Taking ideas from Metro Vancouver and trying to apply them around the province is a risky business, as B.C.鈥檚 urban-focused NDP government is finding out.
They鈥檙e trying to live up to their election rhetoric about solving the urban housing shortage by managing supply and demand. Step one is deploying modular housing, mostly in an effort to get a growing population of urban drug addicts out of tent camps.
Their grand election promise to get more than 100,000 new residential units constructed remains far off. It is apparently based on a long-held NDP myth that the government builds housing. It doesn鈥檛, except perhaps for the glorified shelter spaces that proliferated under the previous B.C. government and continue to be rolled out today.
In general, property developers and the construction industry build housing, if they can ever get approval from local governments to do so. And in those urban areas with the highest housing costs and lowest rental vacancy rates, the construction industry and skilled trades are already flat out building more to meet the demand.
In 2016, the B.C. Liberal government brought in a 15-per-cent additional property transfer tax for foreign buyers of real estate. It was restricted to Metro Vancouver, where mostly in Vancouver and Richmond, Asian buyers were snapping up new condos and high-end houses, pushing real estate beyond the reach of B.C. residents working middle-class jobs. That tax led to a short-term slowdown of prices.
Vancouver city council added their own 鈥渆mpty homes tax,鈥� primarily to target Asian investors parking their capital in downtown condos. This is the model for the B.C. NDP鈥檚 鈥渟peculation tax,鈥� announced in February by Finance Minister Carole James and set to take effect by next year.
The idea is to force owners of vacant residences to put them on the long-term rental market, based on the assumption that they are real estate speculators. It will be extended to high-demand urban areas, Metro Vancouver, the regional districts of Fraser Valley, Greater Victoria and Nanaimo, plus the municipalities of Kelowna and West Kelowna.
James has been dealing with the fallout ever since. Opposition critics have taken to calling it the 鈥渃abin tax,鈥� landing on owners of vacation homes who don鈥檛 know how often they have to occupy them to avoid the tax.
Nanaimo regional district and West Kelowna were first to demand to get out of this scheme. They argue that new construction investment will simply move down the road across the arbitrary borders to avoid the tax.
Both B.C. Liberal leader Andrew Wilkinson and B.C. Green leader Andrew Weaver are livid. Weaver鈥檚 wealthy constituents with Gulf Islands getaways are not amused. Others want to know why Whistler was exempted, but not Parksville. James has put off clarifying the status of vacation homes until later this spring.
Wilkinson sees a darker motive.
鈥淲hat the NDP have done is called a speculation tax what is really an asset tax,鈥� Wilkinson said March 7. 鈥淲hat they want to do is slowly chip away at people鈥檚 equity in their homes. They鈥檙e saying for now it鈥檚 secondary homes, but not sure if it鈥檚 applying to foreigners only, not sure if it鈥檚 applying to Albertans.鈥�
Finance ministry officials quickly poured cold water on my news report suggesting Albertans might get a break on their Qualicum Beach or Okanagan retreats. If anyone gets protected, it will be B.C. taxpayers with second homes.
Once you get beyond the glass towers of Yaletown, this idea that governments can increase housing supply by force starts to look shakier by the day.
Tom Fletcher is B.C. legislature reporter and columnist for Black Press. Email: tfletcher@blackpress.ca
tfletcher@blackpress.ca
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