Monday, April 2, 2018

Keep government out of housing market



Dear Editor:

You can go back as far as you want in history and find glaring examples of government meddling in real estate markets. Interfere with market forces and it always comes back to blow up in the faces of those who attempt to manipulate the market.

Take the latest measures of the NDP government who believe they can address housing prices and vacancy rates by taxing second homes, vacation properties and retirement homes in select locations. They call it a "speculation tax." Their contention and motivation is twofold; the first is to tax people into selling their home thereby increasing supply in the marketplace, thereby tilting the supply side, thereby causing prices to drop. The second motivation is to collect taxes and redirect the funds into affordable housing programs and initiatives. Really?

In the revised strategy, properties under $400,000 are exempt from the tax, Foreign owners pay two per cent of value, one per cent for out-of-province owners and B.C. residents pay 0.5 per cent. To be exempt from the tax owners must rent their homes for a minimum of 6 months a year for 30-day minimum increments.

Now, let's look at this. You live in Alberta and own a property you want to keep for retirement so you will pay an additional $5,000 on a $500,000 property. Alternatively you have to rent it out and not use it. If you rent it out and want to use it, you have to kick the tenant out for the period you want to use it. How does that increase the rental pool?

Just so you know by way of example, fully half the "vacant" homes in Kelowna and West Kelowna would have to be rented to increase the vacancy rate from 0.5 per cent to 1.5 per cent.

That's problem No. 1. Next problem is that properties under $400,000 are exempt. That means the properties typically rentable in the "affordable category" are not coming into the rental pool, therefore the idea is rendered ineffective.

High-end properties at say $800,000-$1.2 million rent for $4,000-$6,000 per month.

Who can afford that long-term rent and how does that help affordability? More stupidity.

Next is using the tax money to improve affordability by diverting funds to build more affordable units. Again, really? When was the last time a government official or party came up with anything remotely effective?

I'm all for innovative ideas to help affordability. Please though, don't leave it to governments, let the industry and the market deal with it.

Paul Betts, Vernon

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