BC Political Discussion: Election 2020 and Beyond

[GenWhy?]

Originally Posted by chowhou

Not talking about that.

Redevelopment investors are quite explicitly targeted by this policy. If you invest in a housing developement by purchasing a unit during the preconstruction phase and you assign that contract within a year for a profit you could be looking down the barrel of a 70% tax rate on the profits. Or, if you see the contract out to completion and you purchase the property, you have another two years of tax penalty time tacked on. I think it's a pretty obvious cooling affect on housing investment.

There seems to be some confusion in this thread, others don't agree that this is flipping and I don't either. I call this real estate investment which we desperately need in this province. We should be happy that these people are funding the development of real estate in our province, this is a good thing. However, this practice is targeted by the province with this tax.

I agree this might cool investment in condos and to me that's a great thing and the sole reason (I understand) behind this policy. While this is a bit of "real estate investment", it's folks buying condos to rent them out. While in general not the worst thing to happen, it does skew prices of units and land and really hurts the rental market and overall affordability in the city.

This shouldn't be an issue for investors because they should be holding onto the product for a fair amount of time. I don't think asking them to hold a property for 2 years is impossible to avoid a tax.

[GenWhy?]

Originally Posted by chowhou

There seems to be some confusion in this thread, others don't agree that this is flipping and I don't either. I call this real estate investment which we desperately need in this province. We should be happy that these people are funding the development of real estate in our province, this is a good thing. However, this practice is targeted by the province with this tax.

There is a problem with these real estate companies getting 1st dibs and re-selling properties. They're not providing housing. They might be getting shovels in the ground quicker for these higher end condos, but they're not providing housing.

[Migrant_Coconut]

Originally Posted by chowhou

I said it once and I'll say it again, the government has already indicated who this is targetting.

https://www2.gov.bc.ca/gov/content/taxes/income-taxes/bc-home-flipping-tax

Yes they have: people trying to play with one of the most basic needs like it's a stock market. There's ways of adjusting the language to target said people without triggering a brain drain of genuine good faith investment.

[chowhou]

Originally Posted by GenWhy?

I agree this might cool investment in condos and to me that's a great thing and the sole reason (I understand) behind this policy. While this is a bit of "real estate investment", it's folks buying condos to rent them out. While in general not the worst thing to happen, it does skew prices of units and land and really hurts the rental market and overall affordability in the city.

This shouldn't be an issue for investors because they should be holding onto the product for a fair amount of time. I don't think asking them to hold a property for 2 years is impossible to avoid a tax.

Investment in condos is the only way supply increases so I fundamentally disagree with you there. Anything that inhibits an investor's ability to profit is going to have a cooling effect, there's no binary "issue" or "non-issue". Time is money.

Originally Posted by Migrant_Coconut

Yes they have: people trying to play with one of the most basic needs like it's a stock market.

It's one thing to say "this is a tax targetting flippers!" but the implementation is all that matters. I believe I said this before, and I think you're engaging in it now:

Originally Posted by chowhou

I've yet to see a compelling argument for why we should disincentivize/ban flipping that doesn't reduce down to "they're profiting off something in a way I don't like".

There's ways to target those people without triggering a brain drain of genuine good faith investment.

If there is a way, this is not it.

[GenWhy?]

Originally Posted by chowhou

Investment in condos is the only way supply increases so I fundamentally disagree with you there. Anything that inhibits an investor's ability to profit is going to have a cooling effect, there's no binary "issue" or "non-issue". Time is money.

I agree that investment in condos is a good thing and required. If there is appetite for it, people that want to hold them for 2+ years will continue to buy, or people that actually will live in them will buy. This policy only affects people who have no real intention to hold the property as a long-term investment and it won't affect people wanting to make it their home.

As well I see cooling the condo market as a positive. "Investors" that buy and sell within 2 years are not making condos more available to a wider population. If long term investors and homebuyers cannot afford the current price, they won't afford the "flipped" price either. Both condo and land prices are escalated to unsustainable levels that is greatly affecting the viability of rental all over the city.

[Migrant_Coconut]

Profiting =/= profiteering. I have yet to see a convincing argument for why targeting the latter is the same as/will affect the former.

[chowhou]

Originally Posted by Migrant_Coconut

Profiting =/= profiteering. I have yet to see a convincing argument to why targeting the latter is the same as/will affect the former.

Are you asserting that what I've said before is not a convincing argument? The core thesis being that this policy disincentivizes investment in new housing by 3rd parties (non-developer, non-owner).

