Housing Vancouver strategy to address speculation in real estate

Gregor Robertson
Photo by Sukhwant Singh Dhillon

THE City of Vancouver announced on Monday that it will introduce new measures to stabilize land value in areas undergoing new community plans in order to address the upward pressure on land prices in Vancouver, a significant contributor to the rising cost of housing in Vancouver.

Designed to curb ongoing speculation of land value and to remove barriers for developing affordable rental and social housing, this new policy concept will be outlined for City Council on Tuesday as part of the new Housing Vancouver strategy. It clarifies requirements that developments must contribute toward affordable housing and other public amenities in the area. These rates will be set prior to the launch of new community planning programs, such as station areas, to help mitigate speculative behavior and reduce the overall cost of new housing. The full policy proposal will come to City Council in early 2018.

“Our Housing Vancouver strategy focuses on ensuring housing is for homes first, not just treated as a commodity,” said Vancouver Mayor Gregor Robertson. “We need to level the playing field to make housing more affordable for residents in Vancouver – supply alone is not going to solve our challenges. It’s time to create new tools that help the city to curb the negative impacts of real estate speculation and get more affordable housing built throughout the city.”

The City will also seek to shift the supply of new homes to emphasize secured rental housing, including exploring the use of Rental Only Zones, to help keep housing available for people and families that live and work in Vancouver. The ability to do this will depend on legislation from the Provincial government.

“The effects of speculation have caused significant consequences for housing in Vancouver, and has hindered many of our attempts to build affordable rental housing as the high cost of land make projects unviable,” said Gil Kelley, General Manager, Planning, Urban Design and Sustainability. “We want people to stay, live, and build a future in Vancouver. Our new Housing Vancouver strategy ensures that future housing developments across the city will provide the right homes for our residents, not investors.”

To further reduce the effect of speculation in Vancouver’s housing market, the City will continue to work in partnership with the provincial and federal governments to slow investor demand and help stabilize land values. As part of the new Housing Vancouver strategy, the City proposes to work collaboratively with the provincial and federal governments to investigate broader taxation and financial regulations, which includes:

* Implementing a speculation or flipping tax

* Increasing provincial Property Transfer Tax on luxury properties

* Reviewing and reforming applicable federal and provincial tax regulations, encompassing income taxes and capital gains taxes, and close loopholes

To help ensure homes in Vancouver are for local residents, the City has already taken significant steps to reduce the commodification of housing. These include:

* Introducing Canada’s first Empty Homes Tax to encourage owners to bring underutilized residential properties back into use as rental housing.

* Approving short-term rental regulations to limit the use of properties that should be providing long-term rental housing for local residents, not short-term rentals for visitors.

* Proposing new requirements that pre-sales of condominium units be offered to locals first, before they are marketed and sold overseas.

For more information, visit Vancouver.ca/housing

“The strategy documents incorporate two policy steps already underway that will prove helpful in ensuring that the city’s housing stock serves locals. The Empty Homes Tax and limitations on short-term rentals will reduce demand for Vancouver real estate from people who do not live and work here, which will make housing cheaper for those who do. The proposed steps to pre-zone for greater density, with clear and significant requests for rental restrictions, affordability targets, or cash contributions will both lead to more supply and enhanced affordability and reduce the risk of speculative increases in home prices as investors assemble parcels for redevelopment,” said Tom Davidoff, Associate Professor, Director of Centre for Urban Economics and Real Estate at University of British Columbia, Sauder School of Business.