(REBGV) Housing was the dominant issue in the recent provincial budget.
The government released a 30-point housing strategy aimed at reducing housing demand, curbing tax fraud, building affordable housing, and increasing security for renters.
New tax measures include increasing property taxes and property transfer taxes on residential properties valued above $3 million, expanding the foreign buyer tax, and implementing a housing speculation tax.
“We welcome the provincial government’s commitment to address money laundering concerns and increase the supply of affordable, social, and rental housing in our province,” Jill Oudil, Board president said. “We’re concerned, however, about the series of tax measures announced. The budget introduces new taxes, hints at future taxes, and hikes existing taxes on housing. Taxes don’t make homes more affordable.”
Below is a summary of the key real estate measures announced in the February 20 budget. There’s considerable information to go through. We’re analyzing each item to understand the implications to you and your clients and will report back with more information and analysis in future communications.
The province will:
Foreign buyer tax
Property Transfer Tax
Effective Feb. 21, 2018, the Property Transfer Tax on residential properties above $3 million will increase to five per cent from three per cent.
Provincial School Tax
Beginning in 2019, the provincial school tax will increase on most residential properties in excess of $3 million.
Database on pre-sale condo assignmentsThe province will require developers to collect and report comprehensive information about the assignment of pre-sale condo purchases. The information will be reported to a designated government office and shared with federal and provincial tax authorities to ensure taxes are paid.
Online accommodation PST and MRDTOnline accommodation platforms are enabled to collect and remit the Provincial Sales Tax and Municipal and Regional District Tax (Hotel Room Tax).
Property tax treatment for ALR landAs part of the Agricultural Land Reserve (ALR) review, the province is examining residential land in the ALR to ensure land is used for farming.
Clarity of property ownership
Compelling access to MLS®The province plans to enable tax administrators to compel access to information relevant to property transfers, such as information held in a MLS® database. (We’re asking government for clarification.)
Beneficial land ownership registry
The province will require additional information about beneficial ownership on the PTT form.
Administered by the LTSA, the information will be publicly available and shared with federal and provincial tax and law enforcement authorities.
Legislation will be introduced to require BC corporations to hold accurate and up to date information on beneficial owners in their own record offices and make it available to law enforcement, tax and other authorities.
Task force on money laundering and tax evasion
The province will work with the federal government to formalize a multi-agency working group on tax evasion, money laundering and housing.
Railtown might not be the next Yaletown, but the thin strip of gritty industrial on the lower Downtown Eastside is catching its share of trendy developers.
FRANK O'BRIAN (BUSINESS IN VANCOUVER) Railtown is north of Alexander Street, south of the rail tracks and bordered by Gore Street to the west and Princess Street to the east.
Once known as Japantown, it was first established as a heavy manufacturing zone linked to Vancouver rail and port access.
However, a May 2017 City of Vancouver zoning change has increased the area’s density and expanded the industrial definition to include a range of high-tech, creative manufacturing and other light-industrial uses.
As in Mount Pleasant, which has similar but less generous density, the zoning change has attracted commercial developers to Railtown.
Mount Pleasant is zoned for a floor space ratio (FSR) density of 3 while Railtown has been granted a 5 FSR density, explained Boe Iravani, a real estate broker with Cushman & Wakefield.
Railtown developers are also allowed to include light industrial in an entire project; zoning in Mount Pleasant requires that 80% of new space be offices.
Land values are lower in Railtown than in Mount Pleasant, and Iravani added that the higher zoning density translates into a less expensive cost per buildable square foot of commercial space.
Currently, Railtown would be around $200 to $250 per square foot buildable, while Iravani said Mount Pleasant would be north of $300. “Basically you can build four storeys in Mount Pleasant, but developers can go to five floors in Railtown in new builds [depending on the lot size].”
An example is Maker Exchange, the largest of three new projects now underway in Railtown. The five-storey, 152,000-square-foot Omicron and Rendition Developments industrial complex is designed for creative, digital and other light industry.
Being built at 488 Railway Street on the site of an old boiler factory, it received city permit approval December 17, subject to conditions.
It has some of the largest floor plates (25,000 square feet) of any new commercial building in the city and is the largest industrial project being built in East Vancouver, Iravani said.
Maker Exchange is expected to be completed by 2020.
New Class A space in Railtown is expected to lease in the $30 to $35 per square foot range, similar to Mount Pleasant or False Creek Flats Class A, but less than the downtown office average, which is north of $45.
CANADIAN PRESS /HUFFINGTON POST - "The principle of union is that there is strength in numbers of the people who are affected."Rising rental costs, evictions and a scarcity of units in Vancouver's densely populated West End were among the reasons for Gail Harmer's decision to join a group that is taking a new approach to advocating for the rights and protection of tenants.
The Vancouver Tenants Union formed last spring in response to a growing number of renters who say they fear eviction or being priced out of their homes and neighbourhoods. The group's membership has grown to nearly 1,000 people across the city.
