How B.C.’s proposed speculation tax could impact Vernon | Vernon News | iNFOnews

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How B.C.’s proposed speculation tax could impact Vernon

Bonnie Hutton and Morgan Grant, homeowners at Predator Ridge near Vernon, walk past one of the many active construction sites in the neighbourhood, Thursday, April 26, 2018.
April 30, 2018 - 2:53 PM

VERNON - One of Vernon’s biggest housing developers says it’s already had a drop in the number of out-of-province buyers following the announcement of a proposed speculation tax in B.C.

Predator Ridge, a residential neighbourhood about 15 minutes from downtown Vernon, normally sees 38 per cent of its buyers come from outside B.C., but there’s growing uncertainty in that market, Jason Kelder, development manager at Predator Ridge said at a recent Greater Vernon Chamber of Commerce meeting.

“A big part of our market is people buying for future use and we’ve seen an abrupt stop in that,” Kelder said.

He pointed to the speculation tax, which was proposed by the B.C. government in February, as a reason for the decline.

“We are a little bit more cautious heading into 2018 and 2019 than we were six weeks ago. A lot has changed,” Kelder said.

The proposed speculation tax is part of a plan by the provincial government to enhance affordable housing by stabilizing the real estate market. It would affect properties that are not the owner’s primary residence and aren’t being occupied by a tenant while the owner is away. The tax is only currently applicable in certain parts of the province, such as Metro Vancouver, Kelowna and West Kelowna. So far, there are no other cities in the Interior that would be subject to the tax. Mayors in Kelowna and West Kelowna have spoken out against the tax, claiming it will threaten the economy without actually stopping real estate speculation.

While Vernon isn’t named in the legislation, Kelder said buyers from Alberta, Saskatchewan and elsewhere may lump it in with nearby Kelowna, or worry that it’s only a matter of time before the speculation tax spreads across B.C.

Kelder expects to see fewer people buying properties in the Okanagan with the intention of residing there part-time for a few years before moving permanently.

“People are going to come here, they may just put it off for a few years. They’re not going to buy that house that they’re going to retire in three years before they retire anymore because the government feels they’re speculating,” Kelder says.

He said all they are doing, though, is “speculating retirement.”

Kim Heizmann, a Vernon realtor and Okanagan Mainline Real Estate Board member, said the board is concerned about the tax, so much so that it joined a coalition aimed at scrapping it. She described it as the tipping point that would take the market from a proper normalization trend to a steep decline, and said it definitely has repercussions in places like Vernon.

“A lot of people outside B.C. don’t know the difference that Vernon isn’t affected by the tax whereas Kelowna and West Kelowna are, and they’re just saying ‘forget it, we’re not going to invest right now’ so we are also seeing those numbers decline and it’s a concern for us,” Heizmann said.

Vernon Mayor Akbal Mund is keeping a close eye on the tax and already has his concerns.

“The biggest thing is how it will affect tourism,” Mund said. “People come out for a vacation and think ‘I want to stay here’ well now people will think ‘we’re not going to stay here.’”

He said while Vernon is not currently included in the tax, it could be in the future, and that’s a possibility that potential homebuyers from out of province will be thinking about.

“I believe it’s pulling off people thinking of purchasing and thinking twice about it,” Mund said. “People will go ‘is it worth it?’ It’s going to be a wait and see situation in the next few years.”

He believes the tax should have been restricted to the Lower Mainland and said it would hurt Vernon if introduced here in the future.

“It’s concerning,” Mund said. “You just don’t know what’s going to happen.”

To contact a reporter for this story, email Charlotte Helston or call 250-309-5230 or email the editor. You can also submit photos, videos or news tips to the newsroom and be entered to win a monthly prize draw.

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