Repair bills will include HST while PST rebate disappears
Doug Ward
Sun
Trudy Lancelyn is strata council president at a Burnaby highrise undergoing repairs for leaks. The residents in the building are about to get hit with an unforeseen tax bill, thanks to the new HST and the cancellation of a PST rebate grant. JENNIFER MOREAU/ BURNABY NOW
The financial hit facing thousands of leaky-condo owners in B.C. is about to get worse because of the new harmonized sales tax and the end of the province’s rebate for PST paid on repairs.
The HST will apply to all goods and services involved in leaky condo reconstruction, including labour, which was not covered by the PST.
The PST relief grant for owners of homes with completed repairs will be terminated June 30, with the arrival of the HST.
“It’s a double whammy,” said James Balderson, of the Coalition of Leaky Condo Owners.
“The government will be taxing the misery of leaky-condo owners.”
Gary Hamilton, president of a strata council at 2368 Laurel St. in Vancouver, said the changes will force condo owners in his development to dig deeper into their pockets to pay for repairs.
Hamilton said the strata council won’t be getting a $40,000 PST rebate it had initially counted on when drawing up its budget. And the HST will add an extra $80,000 to repair costs, he added.
“So the overall impact to the owners here is $120,000,” said Hamilton. “We had no idea when we signed a contract with our contractor, what the impact of these tax changes would be.”
Hamilton said his strata council has a contingency fund for unexpected costs, but the unanticipated burden will leave his member condo owners, some of them pensioners, with less discretionary income.
It’s unclear how many condo owners will be affected by the tax changes.
Seumas Gordon, a public affairs officer with the ministry of housing and social development, said the government does not have an estimate of how many condo owners stand to lose the rebate.
Leaky-condo advocate Balderson said there could be tens of thousands of owners who are going to face increased costs.
A report from consultants McClanaghan & Associates two years ago estimated that some 45 to 55 per cent of the 160,000 strata-owned apartments built in B.C. during the leaky-condo period — considered between 1992 and 1999 — had suffered “premature building envelope failure.”
The report’s authors estimated that between 45 and 68 per cent of the leaky units had not yet been repaired, and that by 2012, up to one-third of them would still need fixing.
The Homeowner Protection Office (HPO) said that, as of the end of 2009, it had approved relief grants for 765 strata councils, with an average grant of $688 per home.
NDP housing critic Shane Simpson, extrapolating from the report’s projections and the HPO figures, said that there are about 29,000 units still to be repaired — “so there’s about $20 million being lost to condo owners in lost PST rebates. It’s a pretty big number.”
Simpson said the new condo repair costs are “just another example of how the HST will hit consumers and people who can least afford it. People are facing a whole array of extra costs simply to keep their homes.”
Among these people are owners of 50 condos in a highrise building at 7288 Acorn Ave. in Burnaby who have already contributed about $75,000 each for a 12-month, $3.8-million repair job expected to wrap up this October.
“This is a tax … that we hadn’t budgeted on. We counted on getting the PST rebate, and we’re not going to get it,” said Trudy Lancelyn, president of the strata council.
Lancelyn was expecting a total PST rebate of roughly $100,000.
“We’re not against the HST per se, but it would have been very helpful if they just waived that criteria,” Lancelyn said. “It basically disqualifies every partly complete project like this one.”
The Burnaby strata council estimates that the additional seven-per-cent HST levy on items currently PST-exempt will mean $110,000 in additional costs. In all, the HST and the cancelled rebate will add $210,000 to the project, which translates to $4,200 on average per suite.
Lancelyn said they had no idea the HST was on its way when they budgeted for the project.
But government spokesman Gordon said the PST relief is available for work completed by June 30 where PST has been paid. Applications received by June 30, 2010 will be processed.
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