Coalition launches ‘Scrap the Speculation Tax’ campaign

Joannah Connolly
Western Investor

It started with a “Stop the Speculation Tax” petition that was launched last month by disgruntled home owners opposing the province’s proposed annual tax on underused second homes in areas across B.C.

Now, the petition group has banded together with chambers of commerce, tourism industry representatives, construction associations and development lobby groups to form a province-wide coalition and launch a campaign called “Scrap the Speculation Tax.”

The new coalition comprises the Kelowna, Namaimo and Peachland chambers of commerce, Tourism Victoria, the Canadian Home Builders Association’s Central Okanagan chapter, the Urban Development Institute’s Capital Region and Okanagan chapters, the Independent Contractors of British Columbia and the Stop the Speculation Tax petition group.

The coalition stated, “[The B.C. government] announced [the new tax] with the intention of trying to address housing affordability, but this patchwork tax will do the exact opposite. This tax will kill jobs, hurt the B.C. tourism industry and make the housing affordability issue worse. This tax doesn’t target real speculators, just hardworking BC and Canadian taxpayers. That’s why we’ve partnered with a broad coalition of impacted stakeholders, from tourism agencies to chambers of commerce and homebuilders to launch a Scrap the Speculation Tax Campaign.”

The group said it is asking the B.C. government for a new approach that, “Targets real speculators, not long-term homeowners, or out-of-province residents; protects our local tourism-dependant economies, like Kelowna and the South Island; reduces the cost of delivering housing units by exempting vacant development land; and exempts Canadian and B.C. taxpayers from this unfair tax.”

The campaign comes two weeks after finance minister Carole James announced a slew of amendments to the proposed tax. The changes reduced the tax to 0.5 per cent of the property’s value per year for B.C. residents, with the first $400,000 in value effectively exempt, and to one per cent for Canadians living outside of B.C. The changes also reduced the geographic reach of the tax, which under the current iteration will apply to Metro Vancouver and the Fraser Valley, the Capital Region, Nanaimo-Lantzville, Kelowna and West Kelowna.

A poll held shortly after February’s B.C. Budget announcement about the new speculation tax, and other housing taxation measures, found that more than 80 per cent of British Columbians were in favour of the new taxes.

Copyright © 2018 Western Investor

New Taxes From BC Budget 2018 ? Updated April 2, 2018

other

Speculation Tax – A new tax on Foreign speculators that will apply in Metro Vancouver, Fraser Valley, Capitol and Nanaimo Regional Districts and Municipality of Kelowna and West Kelowna
Starting this year 2018 (date to be announced) the provincial government will apply a 0.5 per cent ($500/$100K of property value) speculation tax of assessed value on homes owned by people who don’t pay taxes in British Columbia. The tax goes up to 2 per cent in 2019 ($2,000/$100K of property value) and will stay at that rate going forward. Exemptions are British Columbians who own 2^nd vacation properties in rural areas such as the Gulf Islands and Cultus Lake. Other exempted vacation and retirement hot spots incl Parksville, Qualicum Beach, Nanoose Bay, all the Gulf Islands, Kent, Hope, Harrison Hot Springs, Bowen Island and Cultus Lake. Whats left is a speculation tax that will apply to Metro Vancouver (incl Village of Lions Bay) the Capitol Regional District (minus Gulf Islands & Juan De Fuca) Naniamo/Lantsville, West Kelowna & Kelowna.Over 99% of British Columbians will not pay the tax, Only those who hold multiple properties and leave them empty will be asked to contribute. It is expected to bring in $87 million this year. The tax will target foreign and domestic speculators who don’t pay taxes in BC including those who leave their units sitting vacant. This will include satellite families.

Foreign Buyers Tax going up to 20% for all Properties effective Feb 21, 2018

Starting Wednesday Feb 21, 2018, the foreign home buyers tax is going up from 15 per cent to 20 per cent. Not only will the tax be applied to homes in Metro Vancouver, but will now apply in the Capital Regional District, the Fraser Valley, the Central Okanagan and the Nanaimo Regional District.

