MORE B.C. ELECTION COVERAGE
Liberal Leader Andrew Wilkinson says he would scrap B.C.'s speculation tax, which adds a surcharge to homes left vacant for more than six months in key parts of the province, including Metro Vancouver.
Instead, he's proposing a new capital gains tax on flipping condo presales.
NDP Leader John Horgan, though, said the tax has encouraged owners to rent out their properties, improving vacancy rates.
So, has the tax that was introduced in 2018 actually made housing more affordable?
Some observers, but not all, say the answer appears to be yes. But experts warn there's no one solution to B.C.'s affordable housing crisis.
QUOTES
Wilkinson: “The NDP introduced a phoney speculation tax that doesn't actually address speculation at all. We need to make it more affordable for couples, young people and families entering the housing market to buy a presale contract and know that it's not going to be the subject of speculation.”
Horgan: “I believe the speculation and vacancy tax is successful, because it's addressing people investing in housing to make profit, not buying housing to live.”
B. C. Green Leader Sonia Furstenau: “I voted for the speculation tax and I stand by that decision. Housing and the cost of living is still the No. 1 issue for British Columbians. The tax has proved to be an effective tool on this issue, but we need to do more to improve affordability.”
FACT CHECK
Have affordability and availability improved? A 2020 Canada Mortgage and Housing report found 11,118 existing condos in Metro Vancouver became rentals in 2019, and one of the report's authors said the timing of this change coincides with the speculation tax and other new housing regulations.
However, the CHMC report also found tight vacancy rates and skyrocketing rents continued in 2019.
Rentseeker.ca agreed, finding Vancouver had the highest rental rates of all Canadian cities in 2020, and the numbers had worsened since 2019. However, padmapper. com found Vancouver rents did drop in August, by as much as 2.9 per cent for a one-bedroom unit.
The City of Vancouver has a similar empty homes tax, and reported in February that the number of properties declared vacant in 2019 had dropped 14.6 per cent from 2018.
“We're returning more empty homes to the rental market,” said Mayor Kennedy Stewart.
The city also says the tax's revenues have been used to buy affordable housing buildings.
Paul Kershaw, a professor in UBC's school of population and public health, said “the jury remains out” on the effectiveness of the speculation tax on its own. But, he argued, you can't say it's a failure just because housing isn't instantly more affordable, noting not even a global recession has brought Vancouver's home prices down. He argues that several policies, including the speculation tax, will need to work in unison to improve affordability.
“I don't understand the evidence driving the provincial Liberal party to make this call,” Kershaw said.
Andrey Pavlov, a professor with SFU's Beedie School of Business, said he's seen no evidence that vacancy rates have improved, pointing out that new home starts have dropped since the speculation tax was introduced.
The NDP said the tax would bring in $80 million in revenue this fiscal year, but Pavlov argued the province has lost more though a reduction in property transfer taxes.
“So government ended up worse off financially,” he said. “I think any
government should cancel that tax. It's been an utter failure.”
As for the Liberals' condo presales idea, Kershaw said it would be a “worthwhile idea” to add it to the mix of housing policies.
Pavlov agreed it made sense to tax an investor for selling a condo they haven't lived in yet, although he would like to see exemptions for people selling due to unforeseen events such as a job loss.
Tom Davidoff, director of UBC's Centre for Urban Economics and Real Estate, disagreed with the Liberal idea, saying people who pre-buy condos absorb high risk before a unit is constructed, which helps finance the development.
What will voters think? That's impossible to know.
A few residents have taken legal action against the province, saying the tax unfairly targets them. But a January Research Co. poll shows three-quarters of British Columbians agreed with the speculation tax.
So, ending the tax might be a hard sell on the campaign trail.