom Armstrong, executive director of the Co-op Housing Federation of B.C., applauded the government's plan.

The measure "will penalize people parking their capital in our housing market simply to speculate, driving up prices and removing rental stock", she said.

"If you're anxious about pricing and affordability there is a supply side to the market to look at, " he said.