ISSUE 1: Expansion of Provincial Trades Education, Funding, and Facilities
The Problem:
- The gap between the creation of new housing and population growth in BC continues to widen. While new home construction in BC has been very strong for the past several years, it takes far too long for projects to receive permitting and construction times continue to be stretched. The BC Government expects its Small Scale Multi-Unit Housing and Transit Oriented Development zoning reforms to generate between 216,000 and 293,000 net-new housing units over the next ten years, but there are significant barriers to realizing that goal. These are outlined in BCREA’s recent Market Intelligence report: Building the Future: Unlocking the Production Potential of BC’s Housing Sector.
- A major barrier to building these needed homes in BC is the skilled trades shortage in the construction sector as well as insufficient productivity. The BC government estimates that close to 55,000 construction workers will retire in the next decade and BCREA estimates that we may need an additional 130,000 workers to meet new home construction targets by 2035. This is due to an aging and retiring construction workforce, as well as increasing certification requirements for skilled trades.
- Funding for Skilled Trades BC has not increased in more than a decade despite increased costs from inflation, construction materials, cost of living, and the complexity of the building sector. This means the value of the funding has decreased over time. Meanwhile, many other provinces, such as Alberta, Saskatchewan, and Nova Scotia, are significantly investing in skilled trades and increasing their ability to attract and retain skilled trades workers as BC falters in this regard.
- BC’s lack of trades investment means skilled tradespeople are increasingly leaving the province. Public secondary and post-secondary institutions are not expanding skilled trades training at the necessary levels, resulting in training programs underpreparing students for trades of the future, growing wait lists for training programs, and ultimately, an escalating shortage of skilled tradespeople adequately trained to build desperately needed housing supply in our province.
Recommendations:
To better attract and retain skilled trades needed in housing construction, BCREA recommends that the BC government elected in October 2024:
- Review the state of trades training across BC for secondary schools to identify training and basic support gaps;
- Increase support for trades training and awareness in school spaces from young ages;
- Increase funding for Skilled Trades BC Youth Programming;
- Increase capital grants to post-secondary and other trades training institutions, including secondary schools, for trades training equipment and spaces;
- Significantly expand provincial scholarships and incentivization programs for trades training for new graduates; and
- Immediately increase funding for Skilled Trades BC on a long-term basis, allowing for increases that reflect cost of living, to accommodate:
- More seats for training and increases in seats tied to population growth and demand from industry; and
- Flexibility and expanded options to serve remote communities and underrepresented groups.
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ISSUE 2: Housing Tax Reform
The Problem:
Housing taxation levels in BC are some of the highest in the world. If the provincial government wishes to reduce the cost of housing for residents of BC, one of the fastest and most effective ways to do so would be to engage in significant tax reform. Housing taxation levels have risen sharply since 2016, with a multitude of new and arguably ineffective taxes.
- Taxation is directly having a significant negative effect on the affordability of homes. Modifying some taxes and doing away with others could have an instant effect on housing affordability in BC.
- The BC Government now takes in well over $2 billion per year in revenue from these housing-related taxes:
- As of January 1, 2025, the Province will add yet another tax:
- Residential Property Short-Term Holding Profit Tax (Flipping Tax). The Fiscal Year (FY) 2024/25 BC Budget estimated that the flipping tax would raise $11 million in FY 2024/25 and $43 million in FY 2025/26.
These figures don’t even include the substantial revenues raised by local and provincial governments through annual property taxes and development related levies, which are generated from the residential sector. The burden on the housing sector from combined annual property taxes, development levies, and at-time-of-purchase taxes is huge. It’s no wonder that housing in BC is mostly unaffordable for average residents.
Source: BC Data Catalogue; BC Budget and Fiscal Plan 2024/25-2026/27
PTT:
- The overwhelming majority of tax revenues from housing come from the PTT, and these revenues have massively escalated along with home values. Because the tax has never been indexed to reflect market changes or inflation, this has created a windfall for government at the expense of BC families and property owners.
- The tax was introduced in 1987 as a wealth tax to discourage speculation. The tax has never undergone a systematic review since its inception.
- Unlike the current multi-threshold version of the PTT, the original tax specified a one per cent levy on home values up to $200,000 and two per cent above $200,000. The two per cent threshold was originally only supposed to capture five per cent of transactions.
- 99.5 per cent of transactions in the Lower Mainland in 2023 were above $200,000 and almost 70 per cent of sales in the relatively affordable region of Northwestern BC were above $200,000. (Based on Greater Vancouver, Fraser Valley, Chilliwack, and BC Northern MLS® Data)
- The median PTT paid per transaction by BC households is now over $11,000, or double the median PTT paid in 2010. That is money that BC residents could use to save for their children’s education or their own retirement, or simply use to offset a rising cost of living in the province.
