BC's new home ownership measures helpful, but not for everyone
BC's new home ownership measures will be helpful, but not for everyone. Recognizing the difficulty for young families hoping to enjoy home ownership, the BC government announced housing relief measures effective April 1.
What does this mean for prospective homeowners? Here's the breakdown:
- Newly built homes bought as a primary residence are eligible for a provincial rebate of 71.43 per cent of the provincial portion of HST, up to a maximum amount.
- New homes with HST payable after April 1, 2012, will have a maximum rebate of $42,500 (before, that maximum was $26,250).
- Purchasers of newly built secondary recreational homes outside Greater Vancouver and the Capital Regional Districts may be eligible to claim a provincial grant of up to $42,500.
- The BC HST threshold has been raised to $850,000. Right now, more than 90 per cent of newly built homes sold in BC are below $850,000. To simplify, if you bought a pre-lived in home, you paid no HST.
- If you bought a new home, they charged you HST. Now, they give you some back whether its your principle residence or a secondary vacation home.
In addition, first time buyers of newly built homes may be eligible to receive the BC first time new home buyer bonus of up to $10,000. It might seem like a drop in the bucket, but this relief will be spread out amongst a lot of families that choose to buy a brand new home as their very first starter home. But to put that in perspective, they make no HST on resale, so no wonder they are giving incentives to buy new.
I think these measures are more geared to help the construction industry. The Canadian Home Builders Association estimates that each new home will create 3.8 person years of employment and over $60,000 in spinoff spending. It will also help the secondary and recreational market, as these haven't seen the boom in prices that the GVRD has.
If we are going to get serious about affordable housing or help people find a suitable home they can own in an area they need to be in what really needs to happen is a multi- pronged approach. These new measures by the BC government are helpful, but we need to start creating more alternate forms of housing. Not everyone is going to be able to buy a 3000 square foot home for $800,000, regardless of this bonus. Not everyone wants to own a new condo in suburbia, then commute for an hour or so to where they work. We need homes where the work is.
It is unclear if the new housing bonus will apply to a couple who, through tenants in common ownership, buy a portion of someone's property and construct a new laneway house on that property. If a contract for the land is signed and the laneway house is the first home for all people on title it appears it could be accepted. The question is: does it matter that the other people on title – living in the main house – already own it?
While laneway housing is proving to be an effective way to add gentle density, (more density eventually makes more supply which should lower prices) it also adds housing in nice areas while keeping the neighborhood character. We can do more.