BUILDING ON ANXIETY OVER HOUSING
Sensing opportunity, Liberals tout a tax on condo presales to restore affordability
The housing crisis was the No. 1 issue for Metro Vancouver residents in the provincial election of May 9, 2017.
And even though the housing market has changed in many ways, including because of COVID-19, it's still a hot subject for voters.
A September poll by Angus Reid shows the B.C. NDP getting high marks on how they're handling health care, the economy and the pandemic, but lower ratings from Metro Vancouverites on the ongoing housing crunch.
That's different from two years ago when the NDP won overwhelming support, according to Angus Reid, for strengthening the foreign buyers tax to 20 per cent, for promising to collect information on the real identity of home buyers and for bringing in the “speculation” tax on unoccupied dwellings.
Sensing an opening, B.C. Liberal Leader Andrew Wilkinson has come out of the campaign gates declaring the NDP's speculation and vacancy tax is “phoney” and claiming it doesn't address speculation.
Wilkinson, the MLA for Vancouver- Quilchena, would kill the surcharge on homes and condos that people leave vacant more than six months of the year and replace it with an extra tax on profits from condo presales.
David Eby, the attorney general who represents the adjacent west-side riding of Vancouver-Point Grey, stands behind the housing policies he has been instrumental in pressing for since at least 2014 and, once elected, cementing into place.
Eby claimed this week the B.C. Liberals only brought in the 15 per cent foreign buyers tax in 2016 because they were forced to by voters outraged to find themselves in a city ranked among the most unaffordable in the world, with a huge gap between local wages and house prices.
“The Liberals were in denial about what was happening in our housing market for so long. And that's because they're so closely tied with developers who have catered to the international market and made fortunes selling functionally useless condos for people on the international market,” he said.
“We're trying to put a crimp in that business. We're trying to build houses for local families who live and work here, wherever they come from,” said Eby.
The NDP, he said, has no intention of getting rid of the foreign buyers tax.
And it turns out neither do the B.C. Liberals, whose housing critic, Todd Stone, said Thursday his party would retain it.
But Stone argued the speculation and vacancy tax, which the NDP says is designed to encourage investors holding vacant properties to rent them out, is “actually a wealth tax and unfairly taxes British Columbians and Canadians” who are among the one per cent of homeowners who end up having to pay it.
The speculation tax discourages housing developers, Stone said, since it adds to a “multitude of other taxes and regulatory hurdles.”
Condo presales, he said, “are already way down.”
The B.C. Liberals will soon release their housing platform, Stone said, and it will emphasize “really boosting supply” to create affordability. “We're not building housing fast enough.”
The NDP and Liberal politicians made their pitches at the same time that COVID-19 has reduced by about half the number of domestic and foreign students coming to Metro Vancouver universities, colleges and language schools. That's made it a bit harder for some landlords to find tenants.
Eby, however, underlines that the current situation is temporary since a full complement of students will return soon, with Friday's news that starting Oct. 20 international students will be allowed to return to their campuses if they're attending a designated learning institution that has a strict COVID-19 safety plan in place.
The speculation and vacancy tax may not be ideal, Eby says, but it was “credited by the Canada Mortgage and Housing Corporation with bringing 11,000 rental units onto the market. That's a huge impact. I was talking to one of my constituents who said there were four houses that used to be vacant on his street that now have families in them.”
The data shows Eby that investors, many of whom don't pay significant income taxes in B.C., are still driving up pressure on Metro home prices. Since housing prices are only down moderately from 2018 in Metro Vancouver and going through an unpredicted jump here and around the world during the pandemic because of low interest rates, Eby acknowledged “we've still got work to do.”
Stone, however, believes it would simply be more effective to restrict speculation by slapping a 50 per cent tax on the flipping of presale condos, which is “literally selling the piece of paper” that constitutes a sales contract on a dwelling that hasn't even been constructed yet.
There is a less-discussed advantage of the speculation tax form, however, Eby said. It makes it possible to catch people “who are lying on their declarations that this is their primary residence.”
That crucial information, said Eby, who launched a public inquiry into money laundering, is now available to Revenue Canada for audits “and is helping red-flag people who are spending more than they're declaring on their income tax.”
For his part, Eby also looks forward to the spring launch of the beneficial ownership registry, which he considers “quite a big deal, because it means you'll actually have to declare who the real human is who owns the property.”
The beneficial ownership registry will not only satisfy what Eby called “salacious interest from the U.S. press about who owns the condos in the Trump Tower,” it will aid Canadian and international tax investigators, journalists and law enforcement officials.
This is a piece of legislation on which the two parties agree, with Stone saying the ownership registry is a “very sensible policy” that will help lawmakers “know what's really going on in B.C. real estate.”
David Eby, attorney general and MLA for Vancouver-Point Grey since 2013, was instrumental in the development of the speculation and vacancy tax.