With the new tax looming, the banks will not be able to rely on any appraisals they obtain for new mortgage applications in the province as they can’t be certain that the values will stay at the current levels. If property values sink and the banks become offside of their loan to value ratios, that would cause a major financial problem for the banks’ balance sheets (as both current and new mortgages would be negatively impacted). That could cause the banks to stop issuing any new mortgages until this mess gets figured out. Total disaster for the BC economy.
The proposed speculators tax law is trying to get property owners to make vacant properties available for rent to people who need a place to live. First off, we need to clarify what is meant by “vacant properties”. To the extent that foreign (be they Canadian or non-Canadian) are speculating on homes and leaving them vacant, I don’t disagree that there could and should be a disincentive for that type of ownership. Vacant homes do nothing for our economy, our housing affordability issues (other than make them worse) or add to the fiber and vibrancy of our communities.
But for the vast majority (if not universally) of Canadian owners who have second homes in BC, these homes are not vacant. They are used for 30, 60, 90 days or more per year by the owners and their families/friends. Thereby doing the opposite of what the truly vacant property owners are doing, (these Canadian owners do contribute meaningfully to the local economies and do add to the fiber and vibrancy of the communities of which they are an integral part.) These are significant investments for these Canadian owners, and they take their ownership and place in the BC community very seriously and passionately. They feel like they are a part of BC, sort of like a “honourary BC residents”. Perhaps the new tax law could exempt “real” owners who are not taking properties out of the housing stock just to speculate and flip them for profit and make the tax not applicable to persons who use them for say a minimum number of days a year. I’m not sure what the right number of days is (perhaps 30?) but it’s the concept that may make sense.
As for vacancy, as we all know our vacancy rates in the Okanagan are very low but we don’t have a long list of people standing in the street with no place to rent. Rather than try to pry these vacation homes out of the hands of the Canadian owners (which for reasons below will never happen), why not create a landscape where developers are encouraged to provide affordable (perhaps even subsidized) apartment housing for rent to average hard working BC people. That is a solution that has a possibility of working, taxing Canadians at a punitive rate in order that they convert their homes to long term lease properties is not. From the people I’ve spoken to and read comments online, the Canadian owners are very upset at the harsh nature of the punitive tax, and while some perhaps could afford the tax, most certainly cannot, and in both cases, it appears that they will nevertheless just sell their properties rather than pay the tax or have them leased to some third-party renter they don’t know.
The Okanagan is primarily a vacation spot, and vacation dollars drive this community. Plumbers, electricians, house cleaners, lawn maintenance, restaurants, shopping malls, realtors, corner stores, etc. all need and rely upon the vacation dollars from these Canadian owners of BC properties for their very livelihoods. Why the BC government would want to punish these regular BC workers and business people is beyond most of us. We don’t disagree with creating a disincentive for foreign owners of vacant properties. That type of ownership benefits nobody, or at least nobody in BC, but punishing these Canadian owners for no good reason or without any upside to the community or our local residents, is simply a lose lose proposition.
It’s easier to catch flies with honey but currently out of province owners have 2 guns placed to their heads. Rent your place out or pay a huge fine. Hmmm, which of these two evils do I prefer? Have the governments ever thought of maybe using some honey to get what they want? What about rewarding out of province owners with an incentive? What about a reduction in their property taxes to people who rent out their homes? What about a rebate or subsidy to the home owner in relationship to cover shortages between rent income and their mortgage/utility costs?
Other incentives might include changes in the Residential Tenancy Act to make it more equal for landlords. Right now, the whole law is written in favour of the tenants. What about giving landlords the ability to higher damage deposits? Or making the tenant fully responsible for all damages? Maybe making tenants fully responsible for damage claims by having it affect their personal credit rating, making tenants more accountable towards damages has been a huge reason why a lot of owners do not rent out their properties. I would also suggest that the province adopt a system like Air BNB where both the landlord and tenants are able to rate each other. It’s much more transparent and easier for a landlord to choose a tenant and therefore increase the desire to want to rent their properties.
We Canadians are a timid bunch, we complain about things we don’t like in the bars and basements but rarely do we every stand up and scream for our rights to be heard.
Contact your MLA’s and raise the roof!