B.C. cities to disclose hidden fees for home buyers: Speech from the Throne

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Local governments will soon be forced to disclose their financial stake in new home construction, a measure British Columbia will impose as part of its efforts to tackle inflated housing prices in communities around the province.

British Columbia says municipalities drive up the cost of new home units with fees and regulatory requirements that add tens of thousands of dollars to the price that buyers must pay. Some of those costs include public-art contributions and parking standards, as well as rezoning, development, demolition and building-permit fees.

In a Speech from the Throne that centred on concerns about spiralling real estate costs in many parts of the province – but especially in Metro Vancouver – the B.C. Liberal government vowed to lean on local governments to bring down those costs.

"No one level of government can do this on its own," states the speech, read by Lieutenant-Governor Judith Guichon. "Your government will work with municipalities to reduce the hidden costs in home purchases, and to make those hidden costs clear and transparent to the home buyer."

Vancouver Mayor Gregor Robertson called the measure a "distraction" from the real issues driving real estate prices. "It's absurd to think that local developer charges are driving the record-breaking increases in home prices across the Lower Mainland. The market is at a record pace and that's what is driving the price of housing. It's not related to the cost that developers pay to contribute to community centres and parks and child care. That's a red herring," he said in an interview Tuesday.

The mayor referenced a report commissioned by the city in 2014 by Coriolis Consulting that found no evidence the city's Community Amenity Contributions (CACs) are driving up housing prices.

The report said the real culprits include limited urban land base, local and foreign investors and Vancouver becoming part of a global real estate market. "There are factors pushing up housing prices in Vancouver, on the demand side and the supply side, but CACs are not one of them," the report stated. Mr. Robertson has called for tools such as a speculation tax and a luxury tax on high-end homes.

"What's more critical is ensuring that the province deals with speculation and The Globe's own reporting of corruption in the industry," he said. "That looks like a much more direct impact on housing prices." A recent Globe and Mail investigation found real estate agents and speculators making significant profit, flipping Vancouver-area homes, by finding buyers willing to pay more for properties before deals close.

Richmond Mayor Malcolm Brodie also bristled at the province's tactics. "We at the City of Richmond – and generally, in local government – are absolutely transparent about the various costs that go into development costs," Mr. Brodie said. "We need to have growth pay for itself, and that is largely what cities are doing."

Mr. Brodie said a better way to reduce the cost of new homes, or the transfer of existing homes, is to eliminate the provincial property transfer tax. "That would be the easiest thing that the government could do and that would be welcomed by everybody."

Premier Christy Clark told reporters in Victoria that municipal governments have the authority to impose costs on housing construction. The province can only force the disclosure of those costs, hoping the transparency will encourage local governments to work on ways to lower costs.

"They have the right to be able to make these decisions – demolish permits, zoning – those are exclusively local government and we don't intend to interfere with that," she said. "Local governments are just as concerned about this as I am so hopefully they will address their end of it. But one of the things that I acknowledge is, the province cannot do this alone. There are some things we can do and there are some things that cities need to do but we are going to have to do it as partners."

Finance Minister Mike de Jong has suggested his budget next week will include measures to boost the supply of housing as well as changes to the property transfer tax to help entry-level buyers, while imposing higher costs on luxury homes. The province is expected to reap almost $1.3-billion from the property transfer tax in the current fiscal year, however, and is not expected to abandon the tax altogether.