City of Vancouver “Vacancy Tax”
The City of Vancouver has implemented an annual tax on empty or under-utilized residential properties called the “Empty Homes Tax”. To address Vancouver’s housing crisis, every owner of residential property in Vancouver is required to submit a property status declaration each year to determine if their property is subject to the Empty Homes Tax. Failure to declare by the deadline of Feb 4^th of each year will result in your property being deemed vacant and subject to a tax of 1% of its assessed taxable value and a $250 penalty. This unpaid tax will be added to your tax bill on Dec 31.The tax will be due by April 16 the following year. Most homes will not be subject to the tax, as it does not apply to principal residences or homes rented for at least six months of the year; however, all homeowners are required to submit a declaration. The Empty Homes Tax is also known as the Vacancy Tax and is imposed under the Vacancy Tax Bylaw No. 11674.

Link to Video
https://globalnews.ca/video/rd/1166180931795/
Article Link
https://globalnews.ca/news/4052244/bc-housing-taxes-3-million-vancouver-map/
Budget Link
https://globalnews.ca/video/rd/1165910083672/

Home Tax
http://vancouver.ca/home-property-development/empty-homes-tax-frequently-asked-questions.aspx

Speculation tax takes abrupt turn

 

other

Read through our pages, and still have a question about the Empty Homes Tax? View a list of questions and definitions about the Empty Homes Tax, also known as the Vacancy Tax:

• About the tax
• Definition of terms related to the tax
• Second homes
• Property exemptions
• Real estate

For More info go to: City of Vancouver Empty Homes Tax

Ephraim Vecina
Canadian Real Estate Wealth

Metro Vancouver home sales over the first quarter of this year were the lowest in five years, but statistics from the Real Estate Board of Greater Vancouver also showed that prices remained high.

The board stated that home sales across the region in March tumbled 29.7% year-over-year, and are 23% below the 10-year March sales average.

Just over 2,500 homes changed hands last month, a drop of more than 1,000 compared to a year ago, although the board noted that March 2018 sales climbed 14% compared to February.

Listings of detached, attached, and apartment properties also declined by 6.6% last month compared to March 2017, marking the region’s lowest total of first-quarter new listings since 2013.

Real estate board data showed the number of sales compared to the number of active listings soared to 61.6% for condominiums in March, while the rate was 39.9% for townhomes, well above the 20% rate that has been estimated to tend to push prices upward

The composite benchmark price for all residential properties in Metro Vancouver stood at $1,084,000, a 16.1% increase over March 2017 and a 1.1% increase since February 2018.

REBGV president Phil Moore said that even with lower sales, prices will remain high as long as the selection of properties is slim.

“Last month was the quietest March for new home listings since 2009 and the total inventory, particularly in the condo and townhome segments, of homes for sale remains well below historical norms,” Moore stated in a news release, as quoted by The Canadian Press.

“High prices, new tax announcements, rising interest rates, and stricter mortgage requirements are among the factors affecting home buyer and seller activity today,” Moore added.

The benchmark price for detached properties was $1,608,500 last month, up 7.4% from March 2017 and up less than 0.5% over February 2018, as sales-to-active listings nudged the mark where the board said downward pressure on prices could occur.

With sales outstripping supply for condos and townhomes, the benchmark price for a condo was $693,500 in March, a 26.2% leap from March 2017 and a 1.6% bump compared to February 2018.

Benchmark prices for townhomes across Metro Vancouver reached $835,300 last month, a 2% increase over February and a hike of 17.7% from March 2017.

Copyright © 2018 Key Media Pty Ltd

Neil Sharma
Canadian Real Estate Wealth

While nearly half of Toronto’s condo investors were cash flow negative last year, they were, in fact, offsetting their taxes.

A joint study between CIBC and Urbanation revealed 44% of Toronto’s condo investors were in the red—of which 45% were short by less than $500, and 20% between $500 and $1,000.

“We did hold a roundtable discussion with some of the top condo investment brokers in Toronto, and we asked why do some investors hold fairly significant negative cash flow positions, and their view is that, oftentimes, it’s to use to write off on their taxes and limit their overall tax burdens,” said Shaun Hildebrand, senior vice president of Urbanation. “These are often wealthy individuals and they’re comfortable with the appreciation of their units offsetting monthly cash flows.

“If you look at the data as a whole, most of the investors are cash flow positive, and for those who are cash flow positive, they’re positive by an average of $360 a month.”

The CIBC-Urbanation study elucidated how impactful investors are on the city’s real estate market. Forty-eight percent of newly completed units in the GTA last year were purchased by investors.

