Kelly Sinoski, Vancouver Sun, July 26, 2016
Metro Vancouver mayors hope a new housing fund announced by Premier Christy Clark will be used to help resolve a “desperate need” for affordable housing across the region.
Clark announced Monday a 15-per-cent foreign buyer tax on all residential real estate deals in Metro Vancouver — from Bowen Island to Langley Township — starting Aug. 2. Revenue would go into a special housing fund for housing affordability projects, but it’s not clear how, or if, the province will partner with local municipalities.
A Metro report suggests the region needs 18,200 new housing units per year — one-third of those purpose-built rentals — over the next decade to serve a population that’s set to grow by 185,000 residents by 2021 and a further 678,000 residents by 2041. Two-thirds of those purpose-built rentals should be earmarked for very low or low-income households.
“The (rental housing) targets are going to be hard to achieve in this region without the support of the provincial and federal governments. We’re falling behind right now, that’s for sure,” said New Westminster Mayor Jonathan Cote, whose city adopted a comprehensive rental housing policy.
“Any fund for affordable housing in the region would be welcomed by all municipalities. It does look positive the revenue from the foreign tax is going to be used for non-market housing in the region and that’s a desperate need.”
Purpose-built rental housing — market housing that rents at prevailing market rates — comprises between 328,000 and 340,000 households in Metro. However, much of this housing, built with federal incentives in the 1960s and 1970s, is being demolished, particularly around SkyTrain lines. Metro estimates housing supply fell short of demand by 1,600 units between 2011 and 2014, noting that while there was a modest increase in starts since 2010, most units are still under construction or in the development phase.
Vancouver renter Charlotte Whitney would like a space larger than her one-bedroom basement suite in east Vancouver, but is finding “there’s not much out there.” What is available comes with intense bidding from renters, or at prices she can’t afford.
It’s the same across the region. Marne Sherman and roommate Art Manz began looking for a two-bedroom suite after their landlords gave notice that family would be moving in to their Surrey basement suite. Daily visits to Craigslist have turned up listings for similar suites with rents that are 50 to 150 per cent higher than what they pay now.
“I’ve never, ever seen it like this — never in my life — and for that reason, always being a renter, it’s pretty scary right now,” Sherman said.
Municipalities are taking various measures to retain or boost rentals across the region. North Vancouver City, where about 46 per cent of households are renters, has a policy to add infill to existing purpose-built rentals, while New Westminster has a moratorium on conversion of rental buildings to strata title ownership. New West and Vancouver also replace rentals as they are demolished, while other municipalities are building higher density around SkyTrain lines.
But Cote maintains it is crucial for senior governments to also get involved. “I’m not prepared to sit around and do nothing for one of the most critical issues facing our region but we’re hoping the federal and provincial governments will have a change in course,” he said. “If this is able to provide a reliable fund going forward that will be positive.”
Burnaby Mayor Derek Corrigan argues municipalities are not in the business of building housing or providing social services, and he’d like to see money from the tax go into B.C. Housing. A housing fund accessible by Metro Vancouver and social service organizations to build more affordable housing would also be a good alternative.
B.C. Finance Minister Mike de Jong refuses to say how much money the tax could generate.
“We’re not certain to what extent in this case in our market this will reduce activity, shift it elsewhere,” he said. “If we see continued purchase by foreign nationals at the rate we have seen thus far, this is going to generate a lot of money. That’s not why we are doing it. I think it will generate some additional revenues, but as soon as I offer up a figure and I’m not just not in the position to do that authoritatively.”
Had the province collected 15 per cent tax on the $885 million foreign buyers spent on Metro Vancouver real estate between June 10 and July 14, it would have raised about $133 million. And had foreign buyers purchased 10 per cent of the Metro real estate that switched hands in 2015 (nearly $55.07 billion, according to Landcor Data Corporation), the province would have raked in $826 million.
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