[GenWhy?]

I mean... if a building cannot launch, get it's 60% sold benchmark, because a handful of buyers wanted to sell their units within 2 years then maybe the units are too expensive and the market doesn't want that product.

[GenWhy?]

Originally Posted by chowhou

Are you asserting that what I've said before is not a convincing argument? The core thesis being that this policy disincentivizes investment in new housing by 3rd parties (non-developer, non-owner).

Less speculation sounds like a positive consequence, IMO.

[Migrant_Coconut]

Yeah, that.

[chowhou]

Investment in new housing is inherently speculative. You're putting dollars in with the intention but no guarantee of getting more dollars out on the other side. You can't be pro-development while being anti-investment. (But if you're anti-development, I can see your point about wanting to target this.)

[GenWhy?]

Originally Posted by chowhou

Investment in new housing is inherently speculative. You're putting dollars in with the intention but no guarantee of getting more dollars out on the other side. You can't be pro-development while being anti-investment. (But if you're anti-development, I can see your point about wanting to target this.)

I am pro-investment, I just don't see the upside of continuing to incentivise buying properties without the intent to hold onto them 2+ years or to live in it. I see no societal benefit - especially in a housing crisis where speculation drives up the cost of all housing types and tenures.

[Migrant_Coconut]

False dichotomy. There's a middle ground between laissez faire/an-cap and stagnation.

[whatnext]

Originally Posted by chowhou

Are you asserting that what I've said before is not a convincing argument? The core thesis being that this policy disincentivizes investment in new housing by 3rd parties (non-developer, non-owner).

If investing real estate is what they want, then buy shares in a REIT. If the demand for housing is there, the market will supply it even without the aid of flippers. The kind of flipper you describe is often the realtor-insider who gets first crack at these units. And thus we end up with shite like Kengo Kuma which aren't really designed to be places to live merely places to store wealth.

[GenWhy?]

Originally Posted by whatnext

If investing real estate is what they want, then buy shares in a REIT. If the demand for housing is there, the market will supply it even without the aid of flippers. The kind of flipper you describe is often the realtor-insider who gets first crack at these units. And thus we end up with shite like Kengo Kuma which aren't really designed to be places to live merely places to store wealth.

Exactly, when a building goes up on the market and the general public sees it... it's usually already half sold.

"Only 5 units left!" I wonder why....

If a building is a worthy investment to hang onto for 3 years, people will continue to buy. If they don't maybe prices will stagnate for a year, which would be amazing.

[chowhou]

Originally Posted by Migrant_Coconut

False dichotomy. There's a middle ground between laissez faire/an-cap and stagnation.

Correct, and this moves us from somewhere in the middle ground closer towards stagnation. You might like that, I don't.

Originally Posted by whatnext

If investing real estate is what they want, then buy shares in a REIT. If the demand for housing is there, the market will supply it even without the aid of flippers. The kind of flipper you describe is often the realtor-insider who gets first crack at these units. And thus we end up with shite like Kengo Kuma which aren't really designed to be places to live merely places to store wealth.

What do you think REIT's do...? Also I don't care what the individual wants to do, I'm just here to loudly and proudly declare in our housing crisis we need policies that promote supply, not hinder it. It's all well and good to want to hit people you don't like with a tax, but I do not want it to come at the expense of the rest of us.

[Migrant_Coconut]

Originally Posted by chowhou

correct, and this moves us from somewhere in the middle ground closer towards stagnation...

You're entitled to your opinion.

[chowhou]

Originally Posted by Migrant_Coconut

You're entitled to your opinion.

It certainly doesn't promote investment in new supply.

[Migrant_Coconut]

Originally Posted by chowhou

It certainly doesn't promote investment in new supply.

If a building is 95% sold before it even gets to market, that's not "equal" opportunity, nor added supply.

[GenWhy?]

Originally Posted by chowhou

Correct, and this moves us from somewhere in the middle ground closer towards stagnation. You might like that, I don't.

What do you think REIT's do...? Also I don't care what the individual wants to do, I'm just here to loudly and proudly declare in our housing crisis we need policies that promote supply, not hinder it. It's all well and good to want to hit people you don't like with a tax, but I do not want it to come at the expense of the rest of us.

I think you might see stagnation in price of units, but not necessarily in unit quantity, due to this policy. We're seeing the shift from condos to rental due tot he rate increases. This has also thankfully reduced the crazy price escalation we had over the years on both unit and land values.