Apartment owners and managers hope to explain impact of HST to provincial government
Marke Andrews
Sun
If the provincial government goes ahead with plans to apply the 12-per-cent harmonized sales tax to landlords next year, property owners will be hamstrung to improve or build rental units, says a housing executive.
Marg Gordon, CEO of the B.C. Apartment Owners and Managers Association, said Wednesday her organization is concerned about what this will mean not only for landlords, but tenants as well.
“This will severely affect any plans we had to try to encourage purpose-built rentals,” Gordon said.
Currently, tenants do not pay the five-per-cent goods and services tax, but rental property owners must pay GST on their input costs — which include materials and labour costs that go into renovating a property — and residential owners do not get input tax credits.
Gordon’s association holds that to offset the 12-per-cent HST, members would need to receive input tax credits. They could also raise rents, but are limited to do so by provincial rent control legislation which, in 2009, set a 3.7-per-cent ceiling.
Gordon said the HST will compound landlords costs, such as an 11-per-cent increase in natural gas in the past year.
“We can only raise our revenues by 3.7 per cent, but our expenses keep climbing,” said Gordon. “This is a huge disincentive to wanting to be a landlord, and to developing communities of new rental housing.
“There has to be some ability to be eligible for input credits, or a flow-through cost.”
On Tuesday, Gordon sent letters to Premier Gordon Campbell and government ministers requesting a meeting to discuss what the HST will mean to both landlords and tenants.
The association has 1,200 members representing 100,000 rental units.
Tom Durning of the Tenants Resource & Advisory Centre (TRAC), supports the group’s bid for a break, if it means stability.
“I would support them going to the government and see if they can get a break if they upgrade their units, but if they do get a break, I would hope they would pass it on to keep the rents stable,” Durning said.
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