Renters, businesses on hook for BC homeowners’ subsidy bill
Posted January 12, 2017 6:03 pm.
This article is more than 5 years old.
VANCOUVER (NEWS1130) – The BC government’s decision to lower the homeowner’s grant will cost renters and businesses millions, according to a local real estate economist.
On Tuesday the Ministry of Finance raised the maximum value of a home that qualifies for the subsidy to $1.6 million, from $1.2 million. The bump means 83 per cent of Metro Vancouver homes will qualify and reduces the taxes on a principal residence by as much as $570 a year.
“It was bad policy,” says Thomas Davidoff, head of UBC’s Centre for Urban Economics and Real Estate. “That just gives money to homeowners from the general revenue so that just means you’re taking money essentially from renters, businesses and people in expensive homes and giving it to people in moderately expensive homes.”
The provincial government says the change was to help seniors on fixed incomes, but Davidoff says they have other options like tax deferral.
“I don’t think they have the economy or housing affordability in mind since they’re subtracting money from renters. That leaves politics,” Davidoff says, pointing to May’s provincial election.
Davidoff also questions the new first-time buyers’ grant of up to C$37,500 towards a down payment because he fears it will encourage potential buyers to take on risker mortgages. He believes both plans will counteract some of the effects of what he thinks are better policies like the foreign buyers and vacant homes taxes.
“I think the government is taking a couple small steps to microwave up a cooling market” he says. “I think net, it’s going to come out of the microwave a little cooler than it would have been without the 15 per cent (foreign buyers) tax.”
