A new report finds a provincial tax designed to curb speculation and improve housing affordability “may not be having a large impact on turning empty homes into affordable or rental housing stock” in North Saanich. The report also makes a case for the district receiving a share of the revenues raised by properties in the community for affordable housing projects, an idea enjoying support among members of council.
“It’s a great idea and I would like to see it move further,” said Coun. Patricia Pearson, echoing comments by Coun. Heather Gartshore.
Council unanimously asked staff to share feedback with the province about the workings of the speculation and vacancy tax in North Saanich “and how the community may benefit from revenue generated by the tax.” Staff will also inform the provincial government that North Saanich needs more data about the workings of the tax, introduced in 2018.
It has raised a total of $1.51 million from North Saanich properties, but no funds have returned to the community, as it is the case with Sidney, where the tax has raised a total of $478,000. According to a ministry spokesperson, $5.6 million have come back into Central Saanich for projects. Over the two years, the speculation tax has raised a total of $228,000 in that community.
The tax tries to discourage real estate speculation by domestic and foreign speculators who own property in B.C. without paying taxes while encouraging the conversion of properties into rental housing with money raised from the tax going into affordable housing projects with BC Housing as the primary recipient.
Under the current rates, foreign owners and satellite families pay two per cent of assessed property values. British Columbians, and other Canadian citizens or permanent residents, who are not members of a satellite family, pay 0.5 per cent.
The provincial government exempts property owners who either live in their respective home as their principal residence or rent out their property for at least three months of the year. Homes not used as principal residences must be rented for at least six months per year to be eligible for exemption.
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North Saanich property owners paid $901,000 in 2019 or 1.02 per of the total tax collected in B.C., according to the report. Regionally, North Saanich contributed 13.7 per cent of the total revenue in the Capital Regional District. The average assessment in North Saanich was $14,300 (with the regional average $8,290), a figure only second to Oak Bay, where the average assessment was $16,500. North Saanich also had the second-highest number of non-exempt properties in the CRD with 1.33 per cent of properties (or 63) subject to the tax. Victoria records the highest figure with 1.54 per cent.
If these figures reflect the higher value of real estate in the district, the report prepared by North Saanich’s director of services Stephanie Munro nonetheless finds the municipality standing apart from the rest of B.C. subject to the tax.
Instead of foreign owners and satellite families paying the large majority of the tax, Canadians pay a “significant share” (over 40 per cent) of the tax raised in North Saanich, it reads. Foreign owners and satellite families pay 80 per cent of the tax provincially, while Canadian residents pay 14 per cent.
The report appears to give credence to previous local complaints that the tax might not hit one of its key targets: real estate speculators.
“Early observations indicate … that the tax in North Saanich may not be having a large impact on turning empty homes into affordable housing or rental stock, compared to the impact the tax is having in other areas of the region or province,” the report reads.
The report concludes that “it would be beneficial” that a portion of the collected tax revenue from North Saanich “be allocated back” into the community to support affordable housing projects.
No such municipal-specific mechanism currently exist. Legislation requires all revenue assessed under the act to flow into the Housing Priority Initiatives (HPI) Special Account to support affordable housing initiatives in (the five) regions where the tax applies, said a spokesperson with the Ministry of Finance in a written statement to the Peninsula New Review. “Housing unaffordability doesn’t affect a municipality in isolation,” it reads. “What is occurring in one municipality affects an entire region, which is why (the ministry) took a regional approach with the tax.”
The spokesperson said BC Housing identifies affordable housing projects in part through collaboration with B.C. municipalities and other partners and the Ministry of Finances encourages local municipalities to work with BC Housing to identify opportunities for new affordable housing.
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