Housing affordability has reached a crisis level in our province

Steve Randall
REP

A coalition called Canadians Against the BC Speculation Tax is hoping to raise $300,000 to take on the British Columbia government’s tax on vacant properties.

The group has launched an online fundraising campaign and says it will use the funds to fund its campaign to urge the government to withdraw the tax, which it says unfairly penalizes those with second homes used for recreation, retirement or employment purposes.

The residents’ group says if the government won’t listen then it will bring a class action against the government.

BC housing minister Carole James refused to back down on the tax when she spoke to reporters Thursday.

She also hit out at critics, posting on Twitter:

“Housing affordability has reached a crisis level in our province. While some may prefer that the status quo continue, we’re taking action to rein in an out-of-control housing market.”

While those opposed to the tax cite unfairness and the number of BC residents who will be subject to the tax, others suggest that the government has got it right.

Graeme Egan, president of Vancouver-based CastleBay Wealth Management told the Vancouver Sun that the tax on properties used as an investment is no different to investors paying taxes on other investment assets.

He also noted that those who are renting out their properties are exempt from the tax.

For those who have a second home purely for family use, Egan says that they must be “pretty well off” and will therefore not be heavily impacted by the tax.

Copyright © 2018 Key Media Pty Ltd

The legal challenge against the BC government?s foreign buyers tax slated for June

Neil Sharma
REP

The legal challenge against the B.C. government’s foreign buyer tax is slated for June, and West Coast sales agents will be keeping a close eye on it.

“There needs to be some kind of control that keeps people from buying up everything in Vancouver, but I think it’s an unfair tax,” said Pete Shpak, an associate broker with MLA Realty, who fields the occasional call from American buyers.

“I had clients from Bellingham, Washington, who bought a presale condo and waited three years for it to be ready—they were an older couple who were ready to retire and wanted to spend half their time in Vancouver—and before it was complete they were hit with this 20% tax. This is an older couple.”

A Chinese citizen named Jing Li has launched the motion against the province, claiming the tax—recently increased from 15% to 20%—contravenes foreign treaties, and is both discriminatory and illegal. It’s also speculated that the suit could snowball into a class action lawsuit.

Shpak’s clientele is mostly local, but he counts the odd foreign buyer, usually from the United States, among them. Or at least he used to.

“I’ve helped Americans in the past, and those phone calls don’t occur as much as they used to,” he said.
“When they do call, I ask them if they’ve heard about the foreign buyer tax and they often say they haven’t, and the conversation stops there.”

Shawn Anderson of the Engel & Völkers VANCITYliving will be following the case closely because the government could be on the hook to return large sums of money.

“I know Tom Davidoff [who submitted testimony on Li’s behalf], who’s consulting on this case, very well, and it will be interesting to see what pans out,” said Anderson. “It would be very unfortunate if the government had to return this money. But, if that’s the law, it is what it is.”

Anderson is leery of taxing foreign buyers because it won’t solve the any of the issues plaguing Vancouver. Moreover, the tax applies retroactively to purchases that hadn’t already been registered to the Land Title Office, and that rankles Anderson.

“I’m probably more against the tax because it won’t help with affordability,” he said. “It’s not going to turn a $4mln house into a $600,000 one; it won’t turn a $1mln condo into a $500,000 one, which isn’t affordable for a lot of people, either. There could have been other measures. I don’t like the way the tax was implemented because it was poor business practice to impose a foreign buyer ban on pre-existing contracts—that’s just wrong. They could have said something like ‘It’s effective from midnight onwards,’ but instead it’s retroactive. It’s like saying, ‘Hey, those shoes you bought last year, well, by the way, you owe us an extra 20%.’”

Copyright © 2018 Key Media Pty Ltd

With lower rate, British Columbians will contribute a third of the overall tax revenues

Joannah Connolly
Western Investor

Two-thirds of homes hit by the B.C. NDP’s speculation tax will be owned by British Columbians, finance minister Carole James said this week.

According to media reports, James made the revelation during a debate at the legislature, while quickly pointing out that 99 per cent of British Columbians won’t be liable for the tax.

James added that, with B.C. residents having a lower rate, their contribution to total speculation tax revenues will be about one third. The tax is expected to bring in about $201 million the each year, of which $140 million is projected to come from overseas or out-of-province owners, and approximately $60 million from British Columbians, said James.

B.C. Liberal finance critic Shirley Bond said, “It’s a very interesting choice calling this a speculation tax to try and deal with housing issues… No one in this room is disagreeing that we have a housing crisis. What we’re disagreeing with is this minister has labelled a tax a speculation tax, which could be much more accurately described as an asset tax.”

