Housing advocates are praising some aspects of the provincial budget, but other aspects have prompted questions.
Neil Moody, chief executive officer of the Canadian Home Builders’ Association of BC, said builders are happy the budget continues to focus on housing.
“We are pleased to see there is some relief for first-time home buyers with the increase of the threshold,” he said. “That’s a good thing we have been advocating for several years.”
First-time home buyers purchasing homes worth up to $835,000 will see the first $500,000 exempt from the property transfer tax. The increase could save as much as $8,000 per purchase and benefit some 14,500, helping them into home-ownership and freeing up rentals. People buying newly built homes worth up to $1.1 million will also receive a new exemption, as will eligible purpose-built rental units.
“There is nothing negative,” Moody said. “It’s incremental changes.”
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A new flipping tax will accompany these measures. It will apply to profits from the sale of residential properties held for less than two years. The rate will be 20 per cent for properties sold within one year of purchase, then decline on a graduated scale before hitting zero after two years.
The tax will kick in on Jan. 1, 2025 with legislation to be tabled this spring, but includes exemptions for life events such as separation or divorce among others. The addition of another housing unit to the property will also trigger an exemption.
Between 2020 and 2022, seven per cent of all sold properties in B.C., were sold within less than two years. Ultimately, government expects that the tax will apply to about 5,000 properties, roughly half of the properties sold within less than two years.
Moody said his association will have to dig into the details of the flipping tax, but did not object to its general direction.
The measure follows a raft of housing related legislation passed in the fall and co-exists with other measures to curb speculation. It is expected to generate about $43 million in its first full fiscal year with the money financing affordable housing projects.
With the flipping tax, government responds to a long-standing demand from the Union of British Columbia Municipalities, which had first proposed the idea in 2018.
Also included in this year’s budget is money for BC Builds ($198 million over three years), government’s new program to encourage the building of subsidized rental homes for middle-income households with incomes up to $190,000.
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But despite rising homelessness, the provincial budget does not include any significant new money for emergency shelters.
Funding for emergency shelters remains roughly at $138 million for 2024, up only incrementally from the previous year, with the proviso that government can also fund emergency shelters from other funding sources.
An additional $9.1 million is going toward the conversion of various forms of housing into permanent housing for people currently experiencing homelessness for a total of $41 million.
This funding will help maintain over 500 temporary and permanent shelter spaces across the province, but won’t be building new shelters. The UBCM has repeatedly asked government to spend more money on shelters, especially against the backdrop of proposed legislation to crack down on homeless camps.
Finance Minister Katrine Conroy said her government is working hard to make sure that people currently living in homeless camps can move toward housing.
“Housing is critical to our government and it’s something that we’re focusing on and bringing in initiatives to ensure that we can move away from that,” she said.
Looming above provincial housing policy is the ability to attract and retain workers and inter-generational inequality with young people increasingly finding it difficult to find affordable housing, be it for a rent or for purchase.
Paul Kershaw, policy professor in the UBC School of Population and Public Health and founder of Generation Squeeze, welcomed the budget when it comes to that aspect.
“There is a commitment, a determination to make B.C. work for all generations, that we have never seen any previous provincial government articulate,” Kershaw said.