Harmer said while she's been "exceptionally lucky" in having no problems with her tenancy, she joined the union to help those around her who fear eviction as landlords change and their units and buildings fall into disrepair.
"The principle of union is that there is strength in numbers of the people who are affected," she said.
Wendy Pedersen, a steering committee member, said the union was formed to help educate renters about their rights and provide practical and emotional support to people in disputes with their landlords.
"Even if people know their rights they can't make complaints or push back too hard against their landlord without risking eviction and backlash of various forms," she said. "When they come together as a group, they are way more secure."
In 2011, more than 50 per cent of Vancouver households were rentals, says Statistics Canada in the latest numbers it has available.
"The housing crisis is out of control and so many people are getting pushed out of their homes," she said.
The group initially formed to support low-income renters in rundown single-room accommodations in the city's Downtown Eastside, but Pedersen said the need for a citywide union became apparent as more people contacted them outside the area looking for help.
Regulations in B.C. cap annual rent increases for an existing tenant in a unit, but landlords are free to raise rents by any amount when a renter moves out. Pedersen said that gave landlords an incentive to take advantage of loopholes in the regulations by flipping leases or giving notice of their intention to renovate or redevelop a site to push out tenants.
"When someone moves out the rents are jacked up two or three times higher, or beyond what people can afford," she said.
Landlords don't always educate themselves on regulations
The union has rallied around some tenants facing eviction over renovations and successfully helped them keep their homes, Pedersen said.
David Hutniak, chief executive officer of LandlordBC, said it's frustrating to see some landlords abuse regulations to increase profits.
"That is not how the industry operates. It's certainly not best practice," he said.
The bulk of rental housing in B.C. is secondary units, such as basement suites or condominiums bought and rented as investment properties, Hutniak said. Unlike landlords whose sole business is renting apartments, these landlords don't always educate themselves on the regulations.
"It just never ceases to amaze me that someone decides to do a rental and they don't know what the heck the Residential Tenancy Act is. I mean, why would you expose yourself to that kind of risk?" he said. "You're not going to know your customers' rights and responsibilities either."
LandlordBC launched an online registry last year for landlords to promote themselves and learn about the regulations in the process of signing up for the service, Hutniak said.
B.C.'s New Democrat government closed a number of regulatory loopholes in recent months.
Hutniak said the changes were needed as loopholes were increasingly abused by some landlords in recent years, tarnishing the industry.
"That was a very important and significant change," he said.
The changes were also welcomed by the Tenant Resource and Advisory Centre, but spokeswoman Zuzana Mudrovic said with skyrocketing land values and demand outpacing supply, prices will only go up.
"It's just the natural consequence of capitalism," she said. "What would prevent that? In the absence of a rent freeze, I'm not sure."
Better systems in Quebec, P.E.I.: Pedersen
The Vancouver Tenants' Union wants to see a freeze and stricter long-term controls that would prevent significant increases between tenant turnovers.
Pedersen said there are better systems in Quebec or Prince Edward Island, where rent control applies to housing units, not people, so the cap remains in place when tenants change.
But Hutniak said freezing rental prices would only dissuade the development of more properties, which is desperately needed to improve affordaiblity.
"If we had a three or four per cent vacancy rate, (we) wouldn't be having this conversation," he said.
The Canada Mortgage and Housing Corp. reports vacancy rates in 2017 fell below two per cent for many cities including Metro Vancouver, the Greater Toronto Area, Ottawa, Charlottetown, Victoria and Kelowna, B.C.
The agency said while availability shrank in those cities, prices climbed.
The average cost of a rental unit in Kelowna last year was $1,045 a month, an 8.6 per cent increase from 2016.
The only exception was Charlottetown, where the province imposed a cap and average rents remained steady between 2016 and 2017 at $825 a month.
Countrywide, the federal agency said average vacancy rates in cities last year fell to three per cent in October, down from 3.7 per cent a year earlier.
Federal strategy can't solve all problems
The federal government announced its national housing strategy in November, promising to build 100,000 new units and upgrade 300,000 existing ones over the next decade.
"We do know that it won't settle all the problems for the housing needs across the country," said Mathieu Filion, communications director for the federal minister of social development.
"But this is significant money, significant units, significant results that we hope to get with that strategy."
Filion said the strategy also includes incentives for private partnerships to build beyond the government's target.
Housing researcher David Hulchanski of the University of Toronto said the government's commitment will fall short of meeting the country's housing needs.
Before the 1990s, the federal government was building 20,000 to 25,000 social housing units annually in addition to subsidies for private rental developments, Hulchanski said.
That building rate barely kept up with the need then and outpaces the total units proposed by the current strategy, he said.
Rental developments are not money-makers compared with the potential earnings for condominiums, Hulchanski said, meaning it's unlikely private developers will fill the gap even with the proposed incentives.
"The market can't do housing for low income people and we're leaving it to the market," he said.
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