Metro Vancouver’s development sector is asking the B.C. government for an exemption to the new real estate speculation tax for bare land.
Anne McMullin, CEO of the Urban Development Institute, said an unintended consequence of applying the new tax and additional school levies to bare land being stockpiled for future development is to increase the cost of new housing.
McMullin said the UDI asked government for clarification on its concern last week, but hasn’t had a response.
McMullin said it is common for developers to hold residentially zoned sites worth $10 million or more for future use, as it can take several years to get through the development process. These appear to be subject to the new taxes, which start at 0.5 per cent of assessed value, even when there is no housing on the land to be lived in.
“It’s capturing land slated for development, which adds additional costs, which makes it also difficult to build what we call that ‘missing middle’ product that is at a lower price,” McMullin said.
The UDI has produced estimates for certain sites that additional taxes, if applied, would add $20,000 to $46,000 for every housing unit on top on taxes and fees that already average $280,000 a unit.
McMullin argued that even purpose-built rental development would become more expensive, requiring higher rents for finished units.
The province faced a firestorm of criticism when it first brought out the idea of expanding the speculation tax introduced by the previous B.C. Liberal government to curb absentee foreign investment in Metro Vancouver housing.
Communities such as Kelowna, West Kelowna, Parksville and Qualicum Beach, which have high numbers of vacation homes owned by out-of-province residents, protested that the tax would unfairly target long-term owners who aren’t speculators.
Finance Minister Carole James, on Monday, rolled out a revised tax that exempted the Gulf Islands, Parksville and Qualicum Beach as well as vacation properties and second homes worth less than $400,000.
James also broke the new tax down to three levels with British Columbians tagged with a 0.5 per cent tax on second homes in areas where it applies — the Lower Mainland, Victoria Capital region, Nanaimo, Kelowna and West Kelowna. The tax would be higher for non residents.
“Over 99 per cent of British Columbians will not pay the tax,” James said in news reports after unveiling the measure. “People with second homes outside of high cost urban areas will not pay the tax. We’re going after those who are clearly taking advantage of the market and driving up prices.”
McMullin said UDI persuaded the City of Vancouver to exempt development lands from its new empty homes tax.
The Ministry of Finance could not provide a spokesmen to speak on the record about the UDI complaint.
Source: The Vancouver Sun. http://vancouversun.com/news/local-news/developers-ask-for-exemption-from-b-c-s-speculation-tax-on-development-land