Blog by Andrew Peck

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Will a luxury or speculation tax create more affordable housing?

Will a luxury or speculation tax create more affordable housing?

In the last month, both the Mayor of Vancouver and economists from the University of British Columbia and Simon Fraser University have proposed a speculation or luxury tax on housing.

The goal is to increase affordable housing. 

While there's no question that making market and rental housing more affordable throughout the province is a top priority, will a luxury or speculation tax make this happen?

When I was president of BC Real Estate Association and the Real Estate Board of Greater Vancouver, we lobbied:

  • the provincial government to make changes to the Property Transfer Tax (PTT) to benefit first-time buyers; and
  • local cities and municipalities to rezone land to allow denser neighbourhoods including row townhomes along arterial roadways,

As part of CREA's leadership team, I've also advocated to the Federal government for changes to the Home Buyers' Plan (RRSPs for home buyers).

How many foreign buyers are there?

BC Real Estate Association data  finds that foreign ownership accounts for less than 5% of sales activity.

A better solution

When the BC Government first implemented the PTT close to 30 years ago, it was designed as a luxury tax that would apply to just 5% of home buyers.

Today, most home buyers in BC pay the PTT. On a benchmark price of $700,000 the tax adds $12,000.   

A better solution to making homes more affordable is to make more homes.

Local governments throughout Metro Vancouver should follow the City of Vancouver's lead and rezone single family areas to allow for laneway homes and secondary suites.

The provincial government should change regulations to allow laneway homes and secondary suites to be bought and sold.

Local governments should also rezone to allow for cottage homes and micro homes and suites.

Homes create jobs

Our provincial economy and local economies heavily rely on home sales and the economic spin-offs and jobs they create in our communities.

Increasing supply will create more affordable homes and benefit our  communities.

Sources:
City of Vancouver
Real Estate Board of Greater Vancouver

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