New housing taxes in the B.C. NDP's provincial budget have left municipal officials in the Okanagan confused and worried about the impact on their region, which has some cities – but not others – designated for both levies.
The popular Central Okanagan regional district, known for its desert-like climate, lakes and vineyards, is newly included in the province's existing foreign-buyers tax, which will rise from 15 per cent to 20 per cent.
But the just-announced tax aimed at out-of-province property owners, which the province calls a speculation tax, will include only Kelowna and West Kelowna, along with Metro Vancouver, the Fraser Valley and the Capital and Nanaimo regional districts on Vancouver Island.
Penticton, in the Okanagan just to the south of the regional district, is excluded.
"We would like to know that we would be protected too," Penticton Mayor Andrew Jakubeit said.
He is worried that vacation-home and investment buyers from offshore or from Alberta will be pushed to his city when the new taxes are imposed in Kelowna.
In the past two years, a lot of new housing has been built in Penticton, but it is being sold largely to Lower Mainland residents who are moving there.
"If that shifts to being foreign investment and vacation [homes], that is cause for concern," Mr. Jakubeit said. "Whether it is foreign money from out of province or out of country, units that are vacant 10 months a year is not good for developing a vibrant community."
Kelowna Mayor Colin Basran, on the other hand, does not think a foreign-buyers tax will have much impact because not many people from abroad are buying homes there and leaving them empty.
But many Alberta residents buy vacation properties in the city, often as a prelude to retiring there, and the new annual tax on out-of-province owners could have a dramatic impact on that.
"I want people to have the ability to invest in our community," Mr. Basran said. "I do worry a little bit that Kelowna becomes less attractive for retirement."
As well, although he welcomes the new measures aimed at reducing demand, he wishes the province had done more to tackle what he sees as the real housing problem in Kelowna – investors buying big blocks of pre-sale condos and flipping them to locals after the prices have risen.
Finance Minister Carole James, in her budget speech on Tuesday, said only that the province will start tracking information on pre-sales, but that will be kept confidential for now. She did not introduce any measures to change the rules for pre-sales.
"That speculative purchasing has had a detrimental impact in Kelowna," Mr. Basran said.
West Kelowna Mayor Doug Findlater said he is worried the new taxes will drive buyers to the other Okanagan communities and wreak havoc with his city's housing market.
"Someone in the finance department needs a geography lesson," Mr. Findlater said. "All of the Okanagan is one very active market, largely fed by people moving in here from Vancouver, but also by foreign buyers and Albertans."
On Vancouver Island, reaction is equally mixed.
Victoria Mayor Lisa Helps, like Lower Mainland mayors, is enthusiastic about the new measures, although she said the key will be to monitor the effects and adjust policies as needed.
"They have pulled a number of levers," she said. "I think it will make a big difference, but measurement is critically important."
However, in Parksville, which is part of the Nanaimo regional district, Mayor Mark Lefebvre said he does not expect the new taxes to make much difference.
His town is a popular retirement community for people from across Canada and the mayor doesn't hear many reports of people buying vacation properties and leaving them empty.
"I think [the new taxes] are to prevent anything from moving up from Victoria."
Vancouver Mayor Gregor Robertson issued a statement earlier this week saying he was pleased with the way the NDP had addressed supply and demand by putting significant amounts of money into building low-cost housing and introducing new taxes.
Vancouver council passed a motion as well, initiated by Green Party councillor Adriane Carr, urging the province to further restrict non-resident buyers and to create a flipping tax that would be geared to the amount of time between when someone bought and sold a property.