A Langford development and property management company is cautiously proceeding as the speculation tax looms.
Dale Sproule, Westhills Land Corp. real estate, sales and marketing manager, has seen first-hand the ramifications from this potential tax.
Sproule said Westhills is not going ahead with the Lakepoint Two building until they feel the market warrants it. The condo building would be Langford’s tallest structure at 17 storeys and 116 units, ranging from studios to three-bedroom suites.
“We haven’t pulled it off the table by any means,” Sproule said. “But we’re at the mercy of the government, it’s not good for the developer or the consumer.”
Sproule said Westhills employs roughly 300 people, usually working at full capacity, but while they wait to see if they can move ahead with projects more than half of their crew is not working.
“The government has created uncertainty in the marketplace and as people pull out of the housing market, it will devalue people’s homes,” Sproule said. “The only way to combat it is to get more product to market … stimulate the economy and get jobs back.”
Mayor Stew Young said he will continue to fight for Langford’s exclusion. He has received letters from U.S. residents informing him they are writing to their respective governors to push a 20 per cent tax on Canadians that have vacation homes in the U.S.
Young noted the province doesn’t want to get involved in trade wars with the U.S. or other Canadian provinces. He added, if affordable housing is the provincial government’s goal, they should build more instead of implementing taxes that, he said, ultimately effect everyone.
Some of that can be seen in the softening of the housing market at Bear Mountain, Young noted, as Albertans sell their second homes.
Plans for new projects on the West Shore are also starting to slow as the market softens. “It’s just starting to happen now, I lived through the downturn in ‘08, and it’s happening,” Young said. “We lost 20 to 30 per cent of jobs in Langford.”
Blake MacKenzie, EMR Vacation rentals business development manager and vice president of NorthWest Vacation Rental Professionals, said his business took a hit when the empty homes tax took effect in Vancouver 2017.
EMR used to have 80 properties in Vancouver and now they are down to three, and two thirds of the secondary home owners who sold were B.C. residents, MacKenzie said.
“There were doctors from up in northern B.C., people who worked in the mills and people who bought as far back as Expo ‘86 that sold and left, furious with Vancouver,” he said, noting not one of the homes was turned into affordable housing or property for long-term rental stock.
MacKenzie agreed with Young, and said the tax is bad policy, bad for business, tourism and trade. He thinks it is a philosophical approach that won’t solve the problem of affordable housing and the government should target people flipping homes.
“Victoria has been targeted as a vacation destination since the Commonwealth Games,” MacKenzie said.
“A lot of these [secondary] homes aren’t affordable, they are above that, so it’s not impacting affordability because a $3 million home on the water is not for somebody who can’t find a place to live.”
Vacation homes bought at Bear Mountain help finance the municipality and buyers are not getting a break with a homeowners grant either, he added.
“The government has labelled it a spec tax, when in reality it affects a lot more people than speculators. It’s a home equity tax, it’s an unfair label, susceptible to this is everyone who owns a home,” Sproule said.
Young wrote a letter to Finance Minister Carole James with a suggestion for a revised tax policy that would instead see a capital gains tax applied to the sale of every secondary property sold, regardless of location within the province.
He suggested a 10 per cent capital gains tax for out of province Canadian investors and 25 per cent for foreign investors.
Young noted a capital gains tax will continue to encourage investment in B.C. rather than a tax against the home’s annual assessed value.