Many first-time home buyers in B.C. say they can't access the province's tax exemption benefit

·4 min read
B.C.'s Ministry of Finance says 14,664 homeowners used the program in 2021, making up 8.6 per cent of all 170,377 home sales that year.  (CBC - image credit)
B.C.'s Ministry of Finance says 14,664 homeowners used the program in 2021, making up 8.6 per cent of all 170,377 home sales that year. (CBC - image credit)

Gabriel Haney is looking to buy a one-bedroom apartment in Langley or Burnaby.

The 26-year-old from Langley says he hopes to take advantage of B.C.'s First Time Home Buyers' Program, an incentive that exempts people who are buying their first home from paying property transfer tax, which ranges between one to three per cent of the home's cost — provided the property is purchased for $500,000 or less.

"I rely on this grant to be able to afford a home," said Haney, a high school teacher.

But even though Haney's budget is around that figure, he says he is struggling to find a home that meets the $500,000 maximum purchase price criteria.

"A lot of properties are listed at $499,000 ... you have to bid above $500,000 if you want to even be considered," Haney said.

He recalls one home he had recently bid on, which received 30 other offers.

"Even if I wanted to take advantage of [the program], I can't because I can't compete with the other people who are bidding above [the price limit]."

'There isn't any property ... that would qualify'

Metro Vancouver mortgage broker Jerry Jackman, who has worked in the business for over 20 years, says he cannot recall any client who has recently accessed the incentive.

"It's ludicrous to suggest that this is a benefit to first-time buyers when there isn't any property that they can buy that would qualify them to get the rebate," he said.

Jackman, who co-owns Think Mortgages with his son, says even outside of Metro Vancouver, properties under $500,000 are difficult to come by.

"It's really not a benefit when there's nothing to buy."

Buyers outside the Lower Mainland are also struggling to find houses under the price threshold.

Michael Huber, 42, and his wife Elsa are in the process of buying their first home in Port Alberni on Vancouver Island for $600,000 — meaning they do not qualify for the tax exemption.

Submitted by Michael Huber
Submitted by Michael Huber

"I think that all first-time home buyers should have the opportunity to have that tax waived ... why not give those folks a break?" said Huber.

Huber, who is originally from Surrey, says affordability was part of the reason they decided to move to Port Alberni. The price cap, he says, is "completely unrealistic" in B.C.'s market today.

"They need to give their heads a shake or at least just come back to the table and do the math, because it's not fair."

B.C.'s Ministry of Finance says 14,664 homeowners used the program in 2021, making up 8.6 per cent of all 170,377 home sales that year.

"Making homes more affordable for people and families is a priority for this government, and this is only one of several programs available to support people with moving into home ownership," the ministry said in an email statement.

Keeping up with inflation

The First Time Home Buyers' tax exemption was first introduced by the provincial government in 1994. The maximum house price has been raised several times since.

Since 2014, the limit has been raised once, from $475,000 to $500,000 in 2017, representing a 5.2 per cent increase.

Comparatively, average residential home prices in the province have increased by 63.2 per cent in this time frame, from $568,405 in 2014 to $927,877 in 2021, according to the British Columbia Real Estate Association (BCREA).

Brendon Ogmundson, chief economist with the BCREA, says the limit has not kept up with home prices, partially due to a large price jump over the last two years.

"If you don't at least index to inflation with these thresholds they're just going to become less relevant," he said.

Ogmundson says those hoping to buy a home for under $500,000 in the province are limited to certain regions: median property prices fall below this amount in the Cariboo region, in Northern B.C., and in the Kootenays, excluding major cities. Some parts of the Fraser Valley have a median apartment price under $500,000, he adds.

"If you're looking in Victoria or Vancouver it's going to be really, really difficult."

The Ministry of Finance said the government reviews and considers changes of provincial taxes each year, but that it is too early to talk about changes in the 2023 budget.

More needed to make housing affordable

Thomas Davidoff, a finance professor at the University of British Columbia who specializes in real estate, says while expanding this incentive will help some to purchase their first home, the government should focus on other measures for housing affordability.

"It helps people get over the line, but on the other hand you are rewarding people who are close to over the line or would have crossed the line anyway. People who have no chance at buying a home don't benefit," said Davidoff.

He said the government should focus on augmenting supply and providing financial support to renters with low income.

"I think we have a problem with too much demand or not enough supply. I'm not sure that the government ought to expand the generosity of incentives to purchase homes."

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