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March 28, 2018
BC budget includes new real estate taxes and spending commitments
Housing was the dominant issue in the recent provincial budget.
The government released a 30-point housing strategy aimed at reducing housing demand, curbing tax fraud, building affordable housing, and increasing security for renters.
New tax measures include increasing property taxes and property transfer taxes on residential properties valued above $3 million, expanding the foreign buyer tax, and implementing a housing speculation tax.
The province will:
• Invest $6 billion in affordable housing to create 114,000 homes over the next 10 years.
• Enhance local government capacity to build and retain affordable housing.
• Require developers to collect and report comprehensive information about the assignment of pre-sale condo purchases.
• Track beneficial ownership information.
• Collect additional information to increase transparency and strengthen enforcement in real estate.
- The province will implement a new speculation tax on residential properties, targeting foreign and domestic home owners who don’t pay income tax in BC. This includes those who leave their homes vacant.
- The tax will apply to the Metro Vancouver, Fraser Valley, Capital, and Nanaimo Regional districts and in the municipalities of Kelowna and West Kelowna.
- In 2018, the tax rate will be $5 per $1,000 of assessed value. In 2019, the tax rate will rise to $20 per $1,000 of assessed value.
- The province will administer the tax and will collect data to enforce it including, social insurance numbers, household information, and world-wide income information.
Foreign buyer tax:
- Effective February 21, 2018, the foreign buyer tax will increase to 20% from 15% and will be extended to the Fraser Valley, Capital, Nanaimo, and Central Okanagan Regional Districts.
- If the property is located in the Capital Regional District, Fraser Valley Regional District, Regional District of Central Okanagan, or Nanaimo Regional District, and the property transfer is registered on or after February 21, 2018, there are transitional rules available.
Property transfer tax (PTT):
- Effective February 21, 2018, the Property Transfer Tax on residential properties ve $3 million will increase to 5% from 3%.
Provincial school tax:
- Beginning in 2019, the provincial school tax will increase on most residential properties in excess of $3 million.
Database on pre-sale condo assignments:
- The province will require developers to collect and report comprehensive information about the assignment of pre-sale condo purchases. The information will be reported to a designated government office and shared with federal and provincial tax authorities to ensure taxes are paid.
Online accommodation PST and MRDT:
- Online accommodation platforms are enabled to collect and remit the Provincial Sales Tax and Municipal and Regional District Tax (Hotel Room Tax).
Property tax treatment for ALR land:
- As part of the Agricultural Land Reserve (ALR) review, the province is examining residential land in the ALR to ensure land is used for farming.
Compelling access to Multiple Listing Services (MLS):
- The province plans to enable tax administrators to compel access to information relevant to property transfers, such as information held in a MLS database.
Beneficial land ownership registry:
- The province will require additional information about beneficial ownership on the PTT form.
- Administered by the Land Title & Survey Authority LTSA, the information will be publicly available and shared with federal and provincial tax and law enforcement authorities. Legislation will be introduced to require BC corporations to hold accurate and up to date information on beneficial owners in their own record offices and make it available to law enforcement, tax and other authorities.
TAX FORCE ON MONEY LAUNDERING AND TAX EVASION
The province will work with the federal government to formalize a multi-agency working group on tax evasion, money laundering and housing.
RESIDENTIAL TENANCY BRANCH
Increased funding to reduce wait time, improve service and deal with disputes more quickly, as well as strengthening the Residential Tenancy Act and the penalties for those who repeatedly break the law.
March 28, 2018
Fewer house buyers for Eastside detached properties!
January and February 2018 proved to be quiet months for sales of detached houses in Vancouver East. According to statistics from the Multiple Listing Service (MLS) of the Real Estate Board of Greater Vancouver, only 45 Eastside detached homes changed hands in January 2018. Sales edged up to 77 in February 2018. The sluggish sales were assisted by several factors, from inclement weather, to another hike in interest rates from the Bank of Canada.
The Bank of Canada has now increased the trend-setting prime rate by .75% in the last year. The MLS Home Price Index (HPI) shows Eastside house prices easing slightly over the last 6 months. The Benchmark Price for a detached home in Vancouver East sits at $1,560,400 (at the end of February 2018)
The busiest segment of the Eastside housing market has been ATTACHED and APARTMENT sales. Prices for these types of homes continue to rise.
As we finish off the winter market, we can expect listing inventories to build, as the spring market is traditionally the busiest time of year for selling and buying real estate.
As we go to press the listing inventory for Vancouver East detached homes is 636, attached homes are at 132 units and apartments 196. We’ll see if sales keep up with listing inventories with the arrival of spring, 2018.