James took to Twitter after the debate to deliver a series of tweets defending the speculation tax, which is one of a lengthy set of housing policies that have been widely supported in polls by British Columbians.

Her tweets received mostly praise from users agreeing that those with more than one home should be taxed to help those with none, while some agreed with Bond about the tax’s misnomer.

The speculation tax is expected to become law in the legislature this fall

Copyright © 2018 Western Investor

Case Study 2: A multi-property investor

Canadian Real Estate Wealth

Vancouver-based Vivienne owns three properties across Canada. When she grew disillusioned with the fees and services she is getting from her property management company, Vivienne decided to research other options.

After taking a couple of weeks to explore the options, Vivienne switched to RentalMiles; it’s a seamless process that she can do on her phone after downloading the RentalMiles app. After switching property management companies, Vivienne quickly started to rack up rewards. Her Vancouver property rents for $1,800 a month and earns Vivienne 3,300 Air Miles that year as she received a signup bonus when RentalMiles launched, easily enough for a free return flight to Toronto

“At the end of the year Vivienne places her other places with RentalMiles and her licensed agents achieves rents of $1,900 and $2,200,” explains Jason Duncan, CEO of RentalMiles. “With three properties in the RentalMiles program, Vivienne’s loyalty jumps to Platinum Status. That year she earns 11,800 Air Miles from RentalMiles. Her property fees are lower, her Air Miles Status is Onyx and she manages every aspect of her portfolio on her smartphone.”

Vivienne often travels overseas for business and to visit family, so being able to manage everything from the app is a massive benefit. “It doesn’t matter where she is or what time zone she is in, Vivienne can contact the agents who look after her properties at any time,” Duncan says.

“She can contact those agents in real time by text, phone or email and discuss any concerns or issues. But, it’s a truly hands off full service management and Vivienne doesn’t have to have any communication with RentalMiles after the property is on the system and agents have done the initial inspection. After that she can check in if she wants or just tap a button in the app and get her annual or monthly financial reports. It’s all done on her behalf.”

“RentalMiles is a property and loyalty rewards management business. Our ecosystem is designed as a 100% digital platform managed through Apps & Websites and supported by a Global Concierge. Global Concierge puts a Concierge at the front door of every tenant and provides services to them that Independent Landlords (ILLS) rarely can. The Concierge also has the effect of removing many processes and tasks that distract professional Agents and take their time away from landlords and tenants e.g. maintenance tasks are outsourced and are not performed by RentalMiles.

At RentalMiles we believe in the rights of landlords & tenants and seek to reward both parties significantly for good behaviours. Our clients’ status increases the longer they stay with us, as do their earning rates for loyalty rewards. We use data intelligently so that tenants are encouraged to stay within the RentalMiles family and don’t start from scratch each time they rent. The behaviours we reward also benefit the landlord, so we’ve tried to create a new industry culture within residential property management, one where all parties benefit.”

Copyright © 2018 Key Media Pty Ltd

Yet another bank discounts variable mortgage rate

REP

HSBC says it is discounting its variable mortgage rate starting Thursday to a level that undercuts the recently discounted rates of other major banks, as competition in the space intensifies.

The bank says it will offer a five-year variable closed rate of 2.39 per cent, down from 2.49 per cent and 1.06 percentage points below its prime rate. It says there’s no end date but that the rate could change at any time.

HSBC’s lowered rate comes after TD Bank and Bank of Montreal started offering five-year variable closed rates of 2.45 per cent in recent days at a heavy discount to their prime rate until the end of May.

Scotiabank says it has also started lowering its rate to match the limited-time offer of its competitors.

The moves come amid slowing mortgage growth. The Canadian Real Estate Association said Tuesday that national home sales volume sank to the lowest level in more than five years in April, falling by 13.9 per cent from the same month last year. The national average sale price decreased by 11.3 per cent year-over-year.

Home sales have slowed due to various factors, including measures introduced by the Ontario and B.C. governments to cool the housing market, such as taxes on non-resident buyers.

Other headwinds for mortgage growth include higher interest rates and a new financial stress test that makes it more difficult for would-be homebuyers to qualify with federally regulated lenders, such as the banks.

The tighter lending rules are making it harder for homebuyers to qualify for uninsured mortgages and shrinking the pool of qualified buyers for higher-priced homes, CREA’s chief economist Gregory Klump said in April.

Meanwhile, Canada’s largest lenders all raised their benchmark posted five-year fixed mortgage rates in recent weeks as government bond yields increased, signalling a rise in borrowing costs.

