Recent steps having little effect on B.C. housing market stability
By AdvocateDaily.com Staff
The B.C. government’s recent solutions aimed at increasing affordability in Vancouver’s real estate sector have not stabilized the housing market, but have instead pitted one group of buyers against another and driven demand out, Vancouver corporate lawyer Jonathan Reilly tells The Lawyer’s Daily.
In addition to implementing a 15 per cent property transfer tax for foreign nationals, the B.C. government recently announced plans to increase disclosure when real estate purchases are made through a corporation or trust.
Starting in mid-September, people will be required to report additional information on their property transfer tax return when a transaction is structured through a corporation or trust, allowing the government to identify those with a significant interest in the property and ensure the correct amount of tax is paid, reports The Lawyer’s Daily.
The return will now require individuals to include their name, date of birth, citizenship information, contact details and tax identification numbers and reporting requirements will apply to all property types, including residential and commercial.
However, as Reilly, founder of English Bay Law Corporation tells The Lawyer’s Daily, so far, the government has only provided solutions that require spending tax dollars rather than considering approaches that require less government intervention and would result in more housing at an affordable price.
Reilly says prices for homes on the west side of Vancouver have fallen about 25 per cent but prices in the condo market, where he says most people in the province are buying, haven’t changed.
“If you own a $5 million home, it’s now worth $1 million less. But people aren’t buying $5 million homes, most people are buying in the $750,000 to $1.5 million range, and that’s the condo market,” says Reilly, whose firm practises real estate law.
“A drop in the $5 million housing market, that really doesn’t help your average person — the only people that it is going to help is developers.”
The province could be doing other things, suggests Reilly, such as reducing the amount of time it takes to get development approval to build new stock.
“Most development, if not all, is financed, and one of the largest costs in the development is the interest to the lenders on the acquisition and construction costs,” he tells The Lawyer’s Daily.
“So if [the government] was more efficient in giving its approvals, then we could have more stock, and I think the real problem [in the housing market] is the shortage of stock.”