David Eby, presumed to be on track to become BC’s new premier, has described a naïve policy that will benefit savvy property speculators and investors
David Eby, favorite and virtually the only candidate for the leadership of the New Democratic Party of British Columbia, has presented a vast program of “affordable housing” which seems to be a boon for real estate speculators, especially in the current market at the time. decrease.
The apparent prime minister-in-waiting’s sweeping legislative platform, released Sept. 28, promises to penalize short-term residential real estate swimmers, force B.C. municipalities to approve new housing, and to prohibit rentals in condominiums. It will also convert any detached house in the province into three housing units.
The most radical idea will be to set up a provincial fund of $500 million to allow First Nations, non-profit organizations and tenant groups to have the first right to buy affordable multi-family rental properties. existing ones that will be put up for sale.
Eby says the province doesn’t want renters and home buyers “fighting over housing with a bunch of speculators and investors who drive up prices.”
Still, a close look at each of the platform’s main boards shows that’s exactly what’s on offer.
Here is a breakdown of the Eby BC NDP housing platform through the lens of an investor.
• Outlaw the ban on rental condos: Investors are currently turning away from condominiums that do not allow rentals. When the province prohibits the right of a Strata Corp. restricting rentals will encourage investors, especially in Metro Vancouver, where they can take advantage of the highest rental rates and lowest vacancy rates in the country. Additionally, a number of condo owners who do not want to live in a rental-friendly building may sell their units, which will increase choice for condo investors and speculators.
• Higher municipal authority: For investors assembling detached housing lots for the potential for higher density development, this policy removes much of the risk. By appealing to the province, the investor could obtain an accelerated multi-family permit – despite the objections of the local town hall and neighbors – and sell the assembled land more quickly to a developer.
• Global triplex zoning: Currently in British Columbia, the average single-family home costs $1 million. By allowing each house to be automatically zoned to allow three dwellings, the value of each house will suddenly increase. It’s also a boon for investors building new homes, as they can add two rental suites as “mortgage relief” and increase the selling price of the home by around 20% to 30%.
• $500 million fund for the purchase of rental properties. Today, it is more difficult for owners in British Columbia to sell older apartment buildings due to the provincial annual rental cap of 1.5%, often costly repairs required and provincial restrictions on renovations. But, with a $500 million war chest of taxpayers’ money, the sale would be all but assured. Tenants, First Nations and non-profits will push to buy these aging properties with provincial support, most likely at above-market prices. The BC government has a reputation for paying well above BC assessed value when purchasing rental property. (Of course, once tenants become owners and start taking care of the Residential Rental Act as owners. they can understand why the owner was so eager to sell.)
• Tax on fins: None of the above investors or speculators need worry about this toothless policy. Under Eby’s proposed rollover tax, the tax rate is not disclosed, but it would be phased out after two years of ownership. However, home flipping has already faded in British Columbia. Home prices in the Lower Mainland have fallen month-over-month since March and, according to the BC Real Estate Association, average home prices in British Columbia are expected to fall another 3.1% in 2023. Investors can therefore, in theory, buy in the current low in the market, take advantage of strong rental income for two or three years, and then cash in as the government changes and the real estate market recovers.
– Frank O’Brien is the editor of Western Investor