B.C.’s government reached a deal with the B.C. Green Party on Bill 45 the province’s new Speculation and Vacancy Tax. Despite its amendments, caveats and primary intention, the tax will not single-handedly solve B.C.’s housing affordability crisis.
New home costs are based on many factors, including code changes, product prices, land prices, interest rates and increasing wages for necessary trades. The speculation tax will not directly make any of these cheaper, which means new homes can't and won’t be less expensive.
In the past three years, demand-side measures have been introduced by all levels of government. The true impact of all taxes and measures has to be evaluated before any more demand-side changes are necessary. It is time to focus on other policy options.
What we need more than anything, is to build homes for less, not more.
To this end, a review of provincial building code changes or requirements with a cost-benefit analysis and how it affects housing affordability is needed; support and funding innovation at the municipal level to decrease permit times and costs should be made a priority; an exemption to annual provincial taxes for new housing projects waiting for approval or under construction is necessary; and continued funding of skilled trades investments and training is imperative.
Putting a greater emphasis on the supply-side of the equation provides a win-win solution, generating more choice and potentially lower costs for homebuyers while continuing to support the residential construction industry.
With regards to the speculation tax, it is encouraging that there were exemptions for properties under development. There are multiple requirements in the bill that help to establish legitimate properties under construction from other residential properties.
This is important, as it signals that those who are positively contributing to B.C.’s new housing supply, won’t be unfairly taxed. Timeline variables that are beyond the home builders’ control, such as the permitting process, can be especially slow. So, if a year passed and the builder was still waiting on permits, it would be unfair to penalize them since they have no means to speed up the process.
The bill also ensures that builders, working on long-term community plans over a series of phases, can seek exemptions.
Phased developments are important to small businesses, as it allows them to build new supply over time and ensure continued work for their employees, at a pace they can keep up with.
Homebuilders build communities in the province and play an integral part of the housing solution for British Columbians. Understanding the complexity of rules, regulations and taxes that are a part of the building process is vital to ensure that supply of new homes are built that match the need for more housing in British Columbia.
Decisions on housing affordability need to be approached with collaboration not contention to move policy forward.
The weight of additional taxes, red tape and policies that do not involve consultation prior to implementation will only exacerbate the housing problem.
Neil Moody is Chief Executive Officer of Canadian Home Builders’ Association of British Columbia