The Urban Development Institute and others in the industry say they would rather see the province remove purchase taxes or cover part of the price.
Real estate developers are pushing back against claims that a new federal-provincial program to buy up empty condos is something the industry asked for, with the Urban Development Institute and others saying that it won’t help their sector.
Two weeks ago, Premier David Eby and Prime Minister Mark Carney said they were putting together a plan to buy more than 2,200 unsold condos and provide them as affordable housing.
They later provided more details, saying the program will have a total budget of $1.45 billion, with B.C. and Ottawa each providing $145 million. The rest of the money will come through financing, and the units will be entered into a rent-to-own program where occupants can pay part of their monthly rent toward a down payment.
On Thursday, Eby likened the plan to buying something “on liquidation,” and said there are no plans to purchase units in Vancouver because “the numbers just don’t work” to convert them to affordable housing.
While opponents have described the plan as a bailout for developers, Eby said that description doesn’t fit.
“You’re hearing directly from developers that this is not what they asked for and it is not from their perspective a bailout,” he says. “When you buy something that’s on liquidation, you don’t say to yourself, ‘I’m supporting a bailout for the store.’
“This is an opportunity for us to recognize the reality that people can’t wait for housing. We can buy housing at below our construction cost and make it available affordably, and if we don’t do it, someone else will do it.”
Carney said buying unsold condos under the plan will only take place if it makes sense.
“If those opportunities present themselves — we’ve created the flexibility in order to get affordable housing to people at a cheaper price than could be built — we’ll do it.
“If the market shifts, if the opportunity doesn’t present itself, then it won’t happen.”
The plan was part of $5-billion infrastructure spending announcement the federal and provincial governments announced last month that will be implemented over the next decade.
Rick Ilich, CEO of Townline Homes and chair of the Urban Development Institute, said he is not aware of any developer who spoke to the government about the program before its unveiling.
“The complexity of a province buying homes, and then creating a structure wrapped around that, and then playing landlord around the rent-to-own program — like if anybody can make rent-to-own work, government can, because they can give away money where they feel like it. But why create such complexity?” said Ilich.
He said he would rather the provincial government implement its campaign promise from 2024 to cover up to 40 per cent of the purchase price on 25,000 new units over five years to help middle-income families break into the market. The loan would be repaid through appreciation when the owner sells the unit or over the course of 25 years.
B.C. Housing Minister Christine Boyle said the goal of the condo program is to allow people to purchase a home who would not have been able to do so previously.
“I hear often from people who are working a good job, they’re making a good income, often they’re paying in rent what they would be paying on a mortgage. But because they don’t have help from the ‘bank of mom and dad’ or other sources to be able to save for down payments, they’re locked out of home ownership.”
In a statement, the Ministry of Housing and Municipal Affairs said the campaign promise to cover 40 per cent of the purchase price is being tried out on the Heather Lands project, a collaboration with the Musqueam, Squamish and Tsleil-Waututh Nations. The Heather Lands are about 8.5 hectares between West 33rd Avenue and West 37th Avenue at Heather Street, according to the City of Vancouver.
The partnership is expected to create more than 2,600 strata leasehold homes for eligible middle-income buyers, with priority for first-time homebuyers, a ministry spokesperson said. The homes would be available at below-market prices for middle-income earners, the city says on its website.
Mark Goodman, principal at real estate agency Goodman Commercial, called the empty condos program a waste of taxpayers’ money that won’t do much to improve housing affordability.
“One could argue that they, in theory, could be buying these units below replacement costs. OK, so that’s a positive thing, but everything is selling below replacement costs right now.”
He said he would rather see the province and Ottawa remove taxes from home sales, in a B.C. version of a recent agreement between Ottawa and Ontario that saves Ontario residents up to $130,000 on homes valued up to $1.5 million.