Vancouver, British Columbia, Oct. 02, 2019 (GLOBE NEWSWIRE) -- Too many British Columbians struggle to find an affordable home to rent or own because of a lack of housing options. Nearly six in ten uncommitted Canadian voters cite access to affordable housing as a top election issue, according to an August 2019 Angus Reid survey.
The next federal government has the opportunity to improve affordability by reducing taxes on new rental homes, encouraging housing supply to match transit targets and changing mortgage underwriting rules.
Six organizations representing the BC housing sector have partnered to make housing affordability recommendations that focus on much-needed solutions.
The participating organizations include the British Columbia Real Estate Association, the Canadian Mortgage Brokers Association – British Columbia, Landlord BC, the Mortgage and Title Insurance Industry Association of Canada, the Real Estate Board of Greater Vancouver, and the Urban Development Institute.
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Read their full statement:
BC Real Estate Sector Urges Federal Parties to Act on Affordability Recommendations
Too many British Columbians struggle to find an affordable home to rent or own because of a lack of housing options. Nearly six in ten uncommitted Canadian voters cite access to affordable housing as a top election issue, according to an August 2019 Angus Reid survey.
The next federal government has the opportunity to improve affordability by reducing taxes on new rental homes, encouraging housing supply to match transit targets and changing mortgage underwriting rules.
Six organizations representing the BC housing sector have partnered to make housing affordability recommendations that focus on much-needed solutions. In advance of the first debate, we urge each of the parties to adopt the following three recommendations to help address the housing and affordability challenges in British Columbia and the rest of Canada.
1. Remove GST as a major barrier to new rental housing
British Columbia has a rental housing shortage. Metro Vancouver’s overall rental vacancy rate has hovered around one per cent or lower for the last five years. CMHC estimates the region has had a net loss of 6,000 purpose-built rental units since 1991. At the same time Metro Vancouver’s population has grown by over one million people and is forecast to grow by an additional million in the next 20 years. This scarcity of rental housing has resulted in increased rental prices and stress for renters, a situation that will continue unless decisive action is taken.
A barrier to addressing the lack of new rental options is the punitive application of the five per cent GST on new purpose-built rental buildings. Under GST rules, a builder pays GST on the “self-supply” of a purpose-built rental building when construction is completed. This means that when rental developers intend to keep, manage and operate new purpose-built rental homes, GST rules require that they pay GST on the market value of the building and property at completion as if they’ve sold it. This is essentially a sales tax on an artificial transaction that adds millions of dollars to the cost of new rental buildings, even for non-profit home builders. A recent analysis of a 117-unit project in Vancouver showed how removing the GST could reduce monthly rents between 3.04 and 6.06 per cent. This additional tax negatively impacts renters, because rental providers must recover the costs through increased rents.
Removing the GST would make purpose-built rental projects more financially viable and could provide lower rental rates for affordable housing projects.
We recommend:
2. Link federal transit investments with federal housing targets
The federal government can encourage effective land use and transportation decisions by linking the need for more housing options with the significant federal transit funding that is planned. Setting new land use guidelines with housing targets for transit investments would unlock additional home options by supporting regional and local transportation plans.
We recommend:
3. Adjust the mortgage stress test and amortization rules
In 2018, the federal government enacted new mortgage rules that require borrowers to qualify for a mortgage at the higher of either the rate they’ve negotiated with their bank plus two per cent or the Bank of Canada’s five-year rate. This B-20 stress test has had a pronounced impact in BC, causing an estimated $500 million in lost economic activity.
The B-20 stress test should be a flexible policy that is adjusted regularly to respond to economic trends.
B-20 is now due for an adjustment for the following reasons:
Changing the stress test would help achieve the government’s goal of ensuring Canadians don’t take on more debt than they can bear, while acknowledging ongoing economic trends.
We recommend:
For a PDF of the news release, click here.
To learn more, visit bchousingaffordability.ca.
Media enquiries:
British Columbia Real Estate Association April van Ert Communications Manager avanert@bcrea.bc.ca 604.742.2797 | Canadian Mortgage Brokers Association – British Columbia Samantha Gale, LLB Chief Executive Officer samanthagale@cmbabc.ca 604.408.9989 | |
Landlord BC David Hutniak Chief Executive Officer davidh@landlordbc.ca 604.733.9440 ext. 202 | Mortgage and Title Insurance Industry Association of Canada Ed Steel Executive Director ed.steel@mtiiac-acahtc.ca 416.994.4949 | |
Real Estate Board of Greater Vancouver Craig Munn Manager, Communications cmunn@rebgv.org 604.730.3146 | Urban Development Institute Cheryl Ziola Director, Communications cziola@udi.org 604.719.2909 |
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