Speculation tax a potential ‘crisis’ in West Kelowna

The municipality of West Kelowna has joined a growing backlash to the B.C. government’s real estate speculation tax with a demand that it be left out of that tax measure.

West Kelowna’s council Tuesday voted unanimously for Mayor Doug Findlater to meet Premier John Horgan and B.C. Green party Leader Andrew Weaver to pressure government to exclude the Okanagan community from the new tax.

“We’re very concerned about the overall economic impact,” said Findlater. “We are fundamentally concerned this would push property values below the amount of equity people have in their homes. It’s a potential financial crisis.”

West Kelowna has a large number of part-time residents who will be affected by the new annual levy, which targets unoccupied homes and secondary homes owned by people not paying income tax in B.C. It will start at 0.5 per cent in 2018 and increase to two per cent in 2019.

Find later fears many of them maybe forced to sell their homes in the face of thousands of dollars in new taxes, leaving a glut of homes on the market.

“The irony of this is if they go through with it, the only people who will be able to afford really expensive places are the really wealthy who would buy them up at a firesale price,” he said.

“People who picked up a modest place on the lake 20 years ago and kept it in the family are not going to be able to afford to keep them.”

West Kelowna, which incorporated 10 years ago, has a population of 35,000. It’s been trying to urbanize and development has been a boon to their growing community, said the mayor.

The shock waves from the tax, even before its implementation, can already be felt, said Findlater, with banks shying away from lending to developers. It could also affect people applying for residential mortgages.

“We do want a decision on this very soon because of the damage this is already doing,” he said. “There is clearly a crisis in confidence about the future over what the province may do.”

The municipality received 239 emails from part-time residents, recreational property owners and developers along with anecdotal estimates of owners facing tax increases of $20,000 to $30,000. It estimates the speculation tax in West Kelowna will add about $10 million to Victoria’s coffers.

If the province doesn’t bow to the request, Findlater wants the province to prepare a report estimating the economic impact of the tax measure, which West Kelowna expects will have unintended consequences for many non-resident property owners who couldn’t be considered speculators.

The municipality’s move is the latest pushback at the tax — the details and parameters of which remain unclear — leaving many homeowners confused by who will be affected by the tax and to what degree.

The speculation tax, announced in last month’s budget, applies to the Lower Mainland, Victoria, the Nanaimo region, Kelowna and West Kelowna.

Other municipal leaders, including in Kelowna and Parksville, have also publicly expressed concern over the effect of the tax on their local economies.