January 19, 2018
Vancouver’s New Housing Strategy
THERE ARE 120 ACTIONS IN THE STRATEGY WHICH FALL UNDER THE FOLLOWING 10 PRIORITIES:
1. Shift toward the “right supply” by increasing rental and social housing near transit and arterials, like the Broadway corridor, Nanaimo station, 29th Avenue station, and Olympic Village station. Low-density neighbourhoods will see new infill housing and multiple homes on a single lot, as well as townhouses and low-rise apartments in areas with public amenities. The city will also implement a Moderate Income Rental Housing Pilot Program (see point 3).
2. Limit speculation and stabilize land value by working with senior levels of government to develop tax and financial regulations including a speculation and flipping tax, increased Property Transfer Tax on luxury properties, and closing loopholes around capital gains taxes.
3. Increase rental protection and affordability to ensure rents remain affordable after redevelopment. The city plans to preserve the existing 90,000 rental homes in Vancouver by lowering the trigger for one-for-one replacement of rentals. A new Moderate Income Rental Housing Pilot Program will incentivize developers through density bonusing to build 100% rental buildings where 20% of the units are permanently affordable for households earning $30,000-$80,000 annually. Over the next decade 2,000 co-op homes will also be built.
4. Review city processes for housing, rezoning and development to simplify city approaches. Reduce processing times and speed up the rezoning and community amenity contributions (CAC) process for market rental development applications.
5. Support diverse ways of living by permitting collective housing by amending the Zoning and Development By-Law to permit six or more unrelated roommates in single-family areas.
6. Provide housing for homeless residents by requesting funding to build 1,200 units of temporary modular housing on city-owned sites in the next two years.
7. Develop a new 10-Year Affordable Housing Delivery and Financial Plan to support development of 12,000 social, supportive and co-op homes.
8. Improve livability of single room occupancy (SRO) hotels by replacing 50% with new self-contained social housing. The city will also establish an SRO revitalization fund to renovate 10 privately owned buildings.
9. Launch the new Social Purpose Real Estate Incentive Program to support non-profits and co-ops who own their land and buildings to redevelop and expand affordable housing.
10. Build five new Aboriginal housing developments through partnerships with Aboriginal agencies, and create a 10-Year Aboriginal Housing strategy in support of the city’s ongoing efforts for reconciliation.
The strategy builds on measures Vancouver is already taking, including the Empty Homes Tax; short-term rental regulation; and temporary modular housing for low income and homeless residents.
NUMBER OF NEW HOMES COMING
The goal: 72,000 new homes to be delivered in 10 years.
- 50% of new homes targeted at families earning less than $80,000
- 29,000 homes (40%) will be for families
- 48,000 homes (55%) will be for renters
- 12,000 homes will be social, supportive and non-profit co-operative homes; 4,100 will have supports
- 20,000 homes will be secure long-term market rental homes
- 4,000 new laneway homes will provide ground-oriented homes for couples and families
ADDRESSING SPECULATION AND HOUSING DEMAND
Vancouver has seen rapid home price growth which city officials believe is “fuelled by more than just households looking for primary homes.”
So far, the strategy has been to implement the Empty Homes Tax and the Short-Term Rental regulations.
The next step is a pilot program directed at newly constructed housing for residents who live and work in Vancouver. This will include:
- A rezoning policy to require developers to market pre-sale strata units to residents already living and working in Metro Vancouver before units are marketed and sold nationally or internationally; and
- Additional measures such as requiring the developer to limit bulk sales, and include terms in the contract of purchase and sale to prevent the flipping of assignments for profit
January 15, 2018
East Vancouver Detached Housing Stabilizes
Following strong demand in the late spring of 2017, which resulted in a big price jump, the year ended with Vancouver East detached homes in a more stable market. According to Multiple Listing Service (MLS) statistics from the Real Estate Board of Greater Vancouver, 88 houses were sold on the Eastside in December 2017. This is down slightly from the 94 detached sales in November 2017. Meanwhile, the number of Vancouver East houses listed for sale dropped considerably in December 2017. As we go to press in early January 2018, the listing inventory is around 550 units. With a sales-to-listings ratio of about 17%, the new year begins with reasonable demand vs. supply in the Eastside detached market.
Mortgage rates continue to be favourable, despite some increases in 2017. Major lenders are advertising 5 year closed mortgages at rates of about 5%. However, with discounts of 2% or more to qualified home buyers, financing continues to be competitive between lenders.
One of the many Federal Government changes to try to cool the housing markets in Canada’s major cities came into effect on January 1, 2018. Home buyers who don’t require mortgage insurance must still qualify for their mortgage at a higher rate.
Under the new rules from the Office of the Superintendent of Financial Institutions, the minimum qualifying rate for uninsured mortgages will be:
- The greater of the Bank of Canada’s 5 year benchmark rate or
- The contractual mortgage rate plus 2%
It will be interesting to see if this new ‘stress test’ negatively impacts the housing market, particularly the condo market, which has been running hot through the latter part of 2017!