“There are a number of investors who do take on a significant monthly loss,” continued Hildebrand. “Some of that may be due to the fact that condo investors, as we found, typically have higher interest rates than non-investors. So banks view credit extended to investors differently than non-investors, and in some cases, investors have gone to private or individual mortgage lenders with interest rates that are pretty significant, so that also plays into it.”

Paul D’Abruzzo of Rock Star Real Estate says that, at a VIP condo launch last week, investors comprised the majority of attendees, but the best they could hope for was breaking even on their purchases.

“You’re not going to make any cash flow—you’ll be negative,” he said. “But it doesn’t stop people from buying.”

He doesn’t believe investors choose to remain in the red solely to pay lower taxes, though.

“It’s a minor advantage, but I think people’s motivation is believing in the equity appreciation they’re going to get on their condos over time. If you’re not going to cash flow, something is going to have to drive your investment value.”

However, D’Abruzzo says unsophisticated investors are commonplace and could benefit from education.

“From what I see, some people aren’t educated on what else you can do with your money. They think going out and buying a condo and praying it appreciates is an investment. They can take the QEW to down to Hamilton, spend the exact same money and buy a home for $500,000, and make a few hundred bucks instead of losing a few hundred bucks. There’s a lack of proper education.”

Copyright © 2018 Key Media Pty Ltd

The real estate sector is highly vulnerable to money laundering and terrorist financing

Joane Leroux
REM

I would like to respond to Jorge Branca’s letter to the editor, FINTRAC: The nemesis of our forest? by highlighting how Canadian businesses, FINTRAC and police and national security agencies all have a role to play in creating a hostile environment for those who seek to abuse our financial system or threaten the safety of Canadians.

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act establishes obligations for real estate and other businesses, including to identify clients, keep records and report certain types of financial transactions. These obligations are essential in detecting illicit activity and deterring criminals from operating within the legitimate economy. For example, eliminating the anonymity of the client serves as an important measure of deterrence. And, keeping records ensures that police will have access to the information and evidence they may require as part of their criminal investigations.

In its Assessment of Inherent Risks of Money Laundering and Terrorist Financing in Canada, the federal government found that the real estate sector is highly vulnerable to money laundering and terrorist financing, given “its size and scope and (the fact that it) generates a large number of high-value financial transactions on an ongoing basis.” This is consistent with the assessment of the Financial Action Task Force, an internationally recognized body that sets global standards for combating money laundering and terrorist financing.

Based on these assessments and other information, including media reporting and concerns raised in Vancouver, Toronto and elsewhere, FINTRAC has significantly increased its examinations in the real estate sector. Over the past two years alone, the centre conducted 343 real estate examinations nationwide.

We are also working to assist the real estate sector in fulfilling its legal obligations by providing extensive guidance, policy interpretations, responses to inquiries and presentations to provincial and municipal real estate boards. Last year, we published the Operational Brief: Indicators of money laundering in financial transactions related to real estate to help real estate in identifying and reporting suspicious transactions relating to money laundering or terrorist activity financing. We developed this material in consultation with the Canadian Real Estate Association and the Organisme d’autoréglementation du courtage immobilier du Québec.

FINTRAC remains committed to working with the real estate sector to ensure it understands and fulfils its legal obligations. However, when that doesn’t happen, we may impose an administrative monetary penalty. Since 2008, the centre has imposed 95 penalties in all sectors covered under the act. I would like to emphasize that, as we finalize our review of our penalty program, we retain the full authority to levy an administrative monetary penalty should it be warranted.

Canada’s anti-money laundering and anti-terrorism financing regime is dependent on businesses across the country fulfilling their legal obligations, particularly providing FINTRAC with timely and high-quality reports. These reports are the lifeblood of our analysis and made it possible for us to provide 2,015 disclosures of actionable financial intelligence last year in support of police investigations targeting fentanyl trafficking, fraud against Canadians and other serious crimes in our communities. You can find FINTRAC’s contributions to some of these investigations on our website.

We are committed to working with our police and national security partners and businesses across the country to help protect Canadians and Canada’s legitimate economy, the stability of which is of tremendous benefit to the real estate sector.

All of us – including real estate – have an important role to play.

© 2017 REM Real Estate Magazine

New property taxes dragging down sales

Kerrisa Wilson
other

Metro Vancouver home sales continued to drop on a year-over-year basis in March, and one of Canada’s biggest banks says BC’s new property taxes are likely to blame.

Last month, home sales plummeted roughly 30 per cent compared to a year ago, according to the latest data from the Real Estate Board of Greater Vancouver (REBGV).

