ELECTION 2015: Housing promises target owners, renters

Federal parties pledge rental unit tax incentives, easier use of RRSPs to tackle Lower Mainland home affordability issue

New homes continue to go up across the Lower Mainland to meet market demand as prices continue to climb. The NDP and Liberals would reintroduce federal tax incentives to try to steer more of that investment to the construction of purpose-built rental units.

As home prices spiral up beyond the reach of many Lower Mainland residents, the federal parties are staking out different approaches on how they would deal with the housing affordability problem if elected.

Urban mayors have tried to make the issue a priority, arguing workers are being priced out of their cities, forcing many to commute farther – clogging roads and transit – and impairing future economic growth and livability.

The Conservatives have put the emphasis on increasing home ownership.

They’d expand the Home Buyers Plan to allow $35,000 to be withdrawn tax-free from RRSPs, up from $25,000 now.

The Tories would also create a permanent home renovation tax credit of 15 per cent, for a maximum of $750 a year when up to $5,000 is spent on eligible renovations.

A further home accessibility tax credit would give up to $1,500 in income tax relief on up to $10,000 in home improvements for seniors or the disabled.

In response to concerns that foreign investment has rapidly inflated Vancouver-area prices, Conservative leader Stephen Harper has pledged to begin collecting data on foreign buyers and act to curb foreign speculators, if necessary.

Other parties focus on support for rental and affordable housing.

The NDP say they’d use federal tax incentives to encourage developers to build 10,000 new affordable and market rental housing units over 10 years, at an estimated cost of $500 million. That would answer cities’ complaints that too few purpose-built rental buildings have been constructed since similar federal incentives were dismantled in the mid-1990s by the Liberals.

New Democrats are also pledging to renew federal subsidies that are soon set to expire at numerous housing co-ops in B.C. as their mortgages mature. Some of the buildings need major repairs, raising the spectre of rising rents or buildings converting to entirely market rates without extended federal aid.

Liberal leader Justin Trudeau has promised deficit spending to stimulate the economy, and a big chunk of that would include more investment in affordable housing and renewed aid for co-ops.

The Liberals would eliminate GST on new capital investments in affordable rental housing as well as offer $125 million a year in other tax incentives to expand and renovate the rental unit supply.

A Liberal reform to the Home Buyers Plan would let more people dip into RRSPs to buy a home without tax penalty – in scenarios like the death of a spouse, marital breakdown, relocation for a job, or taking in an elderly parent – rather than just first-time buyers. The withdrawal limit would remain $25,000.

The Liberals also promise to review price trends in markets like Vancouver and convert some federal buildings and property to low-cost housing.

The Greens pledge even more generous housing aid to build 20,000 new affordable housing units a year and subsidize 40,000 additional low-income homes. They also vow to retrofit every Canadian home by 2030 through an expanded EcoEnergy program to make them more energy efficient and slash building emissions.

 

How bad is it?

The average price for a detached house with a yard reached $724,000 in the Fraser Valley this summer and nearly $1.5 million in Metro Vancouver.

“Vancouver’s housing affordability readings are nearing the worst levels ever recorded in Canada,” an RBC Economics report found in August.

The impact has varied by municipality, hitting Vancouver and some adjoining cities hardest with more than 50 per cent increases in detached house prices over five years, while houses have climbed a more modest 22 per cent in the Fraser Valley over that time frame.

Five-year price gains have been much more gradual for townhomes and condos, particularly in the Valley, where prices have been flat to negative in some areas.

For those who can’t afford to own, rents have also climbed.

Rent and utilities now average $1,054 in Metro Vancouver – where rental affordability is rated “critical” by a new rental housing index – and $860 in the Fraser Valley, which is rated “severe.”

Renters make up 51 per cent of households in Vancouver, but less than 30 per cent in every other Lower Mainland municipality except Burnaby, New Westminster and Langley City.

About 45 per cent of renters in the region spend more than the recommended limit of 30 per cent of income on shelter.

Affordable housing remains a significant local issue even in Lower Mainland communities where housing costs are lower – such as Maple Ridge and Abbotsford – because of the rise of high-profile homeless camps.

A homeless camp that sprang up in Maple Ridge in June.

 

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