British Columbians are finally getting a look at how the NDP government plans to tackle the province’s housing affordability crisis.
The government has unveiled a bold, 30-point plan which it says will stabilize the housing market, crack down on real estate fraud, and boost B.C.’s stock of rental housing.
All told, the province is pledging to spend $6 billion over 10 years on new housing, while looking to bring in about $321 million a year through a speculation tax and changes to the foreign buyer and property tax programs.
The centrepiece of the NDP’s plan to stabilize the housing market is a new speculator tax on absentee property owners. The tax phase-in at 0.5 per cent in 2018 before climbing to two per cent going forward. The plan closely resembles a proposal put forward by UBC and SFU academics more than two years ago.
Under the proposal, principal residents, long-term landlords and absentee owners who pay income tax in B.C. would be exempt from the tax.
“This tax will penalize people who’ve been parking their capital in our housing market simply to speculate, driving up prices and removing rental stock,” said Finance Minister Carole James.
“Tax notices will come out before the end of the year, and primary residents and long-term rentals will generally be exempt.”
The province is also increasing the foreign buyers’ tax from 15 per cent to 20 per cent, and expanding it to cover Victoria, Nanaimo, the Fraser Valley and Central Okanagan.
But Justin Fung from the group Housing Action for Local Taxpayers (HALT) says the group would’ve like to see a foreign buyer ban, at least in the short run.
“It’s still something that I think might be necessary but certainly we’re seeing a lot of great things here,” said Fung.
Homes worth more than $3 million will also see their property transfer taxes climb from three to five per cent.
Those latter two taxes are effective immediately.
All told, the NDP expects those measures will generate $208 million this year, and $321 million going forward.
The other half of the plan involves closing loopholes for property speculators and tax cheats.
The province is creating a new database for pre-sale condo assignments, which will allow federal and provincial tax authorities to ensure tax is paid on sales.
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The province is also moving to end hidden property ownership by collecting more information about beneficial ownership on property transfer tax forms, establishing a new registry to track that information and requiring B.C. companies to keep up to date information on those owners.
Regulators will also be empowered to collect more buyer information, and new penalties will be levied for non-compliance.
Anne McMullin with the Urban Development Institute called the focus on speculators misplaced.
“We don’t see any incentives or any initiatives to compel municipalities to actually get [permit] approvals,” she said.
“We’re looking at four to five to six years for housing to actually get approved, and another two or three years to have it built.”
Building new housing
The NDP plan does actually focus heavily on creating new supply, but that supply will be geared to renters and low-income people.
The NDP is pledging to build 114,000 homes over the next decade, to the tune of $6 billion.
Over the next three years, that plan includes $378 million for new affordable rental housing, and $306 million to build 2,500 new modular housing units and 1,500 units for women and kids fleeing abusive relationships
“Let us celebrate the surge in purpose-built rental,” said Paul Kershaw with UBC’s School of Population and Public Health.
“It takes 19 years for the typical 25- to 34-year-old to save a 20 per cent down payment on an average home. More and more of us are going to be renters going forward, and we need to build that stock.”
It is also pledging $155 million over three years for 1,700 units of social housing for First Nations people.
Colleges and universities will be allowed to borrow money to build new student housing, with a $450-million program to finance 5,000 new beds.
Caitlin McCutchen goes to Kwantlen Polytechnic and is chair of the Alliance of BC Students, says she knows of too many students who live nowhere near there school.
“So they’re doing long commutes, an hour and a half to two hours each way, students sleeping in tents and there are students who sleep in cars, so this is a huge issue,” said McCutchen.
She said many students spend half of their incomes on housing.
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The NDP is also scrapping the BC Liberals’ $703-million loan program for first-time homebuyers, and using the money to create a new “HousingHub,” which will partner with developers, non-profits and other levels of government to build new units.
It has earmarked $75 million over two years to subsidize projects already underway to ensure that they remain affordable to renters when they actually hit the market.
Rentals will also be incentivized by exempting purpose-built rentals from the provincial property tax.
Protections for renters
While there’s no dollar figure attached, the NDP’s budget is signalling new legislation is on the way to protect renters from renovictions and “demovictions.”
It is also earmarking $235 million for fire safety, seismic and other upgrades for existing social housing units to extend their lifespan.
Programs to subsidize housing for seniors and working parents will see $116 million in new funding over three years.
Noticeably absent, however, is the NDP’s campaign pledge of a $400 annual renters grant.
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Other housing highlights
~With files from Jeremy Lye
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