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The-Mortgage-Gal

Spec tax not right fit

Since the B.C. government tax re-defined the areas affected by the Speculation Tax, I have been concerned about the impact it will have on our housing market here in the Okanagan.

Most people have an opinion about the Speculation Tax.

I expect there will be more changes before it comes into effect next year.

I see a difference between targeting foreign investors who are truly speculating and driving prices up, and including families who spend considerable time and money in our community during the course of the year.

The province’s website states “Targeting Speculators / Exempting 99 per cent of British Columbians." I’m pretty sure the first few clients I’ve seen affected feel that the tax has missed its mark.

The impact in Kelowna has been immediate. And I’m not sure if the people feeling the change are the ones targeted by the tax.

I have been working with a young family looking for a larger home as their family has expanded. They have been searching for months to find something suitable in their price range.

The stars aligned – they received an offer on their current townhouse and made an offer on a larger home. Both offers were solid and on the home stretch to having all subjects removed when it was announced that Kelowna would be subject to the Speculation Tax.

The buyer of their home walked away. The buyer lived in Alberta and had planned to split their time between Fort McMurray and Kelowna. Their lawyer did some research, but could not find a definitive answer (for their specific circumstance) as to whether they would have to pay the new tax or not.

My clients lost out on the home they’d made an offer on as the sellers were not interested in extending the contract. My guess is that the sellers of the home they were trying to buy already had an offer in play on another home as well.

Regardless of where you stand with respect to out-of-town buyers, people who own vacation properties here contribute to our economy. Hospitality and retail businesses benefit directly. Although I don’t have hard facts to back this up, I wonder how much trickle down there will be on local businesses.

Until I read an article on CBC about Squamish Mayor Patricia Heintzman asking that Squamish be added to the areas included in the tax, I hadn’t thought too much as to how the program would affect other areas of the province.

Her concern is that people will be looking to buy in Squamish to avoid the tax, and prices will rise disproportionately and create more of a housing shortage. Lack of affordable housing is already a concern for the area and this new dynamic (she feels) will make it exponentially worse.

That brings me to our area. Kelowna and West Kelowna are, at this time, subject to the tax. Penticton, Lake Country, and Vernon are not.

Affordable housing is already at a premium throughout the Okanagan and driving purchasers from Kelowna will likely create a more significant issue in the smaller communities.

According to the province’s website, “the speculation tax will help make sure British Columbians can afford to live in their own province." I’m not entirely sure that this is the right fix.

Does something need to be done to help create affordable housing, whether to rent or buy?

Absolutely.

Do I think this new program was rolled out without adequate consultation or consideration of the fall-out?

Absolutely.

It will be interesting to see what happens with our housing market over the next few months.

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About the Author

Tracy Head and Laurie Baird help busy families find mortgage solutions. Together they have more than 45 years of experience in the mortgage industry.

With today’s increasingly complicated mortgage rules, Tracy and Laurie spend time getting to know the people they work with and help them to better understand the mortgage process. They support their clients before, during, and after their mortgage is in place.

Tracy and Laurie work closely with their clients, offering advice and options. With access to more than 40 different lenders, Tracy and Laurie are able to assist with residential, commercial, and reverse mortgages in order to match the needs of their clients with the right mortgage package.

They work closely with their clients to find the right fit, and are around to provide support for years down the road!

Contact them at 250-862-1806 or visit http://www.okanaganmortgages.com

Visit their blog at https://www.okanaganmortgages.com/blog

 



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