On March 26 the federal government announced Bill C-26, which proposes $1.7-billion in immediate funding toward initiatives that increase Canadian housing supply.DARRYL DYCK/The Canadian Press
B.C.’s development community wants in on the tax rebate on newly built homes for all buyers, including some investors.
Currently, only first-time buyers get a break on the five-per-cent federal goods and services tax on homes up to $1-million. Ontario announced last week an expanded one-year rebate program to include buyers who’ve previously owned a home and who plan to make the new home their primary residence. Some investors also qualify for the rebate if they rent the unit out. The Ontario deal is part of an agreement with the federal government that will cover the federal portion of the HST.
Shortly after the announcement, the federal government announced Bill C-26, which is $1.7-billion in immediate funding toward initiatives that increase Canadian housing supply. The Ontario HST rebate is an example of such funding, the federal government said in a press release, as was reducing development fees on newly built homes.
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Even though the changes are happening in Ontario, B.C. developers rejoiced.
“Our members have been clamouring for movement on the [sales tax] for at least a year and a half,” said Urban Development Institute interim president and chief executive officer Michael Drummond.
“We were trying to figure out what was happening and we wrote to the Prime Minister and copied the [B.C.] Premier and said, ‘Hey, this is this is a great thing you’re doing in Ontario. You should do this in B.C. too.”
“And then the next day, the legislation landed that enabled the Ontario deal,” said Mr. Drummond.
“It’s very broad. It basically allows any of the provinces a lot of flexibility to decide how they’re going to use this funding, as long as it’s to accelerate housing.”
The funding will help those trying to sell the estimated 3,500 completed units that are unsold in the province, and those developers looking to launch new projects, he said.
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As a sign of how stalled the B.C. presale market has become, Beau Jarvis, Chief Executive of Wesgroup Properties, one of the province’s biggest developers, said that only 87 presale units have sold in Metro Vancouver, including Squamish, in the first three months of the year, according to statistics provided by Rennie Intelligence and Zonda Urban.
In an interview, Mr. Jarvis said the GST expansion “would absolutely help.”
“The Feds say they are in ongoing discussions with B.C. But this really isn’t that complicated,” said Mr. Jarvis. “Ontario is moving quickly and seems to understand there are structural problems with housing production in Canada. They are taking action … pushing the Go button. We don’t really know what B.C. is doing.”
B.C.’s Minister of Housing and Municipal Affairs, Christine Boyle, spoke to the press in Victoria on Monday. She said she has been having conversations with the federal government, whose key priority, she said, is to continue projects that have stalled out. She called the federal funding “an important moment” in the reduction of home construction costs.
“I’m meeting with the federal minister this week to advance these conversations. B.C. should be treated as well as Ontario has been,” she said. “We have been working hard to deliver housing here and reduce the cost of delivering housing. That is a key priority for our government.”
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Spokesman John Fragos, press secretary for the Office of the Minister of Finance and National Revenue, said that the funding is intended for supply-side measures to incentivize the delivery of housing. Provinces and territories can decide the best way to use it, whether it’s for market or social housing.
Mr. Drummond said the UDI has been in discussions with the province, and he’s hoping to hear back this week.
They hope that the federal government will expand its GST rebate to all home purchasers, not just first-time buyers.
“Our view is that the GST would be the simplest way, if there’s already a regime in place,” he said. “It would take very little to actually operationalize this. So, take the GST away from not just first-time buyers but everybody, like broaden it,” said Mr. Drummond.
Although the rebate for first-time buyers applies to purchases made in the last year, he believes there’s been little uptake on the tax break. First-time buyers represent a fraction of the new condo market, say developers.
Presales are an investor-driven market because of the nature of development, said Kevin Layden, president and chief executive officer of Wesbild.
“For most people, let’s say you’re going to buy a two-bedroom, one-bedroom condo in a tower, and it won’t be completed for three to four years. Most people have a hard time committing to that kind of time frame. So that’s why the investors work, because the investors help get the project off the ground, right? And then they either rent it out or they will sell it when the project gets to completion on the basis that there’s value creation.”
Mr. Layden said the province could do its part by reducing the property transfer tax paid by buyers who don’t qualify for any exemption. The PTT on a $1-million home, for example, is $18,000.
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Developer Matthew McClenaghan, president of Edgar Development, said there’s no silver bullet that will fix “years of bad policy layered on,” including high taxes, increasingly complicated building codes and escalating development cost charges on projects to pay for infrastructure.
Ontario also announced this week a partnership with Ottawa to reduce development charges, as part of the previously announced $51-billion Build Communities Strong Fund, intended for local infrastructure.
“I really hope that British Columbia follows suit with Ontario. I’ve been saying this for a long time, that affordability should not stretch across just one demographic and the first-time buyer,” he said. “It should be across all purchasers. Our provincial government needs to step up and work with the feds, and start getting things done to help out with affordability.
“We need to work with the provincial and the federal governments to roll back some of these fees.”
Minister Boyle addressed the cost of development charges, but also emphasized the need for infrastructure to match new housing, as well as infrastructure investments that the province has already made.
“We’re in conversation with the federal government about that work, as well as ensuring that local governments are kept whole and those infrastructure dollars are available to invest in communities,” she said.
“How we count those prior commitments and what dollars we could look to in future fiscal cycles is part of the conversation we are in the midst of right now. It’s an important one,” she said.