But RBC Senior Economist Robert Hogue says the region’s sales decline is not surprising considering resales had already dropped notably in January and February — most likely as a result of a national mortgage stress test that came into effect on January 1.

Hogue says sales activity dropped to even lower levels in March.

“Yet the new stress test may not have been the main reason for the further weakening in home resales in the Vancouver area,” he writes in a note, published Thursday.

“The situation got more challenging there after the BC provincial budget at the end of February announced a new round of market-cooling measures,” Hogue adds.

The BC government’s housing plan includes an increase to the existing foreign-buyer tax from 15 per cent to 20 per cent, along with a new speculation tax.

Although stricter mortgage regulations played a role in the region’s drop in sales throughout Q1 2018, Hogue attributes the further slowdown in March to the new housing policies.

“It’s highly probable that some buyers and sellers moved to the sidelines in March in reaction to the uncertainty caused by these measures — just as many did in the months following the introduction of the original foreign-buyer tax in August 2016,” writes Hogue.

Meantime, new listings for all properties fell nearly 7 per cent in March to 4,450 homes compared to 4,762 homes in March 2017.

Despite dampened sales and listings last month, Hogue notes that demand-supply conditions have recently become balanced in Metro Vancouver, resulting in more upward pressure on prices.

In March, the benchmark price of a home was $1,084,000 — a 16 per cent increase from a year ago and up one per cent compared to February 2018.

© 2017 BuzzBuzzHome Corp

Colliers International
other

In this issue, despite a decline in the number of sales, last year witnessed a year-over-year increase of 25% in total sales volume. Almost every sub-market witnessed phenomenal growth in per-unit value as average capitalization rates decreased due to the aggressive acquisition efforts of the investment community.

• Greater Vancouver Apartment sales totaled $1.19 Billion in 2017
• Nearly 50% of apartment building transactions in 2017 occurred outside of the City of Vancouver, most notably in New Westminster, which witnessed 12 sales totaling over $190 Million.
• 2017 witnessed the sale of larger assets as the average sale price increased from $6.5 Million in 2016 to over $10 Million.

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The look is warm and inviting at North Vancouver?s Edgemont Walk

Simon Briault
The Vancouver Sun

Edgemont Walk

Project location: 1133 Ridgewood Drive, North Vancouver

Project size: 24 three-bedroom townhomes ranging in size from 1,835 to 2,161 square feet, with prices starting from approximately $1.569 million

Developer: Boffo Properties

Architect: Gateway Architecture Inc.

Interior designer: Occupy Design

Marketing: rareEarth Project Marketing

Sales centre: 1133 Ridgewood Drive, North Vancouver

Sales phone: 604-880-0441

Website: http://www.edgemontwalk.com

Tarcisio Boffo founded Boffo Properties, a landscaping and construction business, more than 50 years ago and the company is now run by his children Daniel and Flavia. Although Boffo senior is officially retired, he is still involved when it comes to the landscaping of the company’s residential developments and hand picks all the plants – his lifelong passion.

Boffo Properties’ latest project is Edgemont Walk, a collection of 24 row townhomes on the corner of Edgemont Boulevard and Ridgewood Drive in North Vancouver. And with Tarcisio Boffo’s oversight, it’s no surprise that plenty of attention has gone into the landscaping.

Edgemont Walk includes a carefully landscaped courtyard and two plazas, the first of which faces Edgemont Boulevard and features a public art installation called Shattered Sphere by West Vancouver artist Brent Comber. The sphere will light up at night and is made from the trees on the site of the new development. The second private plaza within the development will include another sculpture that doubles as a children’s climbing structure.

“Because they have their own construction company and are building this project themselves, they have full control over the quality of the build from start to finish,” said Greg Lowe, director of sales at rareEarth Project Marketing, which is marketing the project on behalf of Boffo Properties. “It’s the type of old-world craftsmanship you don’t often see any more.

“The exteriors are finished with real granite, as opposed to cultured stone and there is real cedar shingle cladding,” Lowe added. “Edgemont Walk is also an exceptionally energy-efficient development with all homes having triple-glazed windows and on-demand hot water systems.”

Apart from the quality of the homes themselves, Lowe says that what makes Edgemont Walk so special is Edgemont Village itself.

