New Home Buyers Need Tax Relief Now
And as rental supply fails to keep up with demand, pressure must be maintained on all levels of government to make amends
By Peter Simpson,
November 19, 2011
Folks sometimes ask if I ever grow weary of talking and writing about the taxes, fees, levies and development charges imposed on the residential construction industry, costs which are passed along to the end user – buyers of new homes and condos, and families renovating or repairing their homes.
Sometimes I do, but I continue to advocate for housing affordability and choice, and for solutions to the challenges of homelessness and individuals at risk of being homeless, because I have faith that maybe the message will sink in to some influential policy-makers and lawmakers who give a damn.
When I reflect on the significant economic benefits generated by a running-on-all-cylinders B.C. residential construction industry, I speculate what would happen if this engine sputtered to a stop.
My mind wanders back to a 2004 mockumentary, A Day Without a Mexican. This short satirical film dramatized what would happen to the California economy if all the Mexicans – both legal and illegal – suddenly disappeared from the workforce. As you can imagine, the impact was immediate and far reaching. Although a tad hokey, the movie got people thinking about unappreciated contributions.
You can see where this is going, right? I thought about what would happen if everyone directly or indirectly associated with the B.C. residential construction industry abruptly left their jobs.
Last year, residential construction’s economic impact provincially was $14.9 billion, or $57.3 million a day based on 260 work days. The recent shipbuilding selection announcement is expected to be worth $8 billion to Vancouver Shipyards (Seaspan), spread over 20 to 30 years.
When it was announced Seaspan would build the ships, Premier Christy Clark rightfully gushed: “It’s paid off for all the people who work here who now have some certainty around their employment. It’s paid off for the families in the secondary industries that depend on shipbuilding.”
I was delighted to hear of Seaspan’s $8-billion lifeline, and the positive impact the contract will have on its employees and secondary industries. But allow me to emphatically repeat the economic impact of residential construction in B.C. – nearly $15 billion a year, or more than $57 million a day!
So when the premier uses phrases such as “certainty around employment” and underscores the benefits to families in secondary industries, I just wish she would also apply those encouraging words to residential construction and the families who depend on that industry for their livelihoods.
The premier and her government must find ways to alleviate the uncertainty surrounding the HST transition rules and immediately provide some tax relief for buyers of new homes. Until the HST is put to rest, the net cost of new homes must be balanced.
If not, some laid-off construction workers might be taking crash courses in the shipbuilding trades.
• • •
Province columnist Jon Ferry opined last week that “the seemingly pointless Occupy Vancouver protest is sucking up huge amounts of media attention.” I am not going to wade into the debate on the merits or missteps of the Occupy movement, but I certainly agree with the media observation.
Last week, I drove by the Occupy camp on my way to a nearby news conference called to announce the signing of a Canadian Rental Housing Charter, whose primary goal is to increase the supply of affordable rental housing across Canada.
Three network cameras were in position at the Occupy site, waiting for something, anything, to happen. No network cameras were at the news conference. Pity.
The Canadian Rental Housing Coalition, co-chaired by Metro Vancouver Housing Committee chair Wayne Wright and Urban Development Institute executive director Maureen Enser, has been working diligently on this important issue for nearly two years.
The coalition’s founding members include senior officials from the B.C. Apartment Owners and Managers Association, Greater Vancouver Home Builders’ Association, B.C. Non-Profit Housing Association, Real Estate Board of Greater Vancouver, Co-operative Housing Federation of B.C., Canadian Home Builders’ Association of B.C., Vancity, and the Tenant Resource and Advisory Centre.
The coalition also has the support of the Federation of Canadian Municipalities, the Canadian Housing and Renewal Association and the B.C. Chamber of Commerce.
The supply of new rental housing is failing to keep up with demand from a growing population. Currently, rental housing makes up more than 30 per cent of the housing stock across Canada.
More than 40,000 people, comprising 16,000 households, move to Metro Vancouver each year. Of these, just under two thirds buy a home, while the remaining 6,500 households need to rent accommodation.
Yet only about 600 purpose-built rental units are added to the rental pool annually.
“The coalition calls on all levels of government, the private sector and the non-profit sector to work collaboratively to address the critical shortage of affordable rental housing,” said Wright.
Enser said the economic importance of affordable rental housing in this country cannot be overstated. “New rental construction creates vital, well-paid jobs, and sufficient supply is intrinsically linked to business investment and location decisions,” she said.
Nicky Dunlop, executive director of the Tenants Resource and Advisory Centre, said renters are struggling to find quality rental housing in major cities across Canada. “In Vancouver, people are being forced into inadequate housing, often in need of significant repairs, and are experiencing frequent moves. All this is destabilizing for families and individuals,” she said.
The coalition’s nine goals are to:
1. Help develop a national economic strategy that includes an adequate supply of rental housing as an essential element.
2. Reinstate federal tax incentives to stimulate private market rental housing.
3. Increase the viability of non-profit and co-op housing construction through direct capital investment and long-term, low-cost financing.
4. Increase the supply of federal, provincial and municipal land for affordable rental housing.
5. Modify property assessment practices that over-value rental properties relative to other forms of residential use.
6. Review all provincial taxes, including property transfer tax, to ensure they do not impede the delivery of rental housing.
7. Encourage municipalities to adopt policies that support rental housing construction. For example, increase density where appropriate, reduce or eliminate charges and fees, reduce regulatory requirements and streamline approvals.
8. Facilitate a long-term commitment from industry to support innovation in the design, financing and construction of affordable market rental housing.
9. Foster a long-term commitment from the non-profit sector to work with the public and private sectors to develop and maintain adequate, safe, secure and affordable rental housing.
I am proud of the exemplary spadework this coalition has completed, and kudos to Metro Vancouver for its involvement, but no one is even close to dancing in the streets. Many influential organizations are involved, but we need strong political will to take this worthwhile initiative to the next level.
Peter Simpson is the president and chief executive officer of the Greater Vancouver Home Builders’ Association. Email email@example.com
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