On Tuesday February 20, 2018 the Honourable Carole James, Minister of Finance and Deputy Premier presented the NDP government’s first budget since coming into power July 2017. This follows her September 2017 budget update.
Titled “Delivering Dividends of a Strong Economy”, highlights of the government’s key messaging for Budget 2017 include: making life more affordable, delivering services people count on and, building a strong, sustainable economy.
It is LandlordBC’s view that the government’s focus on affordable rental housing is laudable. The commitment to work with private sector rental developers is key and we are pleased to see property tax considerations and pre-zoning for new rental housing on the table. In addition, the new HousingHub represents a potential opportunity for the community housing sector and the private sector to partner to develop new affordable purpose-built rental housing for British Columbians.
While post-budget commentary has been dominated by the “demand side” measures taken by the government to temper residential real estate speculation, on this front the budget is acknowledged by most stakeholders as bold with the caveat, will it be enough or is it completely wrong-headed? The reality is that we are very much in unchartered territory and realistically only time will tell what the impact will be and if the Government’s stated objective will be achieved. It would not be a surprise to see some pullback of foreign investment in residential real estate, at least in the immediate term. However, the reality is there are huge sums of money that continue to look for safe havens to invest in residential real estate, and British Columbia remains a highly desirable place to invest. The money will likely keep coming.
Finance Minister James also received high praise for the Government’s action on child care. While advocates and pundits alike continue to hammer away at the so-called “$10 a day” campaign promise, it is LandlordBC’s view that they need to get past that “slogan” and focus on the tangible results. The consensus is that the measures and funding that the Government has outlined are significant, will make an immediate and long-term impact, while at the same acknowledging that this is an issue that will take time to address. The broader availability of high quality and affordable child care has huge socio-economic issues for families, workers and businesses including the rental housing industry. This is a positive step by the Government.
Housing has never been so front-and-centre in a budget as it was in Budget 2018. While demand-side measures are one side of the equation, supply-side measures are critically important, and Budget 2018 did provide meaningful financial commitments on this front. While it is clear that the community housing sector will be the largest beneficiary of the Government’s financial commitments, a move that LandlordBC fully supports, Finance Minister James did commit $378 million over three years and more that $1.89 billion over 10 years to help build almost 14,000 units of rental housing targeted at the “missing middle” demographic – skilled workers like teachers, service-industry workers and nurses our communities need and are finding it difficult to find and afford quality housing. These monies do represent an opportunity for the private sector rental housing providers to house more British Columbians.
Budget 2018 also provided some potential tax exemptions for new purpose-built rental housing. The Province will mirror property tax exemptions provided under a municipal revitalization agreement for qualifying purpose-built rental housing. This applies to the school tax portion of the property taxes only which is meaningful although the caveat is that the Province’s participation is a mirroring of the municipality’s exemption, ie: the municipality has to make the first move. We have no indication that the Province will “pressure” municipalities to advance this tax exemption, and LandlordBC will be strongly encouraging all municipalities to do so. We are however awaiting clarification regarding the application of the proposed additional education taxes to existing purpose-built rental which we strongly object to as they stand to harm rental affordability.
Portable Housing Benefits for renters has been a cornerstone of LandlordBC’s advocacy for decades. British Columbia has been a leader in this regard with the SAFER and RAP programs targeting seniors and lower income families respectively. These renter supports provide increased housing choice and security for renters in the private rental market and we are pleased that this budget the Government has meaningfully enhanced these benefits with the potential for further enhancements in the future.
While there were numerous tax measures in the budget, one that stood out for us was the increase to the Property Transfer Tax (PTT). LandlordBC specifically recommended that the Government waive PTT for purpose-built rental in a pre-budget “policy tools” submission to Finance Minister James and Housing Minister Robinson. We now see an increase to the PTT. We are concerned about the Government’s decision to not exempt purpose-built rental housing from the Property Transfer Tax. We continue to liaise with the Government on this matter in the hope that they will recognize that their failure to implement such waiver will impede the development of new purpose-built rental.
Minister James, in her address to Budget Lock-Up attendees, stated repeatedly that Budget 2018 was “bold”. It’s hard to argue against that. The are many unknowns in terms of unintended consequences but the strong action on child care will be the beginning of a positive legacy for British Columbians, and the immediate help on housing for the more vulnerable is something that LandlordBC supports.