New property taxes outlined in BC’s 2018 budget are under fire for primarily affecting domestic homeowners in the province, Alberta and other parts of Canada, instead of targeting foreign buyers.
According to a Royal LePage survey, nearly 91 per cent of real estate professionals said that BC’s new speculation tax — set to roll out in fall 2018 — will negatively impact home sales from out-of-province buyers who are looking to purchase a second home in the province.
“Canadians make up a much larger proportion of secondary home owners in the province. If you look at a city like Kelowna, for example, it’s estimated that 15 per cent of the properties are owned by Albertans,” Royal LePage CEO Phil Soper tells BuzzBuzzNews.
The survey, published on Thursday, polled over 500 real estate professionals in BC and Alberta about the housing policies included in the BC government’s 2018 budget, unveiled in February.
Along with a new speculation tax, the government increased the foreign buyer tax to 20 per cent, expanded its boundaries and raised property-related school taxes and land transfer taxes on homes valued over $3 million.
Although 77 per cent of respondents surveyed said that the new levies will deter international home buyers, this group was ranked last when compared to other groups of homebuyers who will be impacted most by the new policies.
According to the survey, nearly 45 per cent of the real estate professionals said the new taxes will impact BC residents the most, followed by Canadians who own or are looking to buy in BC (43.5 per cent) and foreign buyers (11.3 per cent).
With the announcement of these taxes, roughly 81 per cent of Alberta-based respondents believe that Albertans’ interest in BC recreational properties will decrease. Advisors suggest that Albertans will increasingly look for property within their own province or south of the border.
As for market activity in BC, 78 per cent of those surveyed predict that home sales will decrease within the first three months following the announcement of the new policies. A further 57.3 per cent stated that prices will drop during the same period.
“The challenge with broad-based policy like this — that’s rolled out without consultation with industry or academics — is that you can have unintended consequences,” says Soper.
Soper also notes that the new policies will materially impact affected communities that rely on recreational property markets for their local economy.
“When a significant number of people leave a community, it lowers the value of homes, homes become more difficult to sell,” says Soper.
“Some British Columbians who own property in, for example, the interior of BC and live in the big city of Vancouver, may sell because they’re worried about a drop in home prices,” he adds.