The Budget News for 2018 in BC was released as of yesterday, February 20, and it addressed housing affordability issues in our province with some BIG changes being made.
Selina Robinson, Minister of Municipal Affairs and Housing, stated that providing affordable housing is currently one of the biggest challenges affecting British Columbians today. The provincial government has outlined their plans that are supposed to crack down on speculators (foreigners and non-BC residents taking maximum advantage of the upward price movements of our real estate market) and give some relief when it comes to the high demand for housing in our province.
They proposed to create a fairer and more stable housing market by increasing the foreign buyers tax rate (additional property transfer tax) from 15% to 20%, as they felt it wasn’t a high enough amount to stabilize the housing market. The government claims that foreign demand is still putting pressure on our housing stock, and that by increasing the foreign buyers tax an additional 5% they hope to discourage foreigners from buying residential property in BC when they don’t intend to move here.
However, this tax also applies to foreign buyers who intend to become BC residents and the ‘Homes For BC’ document issued by the provincial government stated that, “foreign buyers should contribute to our society in return for the high quality of life they enjoy when they move to BC.”
Starting in the fall of 2018, the government will also be taxing speculators who live in Canada, but are residing in a different province and don’t pay BC taxes. This will include anyone who leaves their property sitting vacant, as they are part of what is driving up our housing costs.
This tax will apply to all of Metro Vancouver, Fraser Valley, Capital and Nanaimo Regional Districts, and the municipalities of Kelowna and West Kelowna. Blanketing the tax over such a broad area was to avoid the possibility that speculators would still try to evade the new tax by simply buying in places neighbouring Metro Vancouver. The tax is intended to help return the real estate market to one that serves the people living here, rather than speculators.
Also being raised are taxes on some of the province’s most expensive homes. Any residential properties with a fair market value over $3 million will have an increase in property transfer tax from 3% to 5%. (It is currently at 2%)
Starting in 2019, these same properties will also receive an increase in school tax:
- 0.2% additional school tax on the residential portion between $3 million and $4 million
- 0.4% addition school tax on the residential portion assessed over $4 million
These school taxes are part of our yearly property taxes and share in the cost of providing education in BC.
The government states, as well, that it will create 114,000 new affordable homes by investing $6.6 billion over the next ten years to fill current gaps in the market, such as homes for for growing families, seniors, and students.
Although the provincial government says they will continue working to create more affordable residential properties and overcome the challenges that we face with our BC housing market, can they keep up with the ever-growing demand for homes and how this effects the costs of buying or selling?
We would love to hear what you think about the changes - and if you have any questions at all, then remember we’re only a phone call away!