November 27, 2017
Detached Home Sales Ease, Condo Sales Boom!
With the prices for Vancouver East detached homes still high, it seems that homebuyers have turned their attention to the condo apartment and townhome markets. As sales for detached homes have slipped this fall, sales for apartments have been at a frenzied pace. According to Multiple Listing Service (MLS) statistics from the Real Estate Board of Greater Vancouver 106 detached homes sold in East Vancouver during October 2017. This is a slight increase in sales from the 95 houses sold in September 2017.
Meanwhile, 150 apartments were sold in October 2017 vs. 129 units in September 2017. While house prices have eased somewhat from the peak prices of May 2017, condo prices were at an all-time high in October 2017. This is clearly a result of low inventory vs. high demand. Multiple offer situations have driven up condo prices nearly 20% from a year ago. Tougher Federal Government lending rules are coming to mortgage lenders in January 2018. (See accompanying story). It seems that Buyers are desperately trying to buy and complete on their purchases prior to January 1, 2018.
In closing, the sales to listings ratio for detached homes on the Eastside stood at about 14% (close to a Buyer’s Market) while the sales to listings for apartments was a whopping 79% (definitely a Seller’s Market).
Detached home sellers need to price their properties sharply today, but prices are still higher than they were at the beginning of the year. All we can say about the condo apartment market right now is that it is great to be a Seller!
November 27, 2017
New Requirements for uninsured mortgages….
Home buyers who don’t require mortgage insurance—those with a down payment of 20% or more—must still qualify for their mortgage at a higher rate as of January 1, 2018.
Canada’s Office of the Superintendent of Financial Institutions (OSFI) announced these rules changes on October 27, 2017.
Draft changes were released last summer for stakeholder feedback. The Canadian Real Estate Association provided a submission.
Under the new rules, the minimum qualifying rate for uninsured mortgages will be:
¨ the greater of the Bank of Canada’s five-year benchmark rate or
¨ the contractual mortgage rate plus 2%
OSFI will also require lenders to enhance their loan-to-value (LTV) limits and restrict certain lending arrangements designed to circumvent LTV limits.
These changes apply to federally regulated financial institutions and are the final revisions to Guideline B20: Residential Mortgage Underwriting Practices and Procedures.
There could be a rude surprise for borrowers who signed a purchase and sale agreement for a property closing after December and have not applied for a mortgage before the new rules kick in, according to the Canadian Home Builders’ Association (CHBA).
“Unless the OSFI creates an exception for such cases, some of these buyers will have to seek higher-cost non-bank financing to close (or may not be able to close at all),” said CHBA, which is working with officials from the Department of Finance to get OSFI to put transitional rules in place for buyers who find themselves in this situation.
CHBA notes: “Builders could be left with empty units while buyers could lose their hard earned deposits.”
The new stress test will not apply to home owners renewing their uninsured mortgage with their existing lender. Home owners who move to a different lender will be treated as a new borrower and will have to qualify at a higher, stress-tested rate.
November 27, 2017
Residential Underground Storage Tanks
How many are still in the ground in BC? No one knows precisely because they were never registered and there wasn’t a permitting system. City of Vancouver staff estimate there are between 10,000 and 20,000 still in the ground in Vancouver alone.
Underground storage tanks (USTs) were extensively used until the 1970’s when natural gas became readily available. They’ve often been forgotten and lie buried in yards and under basements and decks.
Telltale signs of USTs include vent and fill pipes or copper lines sticking out of lawns, or the ground close to buildings.
The life span of a tank is about 25 years. As tanks age and corrode, the toxic substances they contain can leak and leach into soil, neighbouring properties, and groundwater. They can also cause a fire or explosion.
Cleanup costs vary. There are cases where home owners have paid as much as $123,000, according to Mike Mangan, a real estate lawyer.
In BC, residential fuel storage tanks are regulated by the BC Fire Code, Part 4.
Toxic leaks are governed by the BC Environmental Management Act and the Contaminated Sites Regulation.
Municipalities, including Vancouver, typically also have bylaws, policies, and additional requirements for removing or abandoning tanks. Local fire departments usually administer them.
According to the Ministry of Environment and Climate Change Strategy’s Remediation Liability Overview, those who can be held responsible for causing contamination include the current owner, a previous owner, and even a producer or transporter of the substance that caused the contamination.
Tanks in the City of Vancouver
Tanks still in the ground in Vancouver are regulated by:
¨ The City’s Fire Bylaw which follows a CCME Code of Practices for tank removal and decommissioning; and
¨ The City’s Sewer and Watercourse Bylaw No. 8093, section 5.3, which requires property owners to remove a tank that will not be reused or has been out of service for two years.
Have an interesting idea for a newsletter article? Contact Norm and watch this page regularly for updates!