Attorney General David Eby, (left), and Premier John Horgan look on as Finance Minister Carole James delivers the budget speech from the legislative assembly at Legislature in Victoria, B.C., on Tuesday. (Photo by THE CANADIAN PRESS)

B.C. unveils housing plan that raises foreign buyers levy and taxes speculators

VICTORIA — British Columbia is raising its foreign buyers tax and expanding it to areas outside of Vancouver, while bringing in a new tax on speculators, as part of a sweeping plan to improve affordability in the province’s overheated housing market.

The New Democrat government unveiled a 30-point housing plan in its first full budget on Tuesday that also increases the property transfer tax and school tax on homes over $3 million, and invests $6 billion in building 114,000 affordable homes over the next decade.

“Our intent is to bring stability to housing prices with these changes and have revenues to invest in building affordable housing,” said Finance Minister Carole James in a speech to the legislature.

“We recognize these are bold actions. But that’s what B.C.’s housing crisis demands.”

The previous Liberal government introduced a 15 per cent tax on homes purchased by foreigners in the Metro Vancouver area in 2016. Sales slowed for several months before rebounding and prices continue to rise.

The minority NDP government will increase the tax to 20 per cent and expand it to the Fraser Valley, central Okanagan, the Nanaimo Regional District and the Victoria area. The changes take effect on Wednesday.

The speculation tax will be introduced this fall. The annual property tax will target foreign and domestic homeowners who do not pay income tax in B.C, including those who leave homes vacant. So-called satellite families, or households with high foreign incomes that pay little provincial income tax, will also pay the tax.

Up-front exemptions will be available for most principal residences, long-term rental properties and certain special cases, so most homeowners in B.C. will not pay the tax, James said.

“This tax will penalize people who have been parking their capital in our housing market simply to speculate, driving up prices and removing rental stock,” she said.

In 2018, the tax will be $5 per $1,000 of a property’s assessed value. In 2019, the tax rate will rise to $20 per $1,000 of assessed value. It will initially apply to Metro Vancouver, the Fraser Valley, the Victoria-area, the Nanaimo Regional District, Kelowna and West Kelowna.

A non-refundable income tax credit will also be introduced to offset the new tax, providing relief to people who do not qualify for an up-front exemption, but who pay income taxes in B.C.

Cameron Muir, chief economist of the B.C. Real Estate Association, said he is concerned the tax would affect B.C. residents who have vacation properties or second homes. The credit may not be enough to offset the tax they have to pay, he said.

It’s also unfair to penalize people from other provinces who own vacation homes in B.C., Muir added.

“That’s a really big tax increase for Canadians who have done nothing wrong but own recreation property in one of Canada’s most amenable climates,” he said.

Asked whether out-of-province owners of recreation properties in B.C. would have to pay the tax, James said the government was still considering possible exemptions.

The government also moved to close loopholes that allow people to skirt tax laws. It’s building a database on pre-sale condo assignments and a beneficial ownership registry that it will share with tax authorities.

The plan also addresses supply through what the government says is the largest investment in housing affordability in B.C. history — more than $6 billion over 10 years to deliver 114,000 homes. That includes more than 14,000 rental units, 1,750 units for Indigenous people and 2,500 homes for the homeless.

It will also increase a grant for elderly renters and expand a program that helps low-income families.

The government said it’s working with municipalities to develop new tools, such as rental zoning, and creating a new office through BC Housing to partner with non-profits and developers to build affordable homes.

Thom Armstrong, executive director of the Co-op Housing Federation of B.C., applauded the government for taking “critical steps” to address supply and affordability. While measures like the foreign buyers and speculation taxes don’t directly affect his members, he said anything that cools the market helps.

“Anything that moderates demand in the market and has a dampening influence on prices will help the overall situation that our members and clients face,” he said.

Recent statistics from the Real Estate Board of Greater Vancouver show the average price of a detached home was $1.6 million and the average price of an apartment was $665,400. Vacancy rates for renters are at one per cent or lower in most cities across B.C., including Victoria and Kelowna.

Just Posted

Is the fate of Red Deer’s Parsons House solely in the hands of the province?

Demolition of old police station next door to begin this fall

Fundraiser to help keep kids warm in Blackfalds

Community Warmth Fall Fundraiser

Piper Creek Foundation gets a new name

Red Deer subsidized housing program for seniors

Reveen returns to Red Deer

Presented by Friends of Red Deer Regional Hospital

2019 Winter Games will transform Red Deer: Olympic organizer

Team leader behind 2010 Vancouver Winter Olympics provides inspirational pep talk

WATCH: Red Deer students take part in annual run

Dawe/St. Pat’s Run reaches 40th anniversary

Smile Cookie fundraiser campaign for Reading College kicks off

Fundraising campaign runs Sept. 12-18 for program that helps children improve their reading

‘Nightmare that won’t end’: Storm evacuees can’t return yet

WILMINGTON, N.C. — Hundreds of people waited in long lines for water… Continue reading

New bridge collapses into river in rural Saskatchewan hours after opening

HYAS, Sask. — A rural politician in eastern Saskatchewan says he’s at… Continue reading

Halifax researchers tag great white shark in Atlantic Canada for first time

HALIFAX — For the first time in Atlantic Canadian waters, scientists have… Continue reading

Liberal riding association president blindsided by MP’s defection

OTTAWA — The president of an Ontario Liberal riding association says he… Continue reading

Pope gives bishops more decision-making options

VATICAN CITY — Pope Francis decreed on Tuesday that ordinary Catholics should… Continue reading

Hurricane rating system fails to account for deadly rain

TRENTON, N.C. — When meteorologists downgraded Hurricane Florence from a powerful Category… Continue reading

Glad company: Trailer for Disney’s ‘Mary Poppins Returns’

LOS ANGELES — A beloved nanny is preparing to take to the… Continue reading

Most Read