“It’s an extremely authentic experience because there are local people running the businesses,” he said. “There are some (retail) chains, of course, but mainly it’s local people and that really makes a difference. So, for example, when you go to the flower store, you get your flowers from a long-time resident of the neighbourhood. You get this small-town or village feel, but you are right on the doorstep of the big city and also right next to the mountains and the incredible natural beauty that everybody loves about living on the North Shore.”

The homes at Edgemont Walk have three bedrooms plus flex rooms or dens and range in size from 1,835 to 2,161 square feet. Prices start at approximately $1.569 million.

Kitchens feature full-sized appliances by Wolf, Sub-Zero and Bosch, which are integrated with modern kitchen cabinetry. There are quartz countertops, gas cooktops for gourmet-level cooking, kitchen islands or L-shaped countertop designs, chimney-style hood fans and pantry storage spaces.

All homes have engineered hardwood flooring, powder rooms on the main floors and full laundry centres with added storage. There are downstairs flex spaces on the lower levels leading to private, two-car garages that let residents walk directly into their homes.

“There’s definitely a pent-up demand for townhomes in Edgemont,” Lowe said. “It’s the premier neighbourhood in North Vancouver and when you combine that location with the quality of the homes and the finishing inside them, it’s definitely going to be very popular with buyers.”

All homes at Edgemont Walk have a front patio next to the main entrance and a south-facing main patio, usually accessible from the kitchen. They also have a level at the top of the home that is dedicated entirely to the master suite. These include large ensuite bathrooms, walk-in closets and private decks.

“There are other multi-family developments in the Edgemont area, but Edgemont Walk provides an opportunity to actually live in the heart of the village,” Lowe said. “It’s walking distance to everything. There will be a new grocery store right across the street and then you walk down Edgemont Boulevard and you’ve got everything you need – banks, coffee shops, restaurants, bakeries and medical services are all right there.”

Stores and amenities in Edgemont Village include Windsor Meat Co., Giftworks Boutique, Columbus Farm Market, Trims, Village Physio, Canyon Restaurant, Bjorn Bar Bakery and a new Thrifty Foods store coming later in 2018.

“There’s a lifestyle component to the appeal of Edgemont Walk for sure,” Lowe added. “Living right in the village where you’re likely to meet your neighbours and people you know all the time gives you a real sense of community and that’s really special. That walkability will be appealing to downsizers, particularly if they don’t want to have to drive somewhere to get groceries or visit the doctor’s office.”

The grand opening of the Edgemont Walk sales centre at 1133 Ridgewood Drive is scheduled for April 14 and the homes will be completed this summer.

© 2018 Postmedia Network Inc.

Housing affordability improves for first time in 2 years

Steve Randall
Canadian Real Estate Wealth

There was an improvement in Canada’s housing affordability measure at the end of 2017.

It was the first time in two years that RBC Economics Research’s Housing Trends and Affordability Report has shown a decrease in its aggregate measure, albeit just 0.2 percentage points nationally to 48.3%.

As the measure is shown as the share of household income that would be required to carry the costs of owning a home at market price, a decrease indicates improving affordability.

Toronto saw a larger decrease in the measure, down 2.3 percentage points to 75.1%, but it is unlikely to have a meaningful effect.

“We expect the relief to Toronto ownership costs that ensued from the introduction of Ontario’s Fair Housing Plan to be short-lived,” said Craig Wright, Senior Vice-President and Chief Economist at RBC. “Our view is that Toronto prices will bottom out sometime this spring. Then we expect further interest rate hikes through the remainder of this year, which has the potential to stress housing affordability markedly in Canada.”

The report shows that affordability worsened in BC with Vancouver and Victoria both seeing higher prices in the last quarter of 2017, with the aggregate affordability measure rising 1.8 and 0.5 percentage points respectively.

“Unfortunately, Vancouver homebuyers are being challenged by the worst affordability levels ever recorded in Canada,” said Wright. “The costs of owning a home at today’s prices would have represented an astounding 85.2% of a typical household’s income in the fourth quarter. In this context, it wasn’t a surprise to see the BC government announced further housing policy initiatives to cool the market in its 2018 budget.”

Affordability also weakened in Montreal for the ninth time in the past ten quarters, denting its reputation as an affordable market.

The picture has changed little for housing markets in the Prairies and Atlantic Canada. Home ownership costs have remained largely stable though, a small increase in mortgage rates contributed to a slight deterioration in affordability within these regions in the fourth quarter.

Copyright © 2018 Key Media Pty Ltd