Price Tags contributor Tom Durning shares an article from Press Progress that sheds some light on the comments of Brad Wall, former premier of Saskatchewan, about British Columbia’s speculation tax.

Designed to tax vacant properties, the tax will target less than one per cent of the housing market.

So why was Wall in Victoria saying that, “the speculation tax is a message to people outside of B.C. that the province is not open”?

As the Times Colonist in Victoria states, the tax “will be applied to the 2018 tax year and is meant to discourage the buy-up of housing by investors who subsequently leave homes empty. A homeowner can avoid the tax by living in or renting out the home for six months a year.”

And according to Press Progress, a Victoria-based real estate firm called Focus Equities, along with the United Nations Association in Canada, took out a full-page the Times Colonist last week, and “bizarrely billed the event as a discussion about the quote-unquote “Housing Insanity Tax.

While the focus of the event seems to have been more a discussion about the pitfalls of the speculation tax, some interesting statistics came out of it. Michael Ferreira with Urban Analytics illustrated the housing shortage by showing that the 2,100 unsold townhomes or condominiums in Vancouver at the end of 2014 had shrunk to an inventory of only 89 by April 2018.

And while both Mr. Wall and former B.C. Premier Mr. Mike Harcourt thought the speculation tax was not a good idea, Mr. Harcourt noted that with a burgeoning global population of 10 billion by 2050, cities would require resiliency, and $350 trillion of investment was needed in cities worldwide. He forecast housing affordability not so much as a crisis, but more an on-going condition that would require constant attention over the next decades.

As Price Tags has previously reported, a survey undertaken by Research Co. showed that 75 per cent of people surveyed in British Columbia thought the speculation tax was a good idea, with 86 per cent of residents on the west side of Vancouver agreeing with it in the survey. Dan Fumano of the Vancouver Sun covered the results of the survey here.

Photos: Times Colonist and CTV News

Comments

  1. The Lower Mainland hosts a large inventory of empty “infill” lots whose houses were required to be torn down before the permitting of the new dwelling was allowed to commence. Should I send you a pic of the empty lot behind me where the rental home was torn down 3 years ago and the permit for new is still unrealized? When I built in the seventies new house construction on “infill” projects began the day after the old house was demolished. This may seem like a marginal point but facts at the margins do add up.

    1. In addition to these massive delays in permits, costing tens of thousands of dollars in interest, 26% of cost of new homes is paid ot various government entities http://dailyhive.com/vancouver/vancouver-housing-government-fees-taxes-costs-may-2018 It is big business and employs tens of thousands incl governments on all levels esp city halls and provincial coffers. There is even 5% GST of new rental properties. Go figure. No wonder so few are built and those built are super expensive !

    2. Re: cost of development.

      First, the costs mentioned in the Daily Hive piece linked in Thomas’s above comment are for the Cambie Corridor which is one of the most expensive development corridors in the nation. This is not indicative of average costs. Let’s see the numbers for average development in East Vancouver, Surrey, the North Shore and Coquitlam for more accurate comparison purposes. Then let’s see the same data for the five largest Canadian cities where development and growth are concentrated most. Without better data the Daily Hive piece comes across as just another complaining developer using the most expensive examples to support a point. This should be take it with a big boulder of salt.

      Second, of the 12 taxes and fees listed about half represent the actual costs associated with the servicing of development (sewers, water, etc.) and the costs of the impact of added development on the existing receiving infrastructure. Installing one underground service in a trench can cost between $900 and $1,500 a linear meter. Eliminating these charges would result in a big subsidy to the private sector whose record does not prove it will pass on 100% of the savings to the purchasers.

      Third, anyone who works at any city hall in the Metro knows that too many developers and builders are their own worst enemies by providing incomplete or even outright incompetent development and permit applications and plans, so the cost in staff salaries of needlessly reprocessing applications is very onerous. Further, many so-called private development project managers know very little about actual project management and think their main role is to call and harass staff repeatedly thinking that will speed up processing their flawed plans at a time when development is at sustained record levels. The processing queues are long, and if Metro cities staff up to help speed up the processing, taxpayers, voters and commenters like Thomas will be up in arms about “expensive” public bureaucracies. Still, many cities are indeed staffing up incrementally, but not nearly enough.

