Canada's Housing Bubble

Sep 29, 2010 Jeff Lee Vancouver Sun

Too many rules, delays a barrier to affordable housing

Whistler -- If governments want to make homes in B.C. affordable, they must reduce red tape, bring in tax reform and find other creative solutions, municipal politicians were told Monday.

Too many rules, delays at city hall and restrictive zoning can add as much as $100,000 per unit to the cost of a development, Housing Minister Rich Coleman told a forum on affordable housing at the Union of B.C. Municipalities convention.

Coleman said the province will bring in major changes next year to help lower the barriers to affordable home ownership, including streamlining the B.C. Building Code. He challenged municipal politicians to come up with solutions of their own that the province can endorse at the next sitting of the legislature.

"Every dime we put on someone's shoulders is a piece of a mortgage that they are carrying that they have to pay and it means something else in the household goes away," Coleman said.

"It could be they can't afford hockey for their children or ballet or music in order to pay for that which we put on them for processes."

Coleman said his own ministry was faced with spending an additional $10,000 per unit to build seniors' housing in a community that insisted on having five sprinkler heads in each bathroom. Just 10 miles down the road, another municipality made it possible to build 16 seniors housing units without such rules.

"The recommendations coming out of here come directly to me and I am hopeful they will help increase housing affordability. If we can streamline the building code and streamline water and sewer and septic requirements for rural B.C., those two things alone in savings to the homeowner will be stunning."

However, the provincial government came under fire for its own taxation policies and their role in making home ownership less affordable. The provincial property transfer tax and the harmonized sales tax on new homes both add tens of thousands of dollars to the cost of a new unit.

Panelist Bob Seeks, a member of the Canadian Home Builders Association, said by the time a homeowner buys into a new development, the property transfer tax has been paid three times — once by the original owner, once by the developer and once by the final buyer.

"If you want to make home ownership more affordable, one thing you can do is bring in a tax credit for the property transfer tax. Otherwise, the layered-on costs are just passed on to the end consumer," he said.

Coleman said the government reviews the property transfer tax periodically, and that it adds only about $5,000 to the cost of a $500,000 home, much less than regulatory fees and development charges. He said the government is looking at other ways to bring housing prices down.

He said the HST affects only new homes price at more than $550,000, and that the majority of new homes in B.C. don't cost that much.

Coleman said he understands the effect of provincial taxes on home ownership, but argued that eliminating the property transfer tax, would cost hundreds of millions that now go health care and education.

However, he added: "It's fair to say as we come through the fall looking at ... housing affordability, that everything is on the table, and that includes taxation."

The UBCM session touched on a number of possible ways to reduce home prices, including incentives such as bonus density and lower development cost charges, as well as building more fee simple row housing, lowering parking requirements and applying consistent technical building standards across the province.

Coleman said municipalities are sometimes their own worst enemies. He cited the case of a young rural family in rural B.C. that wanted to build a home on a 2.5-acre lot but ran into red tape that caused eight months' delay.

"We need to remember that each one of us taxes that young person who is trying to build a house, who has now spent somewhere around $35,000 more than they thought they would need and still are not in the ground to build their home."

The session also heard about measures being taken by municipalities, including laneway housing and carriage houses in Surrey and Vancouver, lower permit fees and fast-tracking in Langford, medium-density initiatives in Victoria and lower development cost charges in downtown Kelowna.

Surrey Mayor Dianne Watts said her municipality has been overhauling its regulations and considering non-traditional housing such as laneway houses, triplexes and small-lot conversions to promote affordable ownership.

"We're in the enviable position that we do have affordable home ownership," she said. "But that's because we have a housing action plan and we're looking for more ways to reduce the burden for young families."

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