Neil Sharma
REP
British Columbia’s Finance Minister Carole James may have announced amendments to the speculation tax, easing the levy on out-of-province Canadians, but Royal LePage says not enough was done and it anticipates damage to the province’s housing sector.
“There will be a big problem for the economy in B.C. if Albertans go away,” said Phil Soper, Royal LePage’s CEO. “They own a lot of real estate in British Columbia, and have forever.”
Royal LePage’s advisor survey determined that British Columbians would bear the brunt of the speculation tax, which is set at 2% for non-residents and half of that for out-of-province Canadians.
“What they’re saying is the impact on the British Columbian economy and properties will be negative and they’ll bear the brunt of the new tax regime,” said Soper. “Number two is Canadians—mostly Albertans—and number three is foreign buyers.”
James recently announced that out-of-province Canadians can avoid the 1% tax by renting out their properties.
But according to Soper, major British Columbian cities like Kelowna will take a major hit.
“The tax was brought in to target home flippers and foreigners, but in fact it will be British Columbians and other Canadians. This is very troubling for local residents in cities like Kelowna. Approximately 15% of property in Kelowna is owned by Albertans, and an exodus would hurt the economy and property values, and people in Vancouver who own property there will want to sell because they don’t want to be stuck with devalued property. It was more harmful than intended.”
Sotheby’s International Realty Canada’s president and CEO Brad Henderson says that, while the details released by James are still murky, he expects a dampening effect on residential real estate in the province, including in its luxury market.
“Some significant investors in B.C. real estate are Calgarians, and Albertans in general, and this will be a penalization for them,” said Henderson. “I think there will definitely be a decrease in activity, meaning the number of homes bought and sold, and a decrease in the number of people who need to sell their homes. There will also be a dampening in prices over next little while, but it’s tough to say by how much.”
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