B.C.’s budget will help stimulate the housing supply and offer a tax break to those buying new homes, the provincial government says, but experts insist there’s little to no relief for renters, particularly in an increasingly unaffordable Metro Vancouver real estate market.
Finance Minister Mike de Jong announced Tuesday that the 30-year-old property transfer tax will be amended so those buying new homes won’t have to pay the 1-per-cent levy on properties up to $750,000. That could help save thousands of dollars for buyers of new homes in the region, but does little to aid those who rent.
Asked what relief the budget provided for renters, roughly half of Vancouver’s residents, Mr. De Jong pointed to the province’s $355-million commitment over the next five years to building at least 2,000 new units of affordable housing across the province.
Tom Davidoff, a real estate economist at the University of B.C.’s Sauder School of Business, said that much more rental supply is needed and Tuesday’s budget does little to help solve Metro Vancouver’s affordability problem.
“It’s a very tight market. Rents have been rising sharply in the last few years and it’s a joke to try to buy a house at a thousand dollars a square foot … it cannot be done on Vancouver salaries.”
Mr. de Jong rejected a proposal by Prof. Davidoff and his colleagues to create a 1.5-per-cent vacancy tax that would in part incentivize those with empty homes to rent out their properties. (In Vancouver, apartment vacancy rates have hovered around zero in recent months.)
The Finance Minister told reporters that more data is needed before the province takes “a step of that significance,” but he did note that the government will now gather data on the citizenship and residency status of new home buyers.
Prof. Davidoff said the vacancy-tax proposal put forward by him and a team of other academics offers a cheap way of obtaining a snapshot of the extent of real estate speculation in the province.
The tax, now supported by 50 economists, would apply to all properties but exempt homeowners who live in the homes and pay income taxes in British Columbia.
Krista Hilge says she and her husband, a PhD student in geophysics at UBC, consider themselves lower middle class, but never dream of owning in Metro Vancouver. The pair has been kicked out of three apartments in four years and pushed further east toward Vancouver’s boundary with Burnaby after successive landlords have sold the properties to take advantage of the hot market.
“The category I’m in is that of a renter that can afford it here, but there’s no stability, there’s no guarantee we can stay in our home for the long term and that’s hard,” said Ms. Hilge, who works for Kodak.
Now happily renting the ground floor of a house with their dog and two-year-old daughter, they may yet again be facing eviction later this year as the owner is currently showing the home.
“We have a lot of friends [leaving the region] at this point,” Ms. Hilge said.
“They love Vancouver, but it’s not a long-term home for them, when they have families especially.”
Tony Roy, chief executive officer of the B.C. Non-Profit Housing Association, said Metro Vancouver needs 3,000 new units a year of subsidized housing to meet the projected growth in the region, something he had hoped the province would do more to help create.
He said the budget provided a “fundamental shift” by ensuring the province engaged once more in funding affordable housing.
“Incentivizing people to build condos for home ownership at a time when renters are really struggling is probably a missed opportunity,” Mr. Roy said Tuesday. “At the end of the day, the majority of people in cities like Vancouver are renters and they’re not going to see a lot of purpose-built housing come online.”
Earlier this month, Vancouver offered $250-million worth of city-owned property to Ottawa, mostly vacant lots, if the federal government could pitch in $500-million in funding for affordable housing.
Mr. de Jong said his government was not interested in reducing the equity people have in their homes, which experts say leads to a trickle down in unaffordability for the whole region.
“If by cool, you mean actually reduce the value of people’s major asset – their home – clearly we were not interested in taking that step,” he told reporters after unveiling the budget. “We govern the whole province of British Columbia, not just a couple neighbourhoods, and that too has been instrumental in our thinking.”Report Typo/Error