Council has been asked to circulate this letter from Bill Veenhof, Board Chair, Director, Electoral Area H:
The new BC Budget introduced a Speculation Tax and I am writing to give you my unfiltered thoughts on this tax and to seek your input.
There has been no consultation by the Province with the RDN on this tax, this means that there is a great deal we don’t know about the details of the tax. We are told that the goals of the tax are to raise tax revenue for affordable housing and to lower property values to increase affordable stock.
The tax targets “out of province” property owners with an annual tax of 2% (by 2019) of the assessed value of the property. For example, a $500,000 home will have an annual tax of $10,000. This tax is expected to do one of three things:
- For those who decide to pay the tax, that money will go to supporting the need for affordable housing, largely an urban issue.
- Cause people “from away” to rent their places out to avoid the tax. This one doesn’t seem likely to me. If someone from “from away” has a home here, they own it to live in part of the year. Renting it out for the other part of the year will not work in providing affordable stable housing, as we cannot simply throw renters on the street when the owner lives in the home for part of the year.
- Cause people “from away” to sell, increasing supply and driving down property values, thus increasing affordable housing stock. The average price of a home in the RDN is $522,000. To lower the price of an average home to a point where a buyer would assess affordable rental income as a reasonable return on the investment, the average home would have to drop in value very significantly ($200,000?). Home values do not drop independently from the rest of the neighbourhood, if this tax succeeds in driving down property values, all of Area H will likely see a downturn.
If the goal of this tax is to drive down property values in Area H, then it would seem that the Province has deliberately set out to reduce your net worth by a very significant amount. This is your money.
This means that some of you may owe more on your mortgage than your house is worth, have less value in your home to use for a line of credit and some will be constrained proceeding on with the next phase of your lives.
This situation is made worse by the fact that this tax applies to the RDN but not to our neighbouring Regional Districts: Comox Valley, Alberni and Cowichan Valley. We will see our residential values decline but it is not expected that it will be the case in our neighbouring jurisdictions. This is not hypothetical, and you should note that a major development was announced, days after the budget, in Union Bay potentially moving development dollars out of Area H.
The Province has not consulted with the RDN on this tax. If they had, they would have understood that the RDN has recognized the importance of and is working towards the need for affordable housing and supports broad Provincial housing goals. We have approved secondary suites and we are motivating developers to build affordable units. Indeed, with Bowser sewer, developers are planning affordable units (tiny homes) and affordable suites.
It should be noted that as part of developers’ investment funding streams, the developers routinely rely on money “from away”. The proposed speculation tax will reduce this investment source and thus, developers’ ability to realize affordable housing goals. This means that the tax will work against the stated goals.
If this tax causes development to move out of Area H then we will lose construction jobs. Construction is a mainstay of our economy. This loss could cause an outmigration of young people when we already have one of the oldest age demographics in Canada.
Many properties in Area H have seasonal zoning. This means the maximum stay is +/- 180 days. On the face of it, these properties cannot be seen as effective long-term rentals. I do not know what the provincial intention is with these, but the RDN position is that they should not be part of the tax.
Finally, the people “from away” who own homes here are not speculators. They own their homes here for long periods of time, they pay a higher rate of property tax, they support our economy, they pay PST and fuel tax, they volunteer here. They are our neighbours and friends. The tax targets the wrong people.
Last night, the RDN Board voted unanimously that the province end this tax.
I have sent the Honourable Minister James a letter asking for formal consultation on the Speculation Tax. At this point, I do not know if the Province will consult with us. In advance of this meeting, I would like to hear from you.
If you choose to reply, please reply directly to this email (this will help me sort the many inputs I expect to receive). Please indicate:
- If you support the Speculation Tax, or not
- How you will be impacted
- What you would like to see changed
I am looking forward to hearing from you and thank you for your consideration of this challenge to our community.
Bill Veenhof
Board Chair
Director, Electoral Area H
Shaw Hill, Deep Bay, Bowser
Phone: 250-797-6313
Email: bill.veenhof@shaw.ca