      Fourth, several of the listed taxes and fees do not apply everywhere because they are location and circumstance specific. The TransLink levy applies only to rapid transit corridors, like Cambie, and was implemented in the context of decades of shamefully anemic senior government funding for transit. You want the levy eliminated? Then write to the premier and prime minister to encourage them to place greater emphasis on funding urban infrastructure like transit, which after all are key to making our cities more efficacious with respect to energy, emissions, land planning and transportation. In fact, a National Urban Transit Plan should become a top national interest project; the benefits will far outweigh any oil pipeline. The vacancy tax is easily eliminated by ensuring the unit is not vacant. Duh!

      Fifth, CACs arose from balance. They are negotiated to trade additional density and height or public benefits and amenities. To eliminate CACs developers would have to give up extra density and the significant profits associated with penthouse units. On the other side of that coin, what city official (elected or not) will give up daycares, community / recreation centres, libraries, park development, subsidized housing and so forth built with non-tax resources? Granted, CACs could receive more scrutiny and better management, but that shouldn’t be a call for radical change to policies that have supplied great benefit.

      Sixth, the speculation tax was the direct result of the housing affordability crisis and is meant to dampen demand on the most expensive units. The majority of people protesting this tax supported the previous provincial government that helped create the crisis by doing nothing until it was too late.

      That leaves only a few taxes and fees that are indeed questionable and could be subject to a rethink.

  2. Considerable opposition to this tax in Nanaimo, Kelowna and Victoria as it WILL REDUCE NEW SUPPLY, kill construction jobs AND reduces local economy / tourism currently thriving off Albertans living there part-time.

    Kelowna: http://www.cbc.ca/news/canada/british-columbia/kelowna-speculation-tax-opposed-1.4586535

    Nanaimo: https://www.nanaimobulletin.com/news/nanaimo-lantzville-express-concerns-after-speculation-tax-tweaks/

    Brad Wall is dead on. A sideshow to distract from real issue, namely HIGH demand from immigrants, GenY and Albertans wanting to retire in BC.

    The right strategy would have been to raise ALL property taxes everywhere, perhaps while lowering or eliminating income taxes like in booming US states TX and WA. That would far better monetize the vast amount of money in real estate.

    Victoria Tourism http://www.vancourier.com/real-estate/b-c-wide-coalition-launches-scrap-the-speculation-tax-campaign-1.23261879

  3. Is it any wonder most British Columbians view developers and real estate promoters with such distaste?

    1. The reason is most citizens are utterly clueless about the risks, regulations and financing requirements to pull off a successful project. Perhaps once new supply drops hard due to these new taxes people will realize that only less government, not more, will produce more and cheaper housing !

      1. Personally I cannot lump builders, developers, and real estate promoters in the same basket. Where I live (Surrey) ,even though there is plenty of space already zoned for development, developers spend a lot of money trying to get other areas up-zoned because that is where the big money is.
        (In one area 72 % of proponents wanted OCP and or NCP-LAP amendments, 95 % wanted zoning amendments). But as a 50 year veteran of the industry I can tell you ordinary builders face a morass of regs that are very overbearing and more to do with favouring certain kinds of development than technical concerns. I entered my first comment because I had just written a friend to say:

        “Joe Lstiburek told everyone in BC that would listen in 1985: do not use stucco except with a rainscreen. It took 15 years and millions of dollars of home equity losses for the “experts” in charge to get the message. The building code is now more a child of empire building than risk analysis. While England was introducing the bedroom tax in 2013, Lower Mainland munis were still persecuting people for living too many to a house. Now we have thousands of empty properties because munis make people tear down the old house years before the permitting process for the new one ends. Don’t start me on where the real speculative money is made in the system. And don’t worry -the social engineers will try to find a way to tax everyone out of the crisis.”

      2. “only less government, not more, will produce more and cheaper housing !”

        Are there examples of small government jurisdictions that don’t have housing issues and do have a strong middle-class (so we don’t start using Monte Carlo as our baseline)?

        “most citizens are utterly clueless about the risks, regulations and financing requirements to pull off a successful project.”

        Judging by the forests of building cranes in our region, it seems within the skillset of a large number of companies and people.

        It also contradicts the ‘property speculation-is-so-great-everyone-gets-to-profit’ meme the real estate industry loves.

        Perhaps it’s neither terribly risky at present to build condos for market, nor a clear answer to providing home to residents of the region. Nor is leaving the debate to those who profit going to get us to a solution.

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