It’s a start, at least. And on the surface, it looks surprisingly bold. But it remains to be seen whether the 30-point housing plan British Columbia Premier John Horgan’s government unveiled Tuesday will begin to expunge the pathologies that have turned Metro Vancouver’s real estate market into an international housing affordability basket case and a global playground for white-collar criminals and fentanyl tycoons.
It may well be that the suite of measures outlined in the first full budget of Horgan’s seven-month-old government will start to remedy the most obviously ill effects of high-stakes real estate speculation, shadowy foreign investment rackets, massive tax evasion and money-laundering. It could be, too, that the measures will merely end up allowing the New Democratic Party government to get in on the action, like its Liberal Party predecessor did, except in its own way.
What is certain—and it has come as a delight to many West coast housing activists—is that after more than a decade of willful neglect by provincial and municipal politicians, and out of a political culture of persistent denial, indifference, self-dealing and outright corruption, there appears to be a government in Victoria that is giving the province’s distorted, overheated and out-of-control real estate business some long overdue attention.
“I’m not happy, but I’m not sad, either,” said Andy Yan, the director of Simon Fraser University’s City Program whose data analysis and public advocacy helped to shame Victoria into acting. “This will not make Vancouver affordable. But this is a nightmare we’re coming out of. It’s going to take more than one provincial budget to unwind the machine.”
Yan noted that in delivering the budget Tuesday, Finance Minister Carole James stressed that the immediate objective of the government’s housing strategy is to restore some semblance of stability in the out-of-control market. James promised to “moderate” and to “stabilize” house prices.
“At least they’re not over-promising,” Yan said. “But the NDP has at least stood up. The hard work is still ahead of us.”
The main features of the plan are a speculation tax, a ramped-up foreign buyers’ tax, and a new property transfer tax—all estimated to bring in about $750 million over the next three years—along with measures to reveal the identities of the beneficial owners of real estate who buy and sell properties but don’t show up on land title registries. There’s also an ambitious supply-side component, involving a $1.6 billion, three-year investment in rental assistance and 114,000 new units of rental housing, and non-profit, co-op and conventional market housing.
The speculation tax is aimed at local profiteers and the out-of-province investors and “satellite families” who buy up housing stock and leave the homes empty, or vest nominal ownership in a “homemaker” or “student” who pays little if any taxes. “This will penalize people parking their capital in our housing market simply to speculate, driving up prices and removing rental stock,” said James.
Vancouver’s rental vacancy rate has fallen below one per cent. At least 20,000 Vancouver homes are vacant, and nearly 25,000 Vancouver households are declaring a taxable household income that is less than their outlay in property taxes, utilities and mortgage payments. Transparency International estimates that perhaps half of Vancouver’s high-end residences are now owned by shell companies or trusts.
The existing (and largely ineffectual) 15 per cent Metro Vancouver foreign buyers’ tax rises to 20 per cent, and along with the other new taxes it will now apply throughout Metro Vancouver, Victoria and Nanaimo on Vancouver Island, as well as the Fraser Valley and the Kelowna area. The new 5 per cent property transfer tax will target sales of homes worth $3 million and up.