Premier David Eby served for more than two years as British Columbia’s Minister of Housing. He has now had about a month as premier of British Columbia to come up with effective affordable housing policies.
His last plan — the Housing Supply Act politics – has been criticized from all sides for relying on a false supply-side economics principle.
Eby thinks forcing municipalities to build more housing will magically make it more affordable, despite evidence to the contrary.
Increasing housing supply has failed to bring down housing prices over the past five years and there is no reason to believe that bullying municipalities to increase supply will succeed in a near future.
Federal housing advocate Marie-Josée Houle, in a report at the Privy Council, said, “We are losing affordable housing faster than we can build it.
Geoff Heu, Vice President of GWL Realty Advisors Inc., boasts that “everyone wants more from vancouvera sentiment echoed by Vancouver real estate superstar Bob Rennie. Oakridge Park’s 3,300 new homes are being marketed at $2,500 per square foot from sales offices in Shanghai and Dubai.
It’s time for David Eby to be efficient.
To make housing more affordable for local residents, Eby needs to increase the supply of off-market affordable housing. This requires bold and decisive government intervention in the housing market, a market that has failed on its own to create affordable housing for most BC residents.
What carrots can Eby give to municipalities to encourage the construction of more affordable housing?
Here are nine ways Eby can help solve the affordable housing crisis.
Impose a 50% speculation tax on land profits to hit speculators and cool the overheated housing market – a tax with teeth that bites palms, home hoarders and speculators.
Eby’s speculation tax, empty house tax and two-year rollover tax are insufficient and have become “just the cost of doing business” for most investors. Use the revenue from the tax increase to build affordable non-market housing.
Impose a huge, progressive property surtax of up to 5% on high-value homes over $1 million, deductible from provincial and federal income taxes, exempting Canadian retirees, to hit non-paying satellite owners income tax in Canada. Use revenue to build affordable off-market housing.
In his recent report to the Privy Council, Houle noted that up to 30% of purpose-built rentals in Canada are controlled by REITs, or real estate investment trusts, which have a mandate to maximize profits for shareholders through at higher rents.
A REIT is a pool of money from the contributions of individual shareholders in residential rental properties that pays a return on investment to its shareholders, based on the profitability of the rental properties. The more profitable the REIT, the higher the rents and the lower the costs. That means higher payouts to shareholders, happier investors, and more disgruntled tenants. This must stop.
Eby must impose more financial limits on institutional investors who distort demand for housing by restricting the activity of REITs, pension funds and global equity funds in the residential real estate market. Some sort of punitive tax is needed to prevent the investor class from driving up house prices.
Eby can provide more of the province’s record $5.7 billion surplus to fund the construction of more affordable co-op housing and more affordable nonprofit housing.
Cut BC Housing’s cumbersome, slow management team to create a lean, mean housing machine that gets money out and into the ground faster, to build affordable housing projects. Institute management metrics to measure results.
Use provincial and city-owned land at $0 land cost to build affordable housing. A land cost of $0 gives any building project a financial advantage to provide a more progressive housing mix of one-third each for low, middle and high incomes. An example of this is South of False Creek in Vancouver.
Eby can work with municipalities to increase the 50% affordable unit requirement on all property zonings. Over-zoning of land is a financial gift, like manna from heaven for a real estate developer.
Density bonuses must be tied to affordability to provide 50% of housing to middle and low incomes. It’s a misunderstanding. The developer gets more profit and the community gets more affordable housing.
Current municipal policies require only 20-30% affordable housing in each new multi-unit residential building. The sheer magnitude of the benefits of high-end units can support low-end units, and the middle can stand on its own, still providing the developer with a decent but not exorbitant return on investment.
Our progressive income tax system works the same way to balance out income inequality, so this idea isn’t exactly new. It only applies to housing.
Eby may prohibit tenants from subletting their space for profit through above-lease rates or short-term Airbnb rentals. Eby can also prohibit landlords from raising rents between tenancies, except for actual building costs incurred for renovations. These actions could be implemented immediately to prevent rental housing from being commodified and converted into unaffordable housing. This is the opposite of David Eby’s recent announcement on supply-side rents which allows more rentals in condominiums, but not more “affordable” rentals in condominiums.
Finally, the “highest and best use” principle used by BC Assessment for retail businesses punishes small retail businesses by raising their property taxes beyond what is reasonable to stay in retail. . It kills high streets by increasing vacancy rates. It taxes the air above the store, as if the air has already been built. That’s wrong.
Small businesses like hairdressers, dry cleaners, restaurants, bars, grocery stores, clothing stores, and hardware stores are needed to serve residential neighborhoods. Eby has the power to reform this archaic principle and prevent shopping streets from widening.
Unaffordable housing prices are ruinous for a city, especially for young people with jobs that earn good incomes – essential workers, like nurses, teachers, police and firefighters who cannot afford to live in the city they serve.
Housing unaffordability also has huge social and economic consequences for society, such as the inability to attract talented staff, millennials still living with their parents, couples delaying the birth of children, more households multi-generational and more dangerous households.
The exodus to the suburbs requires more highways and contributes to the significant lack of social diversity in our city.
The current housing crisis is unsustainable for our society and requires bold, innovative and decisive political action from Prime Minister David Eby.
Can Eby intervene?
There is no silver bullet, but these proposals can at least start to make a difference. ![[Tyee]](https://news.google.com/design-article.thetyee.ca/ui/img/yellowblob.png){kind=small}
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