- The current version of the tax has been expanded so that two per cent is paid on homes valued between $200,000 and $2,000,000; three per cent on amounts between $2,000,000 and $3,000,000; and five per cent on the remaining value.
Recommendations:
- Do a systematic review of the PTT. Include consultation with the broad housing sector, local governments, property tax experts, notaries and real estate lawyers, and the public at large. This would be a good use for the proposed permanent housing roundtable (mentioned in detail in Issue 4), which we have long asserted would benefit the creation of housing policy in BC.
- The PTT review should at minimum include consideration of these elements:
- Exempt the PTT entirely for all homes below the average BC home price (which is currently $959,480). The applicable home price threshold should be stipulated in each year’s provincial budget and should reflect the current average home price for the province.
- There should be no distinction made between resale homes and new-builds for purposes of exemptions or classification. This would render the current Newly Built Home Buyer exemption unnecessary.
- Rationalize the tax rates and price thresholds to minimize confusion on the part of buyers, conveyancers, and representatives. That is, drastically reduce the number of rates and thresholds.
- Institute an annual process to ensure thresholds reflect the current housing market by indexing to inflation and balancing revenue needs with rate changes.
- Institute an annual process to review the adequacy of special buyer categories such as the First Time Home Buyers exemption.
- The system created should enable reasonable revenues for government without unduly affecting housing affordability. Government needs to moderate its revenue expectations from the housing sector.
- Reduce the administrative burden at the end of property transactions by simplifying the PTT reporting forms.
Speculation and Vacancy Tax (SVT):
- The SVT adds complexity to the tax system without any noticeable benefit to affordability. The province’s own research shows that the tax had only a small impact on prices and rents.
- In some areas, the tax duplicates (or even triplicates) similar municipal and federal vacancy taxes (e.g., the City of Vancouver Empty Homes Tax and the Federal Underused Housing Tax).
- The tax also unfairly treats Canadians who earn the majority of their income outside of Canada, but who live and generate economic activity and tax revenues (sales taxes, property taxes, etc.) in BC. It is not right to label these British Columbians as speculators.
- While nobody wants homes to be vacant in a housing crisis, the SVT has proven itself to be a flawed and ultimately ineffective measure as clearly indicated by the data. Its impact on returning units to the rental market has been diminishing each year since its inception and rents haven’t appreciably been reduced.
Recommendation:
- As this tax is demonstrably ineffective and is duplicated by a federal tax, its immediate repeal would be in the interest of British Columbians.
Foreign Buyer Tax:
- The additional Foreign Buyer Tax is 20 per cent of the home’s value, paid upon purchase.
- Foreign investment in BC residential real estate has been very low since the introduction of the tax.
- While the tax may have been modestly effective, at least in the short-term, the provincial government will need to think of ways to incentivize a large amount of capital investment to hit its housing targets over the next decade.
- As such, Canada will need to attract additional non-domestic sources of capital at a time when tax and investment policy has not been welcoming to non-residents.
Recommendation:
- The investment climate has been restrictive for non-residents in BC and Canada. To reach bold housing targets over the next decade, BC will need to attract a substantial amount of capital, more than what is likely available from domestic sources. We recommend a review of policies that can attract new investment from outside of Canada without unduly distorting affordability and availability for BC residents.
Flipping Tax:
- Flipping activity, by any definition, is an insignificant share of overall transactions in BC.
- As with the SVT and the Foreign Buyer’s Tax, this tax is also duplicated at the federal level.
- According to an analysis by the BCREA Economics team, the newly announced provincial flipping tax will not materially impact affordability in BC.
- There is a significant risk that the tax will cause potential sellers to delay listing their homes, leading to lower resale housing supply and tighter market conditions.
- The application of the flipping tax to assignments could jeopardize the financing of new construction.
Recommendation:
- In the interest of streamlining the housing tax structure and removing taxation that does not achieve any impactful goals and is duplicated at the federal level, this tax should also be repealed.
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ISSUE 3: Short-Term Rentals
The Problem:
Creating additional housing from existing stock should not come at the cost of all other uses. The province-wide ban on short-term rentals has caused significant disruption in specific business and tourism sectors across the province since implementation. The summer months, for example, showed significant decline in tourism across the Okanagan, a region already struggling to recover from tourism-related impacts of COVID-19.