In turn, the central bank’s five year benchmark qualifying rate _ which is calculated using the posted rates at the Big Six banks _ increased last week to 5.34 per cent. This qualifying rate is used in stress tests for both insured and uninsured mortgages, and an increase means the bar is now even higher for borrowers to qualify. 

The Canadian Press

Copyright © 2018 Key Media Pty Ltd

Canadian city ranked top global luxury market

Neil Sharma
REP

Victoria, B.C. has landed the top spot on Christie’s global list of hottest luxury housing markets.

The real estate arm of the famed auction company says strong year-over-year sales growth and high domestic demand for housing catapulted the Vancouver Island community to lead a list of cities around the world on the annual list.

Trailing Victoria on last year’s list are San Diego and Orange County, Calif., followed by Washington D.C. and Paris.

Christie’s says the Victoria market earned such a high ranking because it is seeing an influx of buyers from the United States and China and sales rates that rival frenzied and neighbouring markets Toronto and Vancouver.

It says the average time it took to sell a luxury property in Victoria last year was only 32 days, down from 41 days in 2016, making it one of the most fast-paced markets in the world.

Christie’s also listed Toronto in the ninth spot on its list of most luxurious global cities for prime property and Muskoka, Ont. in the second position for its rankings of the hottest secondary home markets.

Copyright © 2018 Key Media Pty Ltd

B.C. residents who own several homes will be disproportionally hit

Rob Shaw
The Vancouver Sun

Almost two-thirds of those who pay the new housing speculation tax will be British Columbians, Finance Minister Carole James admitted Wednesday.

B.C. residents who own several homes will be disproportionally hit. About 20,000 of the 32,000 homes subject to the new tax will be owned by British Columbians and not foreigners or residents of other provinces, James revealed during a debate on her ministry’s spending plans in the legislature.

The homes are in all areas where the area the tax applies — Metro Vancouver, the Capital Regional District (excluding the Gulf Islands), Kelowna, West Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack and Mission.

The revelation brought immediate condemnation from the Liberal Opposition, who said a speculation tax that mostly hits B.C. residents should really be called an “asset tax.”

“It’s a very interesting choice calling this a speculation tax to try and deal with housing issues,” said the Liberal finance critic, Shirley Bond. “No one in this room is disagreeing that we have a housing crisis. What we’re disagreeing with is this minister has labelled a tax a speculation tax, which could be much more accurately described as an asset tax.

“These are British Columbians who have purchased a second home. Does that qualify them as a speculator? I don’t think so.”

But James offered no apologies, saying those regions are in the midst of an affordable housing and rental crisis and the purpose of the tax is to get people with vacant homes to rent them out or sell them. 

‘We believe they can contribute a little bit more,” said James. “They have the right, if they wish, to pay the speculation tax but they also have the ability to rent their place out.”

Owners are exempt from the tax if they rent their properties for at least six months of each year. There’s also a tax credit for B.C. residents with homes valued under $400,000. 

Though more British Columbians than foreign residents will be hit by the tax, they will overall pay less, James said. Of the $201 million the speculation tax is expected to generate annually for the province, $140 million is projected to come from foreign or out-of-province owners, and roughly $60 million from British Columbians, she said. That’s because B.C. residents will pay a rate of 0.5 per cent, compared to one per cent for Canadians from outside B.C. and two per cent for non-Canadians.

James said B.C. owners who buy more than one home and leave it vacant are, in fact, speculating on the rising cost of housing and hurting their communities. The speculation tax was part of a suite of reforms introduced in February’s provincial budget.

Bond countered that these B.C. owners are simply hard-working British Columbians who could afford more than one property.

“The individuals who struggle to find housing work hard in their communities as well,” said James. “There are individuals who could’t even dream of having one home never mind an additional home they leave vacant.”

© 2018 Postmedia Network Inc.

Eclectic inspiration showcased at Berkeley Village

Mary Frances Hill
The Province

Berkeley Village

Project location: 16433 19 Ave., Surrey

Project size: 183 two- and three-bedroom townhomes

Residence sizes and prices: Two- and three-bedroom homes ranging in size from 1,202 to 1,579 sq. ft., from the low $600,000 range

Developer and builder: Ikonik Homes

Sales centre: 2485 168 St.

Hours: noon to 5 p.m., Sat — Thurs

When she took on the interior design of the Berkeley Village new-home project in South Surrey, Lisa Hansen’s imagination brought her to faraway places and urban milieus.

