Finance Minister Mike de Jong speaking Wednesday as part of a panel on the economy and jobs at the Union of B.C. Municipalities convention in Vancouver.

Rental incentives eyed by province as housing cost relief tool

Finance minister weighs how to dispense affordability aid that might flow from a higher tax on sales of luxury homes

Some of the money raised through a potentially higher property transfer tax on luxury homes could be funneled into incentives to build more rental housing, Finance Minister Mike De Jong says.

De Jong said earlier this month he’s considering a third increment of the property transfer tax to collect more when high-end homes change hands, and use the proceeds to help combat unaffordably high housing costs.

But he has been cautious about how to go about dispensing relief, noting that aid to entry-level home buyers could backfire and simply push prices even higher.

“If all you do is create more demand and supply remains constant you’ll have the opposite effect of what you want – you’ll drive the cost up,” de Jong said Wednesday in an interview with Black Press.

He said rental construction incentives could be one piece of the puzzle.

“Is there a way to also encourage the construction of more and new rental housing – that’s very much a part of this conversation,” de Jong said.

He made the comments after a panel discussion at the Union of B.C. Municipalities convention, where he asked mayors and councillors whether relief should be focused on first-time home buyers, and whether it should go towards the purchase of any housing, or be targeted to increase the supply of new housing.

He said most community leaders seem to support the idea of reforming the property transfer tax in a way that helps young families get into the housing market.

De Jong reminded municipal politicians that they control zoning and therefore have the power to increase density and the number of homes available, applying downward pressure on prices.

The property transfer tax charges one per cent on the first $200,000 of the price and two per cent after that. When a $600,000 home sells, $10,000 flows to the government.

De Jong noted the $200,000 threshold where the tax rises to two per cent hasn’t been changed in 30 years. Increasing that would reduce the bite of the tax at the lower end of the market.

Another potential lever is the exemption for first-time home buyers – they don’t pay the tax on the first $475,000.

Greater Vancouver Home Builders Association CEO Bob de Wit said he’s concerned the government’s idea of a luxury increment on the transfer tax could disrupt the housing market.

“It really depends on the changes they make at the higher end and how they define higher end,” said de Wit, who urged the province to proceed very carefully.

“To a lot of one- and two-income families, a $1 million or $2 million home is not super luxurious. It depends where they charge the premium.”

Home builders and realtors would prefer to see the province dismantle the property transfer tax altogether.

And although Premier Christy Clark earlier this year floated the idea of phasing it out over time, de Wit doubts that will happen, because the tax has grown to become a billion-dollar-a-year cash cow for the province.

Just Posted

Cyclist injured in Langley hit-and-run

Rider was taken to hospital

Phasing plans for Brookswood defeated

Council voted against staggering neighbourhood planning in Brookswood-Fernridge.

Festival of Trees for hospital improvements

Local businesses decorated 20 trees for the 28th annual Festival of Trees on Monday night.

LETTER: Canada should not be selling weapons abroad

A Langley man is critical of Canada for selling arms that are being used to kill civilians.

Langley author pens tribute to the men and women of Canada’s military for Remembrance Day

‘A soldier, a sailor and an airman … stood before the Pearly Gates’

Police aim to prevent retaliation after Hells Angel found dead under B.C. bridge

IHIT confirms Chad Wilson, 43, was the victim of a ‘targeted’ homicide

Otter makes a snack out of koi fish in Vancouver Chinese garden

Staff say the otter has eaten at least five fish

B.C. lumber mills struggle with shortage of logs, price slump

Signs of recovery after U.S. market swings, industry executive says

25% of Canadians still won’t say they use pot, survey says

Statistics Canada poll says Canadians on average were 18.9 years old when they first tried pot.

Canucks’ 50/50 jackpot expected to surpass $1 million

The guaranteed prize for one lucky winner will be $500,000 minimum when Vancouver hosts LA Nov 27

The latest advent calendar trend: Holiday cannabis

A Canadian company is giving people from coast to coast a new way to celebrate the Christmas countdown.

B.C. woman allegedly threatens to rip out intestines of American man

A Kamloops-area woman is accused of harassing and threatening to disembowel an American man

B.C. model looks a lot like expanded taxi industry, ride-hailing group says

Ridesharing Now for BC says it had hoped the bill would be more customer-driven like in other cities

731,000 Canadians going into debt to buy prescription drugs: UBC

Millennials and those without private coverage were more likely to borrow money

Most Read