B.C. Budget 2020: Housing funding up, property transfer tax revenue down
B.C. Finance Minister Carole James welcomed the “moderation” hitting the province’s housing market in her budget speech Tuesday, but that cooling also comes with property transfer tax revenue forecasts decreasing by hundreds of millions of dollars.
Meanwhile, the 2020 budget sees B.C.’s NDP government increasing funding for affordable housing to record levels, but there is still no sign of a renter’s rebate, a major promise of their 2017 election campaign.
The 2020 budget provides $4.2 billion over three years for housing initiatives, described as a “record total.” That includes $1.35 billion in combined program and capital funding for housing 2020-21, more than doubling the funding level from 2017-18. That investment is forecast to increase to $1.41 billion in 2021-22 and $1.49 billion in 2022-23, which includes funding for building affordable homes for low- and middle-income British Columbians.
But representatives of B.C.’s non-profit housing sector expressed disappointment that the 2020 budget delays delivery of thousands of affordable homes.
Thom Armstrong, CEO of the Co-operative Housing Federation of B.C., said Tuesday he was glad the budget does not appear to bring cuts to the government’s 10-year housing strategy, which launched in 2018, a plan he says went beyond what any other provincial government has done on housing before or since. But he was “disappointed,” he said, that B.C. Housing’s 2020 service plan shows the government delaying completion of 2,400 units of affordable rental housing.
“Kicking the can down the road” on the construction of those homes will only make B.C.’s housing crisis worse, Armstrong said, adding: “a crisis deserves a crisis response.”
“It was a difficult day for us, to be honest, because we do think of the government as a partner in expanding capacity in the community housing sector,” said Armstrong. “But they say budgets are about tough choices, and I guess it’s my job to say I’d prefer they made a different choice.”
Minister of Finance Carole James waves to people in the sitting area before she delivers her budget speech from the legislative assembly at B.C. Legislature in Victoria, B.C., on Tuesday, February 18, 2020. CHAD HIPOLITO / THE CANADIAN PRESS
The budget lands at a time when B.C.’s real estate market has cooled following several hot years, with 2020 marking the first time in two decades the B.C. Assessment Authority reported an overall decrease in the assessed value of real estate across the province.
B.C.’s housing market “has performed better than some estimates, with certainly some moderation occurring over this past year,” James told reporters Tuesday, citing home sales decreasing by about 1.5 per cent last year and average home sale prices dropping by about 1.6 per cent. James pitched this as a positive thing, saying: “We are, again, seeing the kind of moderation that we’re looking for.”
James believes home prices still need to come down further, and although home prices are no longer seeing the massive year-over-year “spikes” they recently saw in some B.C. markets, she said, “I don’t think there’s anyone who would say we’ve reached affordable housing in British Columbia.”
But that cooling real estate market has also come with decreased government revenue in the form of the property transfer tax, which is, for most real estate transactions, based on purchase price. The 2019 budget had projected property transfer tax revenues to remain stable at around $1.9 billion over the following three years. But this year’s budget shows it dropped to an estimated $1.54 billion for the 2019-20 fiscal year, forecast to raise to only $1.58 billion for 2020-21.
Some of those losses will be off-set, though, by the province’s new speculation and vacancy tax, which was first collected last year, targeting empty or underutilized residential properties in some of B.C.’s hottest housing markets and generating an estimated revenue of $185 million for 2019-20.
James also talked about B.C.’s continuing “momentum in home construction,” citing almost 45,000 housing starts in 2019, the highest annual level on record. However, the 2020 budget forecasts housing starts to decrease in each of the next three years, starting with a dramatic 22 per cent drop this year.
James said the government’s conservative estimates for housing construction are consistently outperformed by actual results, and she expects that over the next year, both housing starts and sales will climb.
But despite trumpeting its record housing investments, this year’s budget once again contains no mention of a renter’s rebate, even though the NDP campaigned in 2017 on introducing a yearly grant for renters, similar to the one provided to homeowners.
Asked if the province might introduce a renter’s rebate before the next provincial election, planned for October 2021, James said her government is looking at “all options to be able to support tenants,” and has decreased maximum allowable rent increases and boosted rent supplements for low-income seniors. However, James added, the idea of the renter’s rebate is not backed by the B.C. Green Party, whose support the NDP needs to form the current minority government.
The budget also includes $56 million in capital funding for the development of 200 units of temporary modular housing, bringing the total to 2,400 units across the province of this type of housing for people who are homeless or on the verge of homelessness. While these modular homes, which include on-site support services, will be welcomed by housing advocates, they won’t come close to meeting demand. Vancouver’s council unanimously passed a motion in late 2018 calling on the province for another 600 modular homes in that city alone.
In her speech to the legislature Tuesday, James included jabs related to the previous B.C. Liberal government’s record on housing, accusing them of “cashing in on a speculative real estate market” and “turning a blind eye” to the role of dirty money in the housing market.
“Over the last decade our province’s economy has remained strong, but many people and communities fell further behind. There was a bright future in British Columbia, but only for the few who could afford it. I am proud to say that, as a province, we are now on a different path. We are making different choices,” James said. “Mr. Speaker, the days of cashing in on a speculative real estate market at the expense of hardworking British Columbians are done. Instead of turning a blind eye to money laundering and the housing crisis, we’re acting so that everyone can afford a future in British Columbia. Money laundering in our economy must end. Our goal is to ensure balance — and it is not balanced to have an economy that is distorted by dirty money.”
The 2020 budget provides $11 million to fund a public inquiry which will make recommendations related to money laundering in B.C. in sectors including real estate.