With less than a week to go until the provincial election on Tuesday May 9, let’s recap, compare and critique key elements of the various different housing policies from the three parties. First up, in part one of three, the BC Liberal Party.
The incumbent Liberals have pretty much already made their big moves, both to intervene in the province’s hot real estate market and in terms of future “affordable” housing investment promises (for “affordable” read “social” – non-market rental for qualifying BC residents). Here’s the rundown.
· Foreign buyer tax: a much-publicized 15 per cent additional Property Transfer Tax imposed on foreign nationals or overseas corporations upon purchase of Metro Vancouver residential real estate. Following a controversial hard launch in August 2016 that caused a lot of collateral damage, the rules have rightly been softened to exempt buyers with work permits. It also doesn’t seem to have done any permanent damage to house prices, with buyers returning to higher-priced detached homes in the past few months, and lower-priced condos continuing to fly off the shelves. It’s also worth noting that the government has not ruled out the possibility of further amendments to the foreign buyer tax if they were to be re-elected.
· BC HOME loan program: a $700 million initiative to offer many first-time home buyers a loan that matches their own down payment funds (more on this here). Since the February 2017 launch, many hundreds of applicants have been approved for a loan and, although it has come under fire for potentially pushing up prices, it seems to have been a widely popular move.
· Property Transfer Tax (PTT) breaks: First-time home buyers are now exempt from PTT up to $500,000 purchase price (details here) and buyers of new homes under $750K are also exempt from PTT, with restrictions (details here). Considering that new home buyers are subject to GST, and new homes tend to be more expensive, the latter move seemed to many as a way for the Liberals to support the development industry more than home buyers.
· The Liberals have also pledged $920 million to create 5,300 new units of affordable rental housing for seniors, low-income residents and families, and other underprivileged groups. This is a huge investment, but with the foreign buyer tax only expected to bring in $150 million a year (and that seems optimistic), plus those PTT breaks being offered, it is unclear where that funding is coming from.
· The party says it wants to streamline real estate development processes so that developers can build homes faster and ease the supply shortage, adding that it will “work with municipal governments” to achieve this. Another good aim in theory, but in practice it does not (yet) specify any measurable results. It would be great to see an hard goal of housing units for each municipality, so that the all levels of government can be accountable for this – hopefully that will come.
· The Liberals also say they will expand a home renovation tax credit plan to provide up to $20,000 to allow homeowners to build rental suites. The party says the program will help homeowners pay down mortgages and increase rental supply. Another good idea, another grey area in terms of funding.
Despite the Liberal’s talk of massive social housing investment, it’s still largely the foreign buyer tax that seems to capture the voting public’s attention. With a general sentiment from the Liberal party that the tax has done what it was supposed to do (that is, to quell the runaway high-end market for a while), it’s possible that the BC Liberals could further soften the tax or even remove it if they were re-elected. However, with Canada’s dollar falling and local real estate “on sale” to overseas buyers, even with a tax in place, it’s looking unlikely that the Liberals would need to make that move.
Next up: NDP’s housing platform