The ban creates issues for:
- medical employees transferred to remote areas;
- those receiving multi-week medical care as well as caregivers in urban areas;
- film sector workers in town for weeks at a time;
- those attending or employed by short-term but large events for which hotel space is inadequate; and
- those needing short-term housing due to delays in being able to take occupancy of homes or apartments.
The provincial and regional economies need to be factored into and represented in housing policy decision-making.
Recommendations:
To minimize these issues, some exclusions are needed in a variety of categories:
- high-tourism areas;
- medical staff in remote areas;
- those seeking short-term medical care or their caregivers;
- the film industry;
- short-term event related accommodations; and
- those in need of short-term accommodation either for business stays or to have somewhere to live while waiting to take occupancy of homes or apartments.
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ISSUE 4: Establishing a Permanent Provincial Housing Roundtable
The Problem:
- The provincial government has been under a great deal of pressure in recent years to move quickly and introduce dramatic new measures to grapple with significant housing cost increases and affordability issues across the province.
- While many of their new policy ideas have merit, the process of policy development has lacked the detailed consultation necessary to assure a holistic view has been adopted, and that potential policy is thoroughly reviewed in advance by experts from a variety of housing sector segments (market, non-market, Indigenous, etc.).
- Notably, this concern has been echoed in the past by numerous organizations from across the housing market, including LandlordBC, Appraisal Institute of Canada – British Columbia, Canadian Mortgage Brokers Association – British Columbia, Aboriginal Housing Management Association, and others.
- Lack of detailed, advance consultation has led to a multitude of problems, with avoidable mistakes being made by government.
Recommendations:
- We would like to see the immediate creation of a permanent BC housing roundtable, comprised of ten to 12 carefully chosen policy experts from organizations in the sectors mentioned above.
- This group would work in close partnership with the provincial government to review potential housing legislation in the early stages of policy development, assuring that the draft policy is holistic in approach, pressure tested in advance for unanticipated consequences, and likely to achieve its stated goals.
- This approach would assure stronger and more resilient results moving forward on new housing policy directions.
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ISSUE 5: Remaining Problems with New Notice to End Tenancy Rules
The Problem:
- On July 18, 2024, the Province amended the Residential Tenancy Regulation to require landlords to give tenants four months’ notice, instead of two months, when evicting for landlord or purchaser use. The amount of time a tenant had to dispute the notice was also increased from 15 to 30 days.
- In response to feedback from BCREA, REALTORS®, members of the public, and other housing-related organizations, on August 1, 2024, the Province announced that it would be further amending the Regulation to require a three-month notice period (down from four months) and would give tenants 21 days to dispute the notice (down from 30 days) when a landlord issues a notice to end tenancy for the purchaser’s use of the rental unit. These changes took effect on August 21, 2024.
- The Housing Ministry also acknowledged BCREA’s privacy concerns about landlords being required to provide a copy of the Contract of Purchase and Sale with the notice to end tenancy. The new landlord web portal has now been updated so landlords are no longer required to provide a copy of the Contract of Purchase and Sale to the tenant(s). Landlords will still be required to upload a copy of the Contract of Purchase and Sale to the web portal, but it will not be disclosed to the tenant and will only be for internal Residential Tenancy Branch (RTB) use.
- BCREA acknowledges and appreciates the changes that the government made as a result of BCREA’s expressed concerns. But there are a number of issues that remain unresolved.
Recommendations:
- Allow high-ratio insured buyers (including first-time buyers) who will be occupying the property to continue to have a two-month notice period because of the financial hardship caused by a longer delay in them taking possession of their property, and the likelihood of them running afoul of financing restrictions.
- In future, the BC Government should allow much longer lead times for implementation when making changes that involve real estate transactions and tenancy issues. Provisions should always be made to exempt transactions that are already in progress when announcements about these kinds of changes are made.
- To protect the privacy of buyers, eliminate the requirement to report to former tenants for buyers who intend to occupy their own unit. The buyer’s intent to occupy could be documented for the RTB by use of a Statutory Declaration or as part of the PTT return process. An early sale of the unit could be tracked through the Land Titles or BC Assessment systems. The government already has its own sources of information to verify the occupancy status of an owner and that the unit hasn’t sold within the year.
- Provide a more paper-based alternative to the new web portal for use by less technically savvy landlords. Or allow the existing paper forms to still be used for giving tenants notice. The Ministry’s suggestion for such landlords to visit a Service BC Office or the RTB’s Burnaby office for assistance is hardly a realistic or efficient option, and is dismissive of legitimate problems of different demographic groups within our communities.
- Allow the rules for short-term rentals to accommodate property owners or buyers who are stuck between completions if the rental is needed for a period under 90 days.
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