Hansen and her Area 3 Design team paired the look of the thin silhouettes of northern European furnishings with the carefree vibe commonly associated with California at the project’s display space. Incorporating an urban edge into those two elements of the design was an exercise in creativity.
“I called [one] display home ‘LA meets Scandinavian design,’” says Hansen, the principal of Area 3 Design. She says she was attracted to the neutrals and blues that Ikonik Homes used to promote its planned community. Those shades were a great starting point for her to inject some bolder darker hues.
“The use of black plumbing fixtures, hardware, bathroom accessories and wallpaper was to create an urban edge and some drama, all the while maintaining a clean fresh canvas for the homeowner. Most of the colour in this home, geared to appeal to a young urban family, was added through the art, furnishing and the occasional accent wall.”

In another display space, Hansen created an atmosphere that was more eclectic and sophisticated, thanks to a white palette styled to suggest the lightness of a warm climate like that of Palm Springs or Los Angeles. She scattered everyday objects throughout the space to reflect the “real-life” surroundings of an engaged, busy homeowner.
“The homeowner in this display home would have been more established and have more time to spend on their hobbies, art, crafts, music, which you would have found referenced throughout the home.”
Simplicity meets comfort in one bedroom, where a plush blanket folded on a large bed and dark lights against dark wallpaper provide a picture of warmth against the bold contrast of the dark wall covering. Hansen says it’s not difficult for homeowners to create a similar effect, as long as they treat the wall itself like a headboard, or a centrepiece in itself. These details can make a big difference in a room, she says.

Hansen says work is pleasure when you’re a designer who deals with materials and objects you would use and enjoy in your own home.

Many of her favourite items can be found at the Berkeley Village space. She loves the area rug she chose from local supplier Salari, a popular destination among designers. She’s also partial to “Cat’s Pajama’s lounge chair,” made by Blu Dot, which she placed in a living room.
“It’s a fun piece with a perfect scale for the room,” she says. “The back is a white metal and depending on the location in the room, it can look quite sculptural and art-like.”

© 2018 Postmedia Network Inc.

Fees pushing up home prices: Report

Cheryl Chan
The Province

Government regulations and development charges have driven up house prices in Metro Vancouver to the tune of $644,000 per new house, according to a new report from the C.D. Howe Institute.

The report shows that in Vancouver, after factoring in a profit for the developer, close to half of the price of a new detached home is due to government fees and regulations.

The report, released Tuesday, found the cost of barriers to housing supply in Canadian municipalities — such as zoning regulations, development charges and limits on housing development — are highest in B.C., with the Vancouver census metropolitan area leading the pack, followed by Abbotsford and Victoria. 

“Vancouver is, by far, the most restrictive region in Canada,” said Benjamin Dachis, associate director of research at C.D. Howe, who co-authored the report with Vincent Thivierge. “It’s so restrictive it’s on par with some of the worst performers in the world like in New York and some cities in the U.K. and Australia.” 

The study looked at the cost of barriers to building a new home between 2007 and 2016. 

In Vancouver, the restriction cost, or the gap between the cost to build the house and the cost to buy it, was $322 per square foot. For an average detached house worth $1.3 million, the cost works out to $644,000, or about half the end price for home buyers. 

Abbotsford’s restriction cost also made up about half of the average house price, while Victoria’s extra costs were 37 per cent.

Homebuyers in Canada’s eight most restrictive cities paid an extra $229,000 per new house, said the study. 

“When you see a great big gap between what it costs to build and what people end up paying, that’s a pretty clear sign of housing market dysfunction,” Dachis said. 

Construction costs included labour and materials as well as a 17 per cent markup to account for developers’ profit margin. It does not include the cost of land. 

The report makes a number of recommendations, including easing restrictions on developing agricultural land and reducing development charges. 

Bob De Wit, CEO of the Greater Vancouver Home Builders’ Association, said the biggest driver of increased prices in the Vancouver area has been land, but excessive regulations and extra development fees don’t help. 

“No one in our industry would say we need a zero-regulation environment,” he said. “But we would say there are a lot of regulatory burdens in the industry that make it much more expensive to build homes and the C.D. Howe report shows that.” 

Community amenity contributions, which developers pay in exchange for rezoning rights towards services such as parks, libraries and child care facilities, have added to the per unit cost of multi-family dwellings across the region, while development cost charges, which apply to single-family homes, have been on the rise in almost every city in Metro Vancouver, said De Wit. 

He recommended city hall work on speeding up permit application processing times, which range from about three months in the Township of Langley to 12 to 18 months in Vancouver for single-family homes.

“If it’s more efficient, we can get supply online quicker and that would make housing costs better,” he said. 

University of B.C. economics professor Tom Davidoff said municipalities have been making progress on the supply side, but need to go further and loosen up zoning in single-family areas. 

He believes CACs have a place in the process, however, and are “overrated” as a problem. 

© 2018 Postmedia Network Inc.