Market Housing Affordability for British Columbia
Recommendations from BC REALTORS®
When British Columbians head to the polls on October 24 in addition to the advance voters—they will be deciding who will lead the province as we look towards post-Covid-19 economic recovery. Ensuring market housing affordability for all British Columbians must be a key part of recovery planning. As the voice of BC’s REALTORS®, we at the British Columbia Real Estate Association see an opportunity for the next provincial government to improve market housing affordability and address climate change in three key areas:
- Housing supply and options
- Strata insurance
- Energy retrofits
Increase Housing Supply and Options to Match Changing Needs
The COVID-19 pandemic has altered the needs of BC families as homes have suddenly become a workplace, a school, an entertainment centre and a refuge. Now more than ever, BC families need access to affordable homes that can suit their rapidly changing needs.
As noted by BC Real Estate Association Chief Economist Brendon Ogmundson, “In spite of the COVID-19 induced recession, BC home sales are approaching record levels and prices are climbing, providing a needed boost to the province’s economic recovery. However, elevated demand for homes is brushing up against limited supply, further straining already challenging affordability. These challenges are especially acute for lower-income households who have been most impacted by the COVID-19 recession”
In order to provide people with more options for affordable housing, BCREA strongly recommends the following actions for the next government:
- Strongly encourage local governments to fast-track development applications.
Some local governments are already taking steps to speed up approval of development applications, recognizing the critical need to match housing supply and demand. BCREA recommends adopting measures described in the Development Approvals Process Review.
- Exempt properties in the development process from the additional school tax using the same policy framework created to exempt development projects from the Speculation and Vacancy Tax.
The additional school tax increases the tax burden for owners of high-value residential properties in BC, including detached homes and vacant lands. Taxing vacant lands held for development increases the cost of development, rather than encouraging housing supply.
- Increase the supply of smaller, market homes in neighbourhoods using Property Transfer Tax (PTT) revenue to create gentle density in low density neighbourhoods.
For example, the province could provide financial incentives to municipalities to permit the sale of laneway homes and the stratification of secondary suites, where the home permits it. Funds could be used to update zoning and to create a system for stratifying suites.
- In urban areas, increase the supply of affordable, market, ground-oriented, family (three-bedroom) homes along transit corridors in lower density neighbourhoods using PTT revenue.
For example, the province could provide financial incentives to municipalities that fast track medium-density project’s townhomes, cohousing and cooperatives – to help defray the costs of accelerated planning and rezoning.
- Encourage local governments to legalize secondary suites with minimal red tape and enable alternative rental units such as coach houses.
Elevated demand for homes is brushing up against limited supply, further straining already challenging affordability. These challenges are especially acute for lower-income households who have been most impacted by the COVID-19 recession.
Address Skyrocketing Strata Insurance Costs
The rapid rise in the cost of strata insurance experienced over the past year is a BC specific issue that has become all-the-more pronounced under the economic hardship Covid-19 has created. With more than 30,000 stratas in BC, this issue impacts approximately 1.5 million people living in these units. Public dialogue often results in calls for government intervention. Unfortunately, this is a significantly complex issue and there is no quick fix.
The provincial government moved quickly to gather industry stakeholders and set about identifying the causes of the problem. They have made a series of interventions into insurance industry commission structures and client notification practices as first steps. At this point, there appear to be several core issues, including fewer insurers providing their services to BC strata corporations, possibly a high percentage of water damage claims in buildings across BC, and poorly maintained buildings.
To help curb rising strata insurance costs, which are adding to BC’s housing affordability challenges, BCREA strongly recommends the following actions for the next government:
- Develop mandatory education for strata council members.
Serving on a strata council requires financial acumen, experience and skill. Without equipping strata council members across the province with these skills, it’s going to be extremely difficult to ensure that buildings are better run in the future. Mandatory education for strata council members is necessary to significantly elevate knowledge levels and best practices at no cost and with minimal time burden.
- Either create a new organization – modelled on the Condominium Authority of Ontario – to enforce the Strata Property Act, including providing mandatory training and creating best practices for strata councils, or assign this role to the Ministry of Municipal Affairs and Housing.
- The Civil Resolution Tribunal handles disputes related to the Act, but there’s no dedicated oversight body within British Columbia to monitor strata practices and ensure buildings are being operated with best practices.
In comparison, the Condominium Authority of Ontario provides detailed oversight of stratas across that province. They offer training, dispute resolution and other services to help improve strata living. It’s a much stronger environment in terms of consumer protection and it’s one that British Columbia should emulate.
- Continue to work with stakeholders to identify the causes of the current difficult market and to develop solutions.
- Encourage the BC Financial Services Authority to foster a robust, economically viable market that attracts and retains insurance providers.
The rapid rise in the cost of strata insurance experienced over the past year is a BC specific issue that has become all-the-more pronounced under the economic hardship Covid-19 has created.
Incentivize and Encourage Energy Retrofits
While pandemic-related health policies are front and centre in this election campaign, it’s important not to lose sight of other critical issues that will impact us long after a safe, effective COVID-19 vaccine is widely available. Climate change is a crisis that is not going away, as demonstrated by recent wildfires. While proposed changes to the 2022 BC Building Code will set higher standards for energy efficiency in new buildings, much can be done to address emissions from existing buildings.
BCREA is looking to the provincial government for long-term, sustained incentive programs to support property owners now and into the future, and we expect those incentive programs to be available to owners of existing commercial, purpose-built rental, multi-family strata and single-family properties.
To help the province meet many of its goals while stimulating economic activity and creating new job opportunities, BCREA strongly recommends the following:
- Commit to a long-term, widespread investment in financial incentives to help property owners voluntarily retrofit existing buildings to improve energy efficiency and reduce greenhouse gas emissions.
Financial incentives should be available to owners of existing commercial, purpose-built rental, multi-family strata and single-family properties. These incentives should be delivered in a variety of ways, including upfront cash incentives and tax credits. This is a timely initiative, as home needs are evolving and many homeowners are considering renovations. Because of COVID-19, homes also function as offices, schools and primary entertainment centres.
- Engage and educate consumers to encourage demand for voluntary energy retrofits.
BCREA believes that the most progressive, sustainable step the government can take for the real estate sector is not only to offer incentive programs but to develop a public outreach program for consumers and homeowners to educate and inspire action. When more property owners make informed decisions to reduce their carbon footprints and cut energy costs, the entire province benefits.
It’s important not to lose sight of other critical issues that will impact us long after a safe, effective COVID-19 vaccine is available. Climate change is a crisis that is not going away.