by Anita Huberman
Regarding the article “Rental Housing crunch time – No cash being set aside to rebuild affordable units in Metro Vancouver,” published in The Leader, Aug 16.
I read with interest this article, which indicates: “A gap exists in setting capital aside to replace the buildings (aging collection of affordable housing complexes) with federal subsidies.”
The Surrey Board of Trade, a business organization, in concert with all Chambers of Commerce/Board of Trades across Canada with our Canadian Chamber of Commerce, passed a resolution in 2010 to lobby for a national housing strategy. We echo Surrey Coun. Judy Villeneuve’s call for a strategy from the federal government that includes new incentives to build co-op and affordable housing. The need to assist to provide capital to replace the aging collection of affordable housing is urgent.
In major cities across Canada, renters are paying substantially more than they can afford on rent. According to a 2004 PricewaterhouseCoopers report for the Greater Vancouver Regional District (GVRD) titled Forecast Demand for Affordable Housing in Greater Vancouver, in 2001 43 percent of renters in the GVRD spent over 30 per cent of their income on rent, and 22 per cent of renters spent more than 50 per cent of their income. The problem has worsened in the Region since 2001.
The most recent CMHC Rental Market Statistics report indicates that from October 2008 to October 2009, the Universe Of Privately Initiated Rental Apartments in 28 Census Metropolitan Areas increased from 1,751,031 to 1,762,175 or a mere 11,144 units [from October 2007 to October 2008, the Universe Of Privately Initiated Rental Apartments in 28 Census Metropolitan Areas decreased from 1,797,468 to 1,751,031 or 46,437 units]. And by the way this is why a census is vitally important to ensure we have statistical information from which to base economic decisions.
The availability of affordable housing/rental accommodation has economic implications because there is a direct impact on the ability of businesses to retain current employees who have difficulty in meeting their housing needs, and the ability to recruit new employees into the region due to high housing costs.
According to a 2007 report by the Urban Development Institute titled “A New Agenda for Canada’s Urban Environment,” one critical cause for the reduction in the provision of rental housing has been changes in federal income tax policy, such as the elimination of capital gain rollovers, decreases in the amount of allowable Capital Cost Allowance (CCA), the capitalization of soft costs (i.e. legal fees, engineering, financing, etc.), and the introduction of the GST. The federal government has the ability to reduce some costs for investors and homebuyers by re-introducing federal tax policies that successfully encouraged the development of rental housing in the past.
Our policy is that the federal government:
1. Offer a rebate of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) on new rental housing.
2. Offer deferral of capital gains tax and recaptured Capital Cost Allowance (CCA) upon sale of a property and re-investment in new rental housing within a reasonable amount of time (two years).
3. Increase CCA for new rental housing to line up with the true economic life of the relevant asset.
4. Restore soft cost deductibility in the year the costs are incurred for new rental housing.
The Surrey Board of Trade will continue this government advocacy because it is integral to our economic future.
Anita Huberman is the CEO of The Surrey Board of Trade.