In 1972, the federal government eliminated capital-gains deferrals for rental buildings.  These tax deferrals gave owners of rental building incentives to continually reinvest in purpose-built rental housing.  Without this incentive, owners are encouraged to hold onto real estate longer, slowing the redevelopment process.  Since this change in tax policy, investment in new purpose-built rental housing has been stagnant all across Canada.  The Victoria Real Estate Board supports tax policy change that would re-instate the capital-gains deferral and has recently provided funding to the UBC Sauder School of Business to study this policy question.  These changes are also supported by tenant advocacy groups who point to low vacancy rates and rising rents as two of the consequences of a limited supply of purpose-built rental housing.

The Canadian Rental Housing Coalition supports these proposed tax policy changes.  Goal 2 of the CRHC Charter states: Reinstate federal tax incentives to stimulate private market rental housing.  Read the full CRHC charter and add your organization’s endorsement here: Canadian Rental Housing Coalition Charter

Media:

• Times Colonist: Tax change prescribed to relieve rental squeeze  &  Are tax changes needed? Study to take hard look

• Reinvestment in Real Property: The Canadian Real Estate Association’s Submission on Why Canada Needs Capital Gains Tax Deferrals – Canadian Real Estate Association, January 2008
• Creating a Positive Climate for Rental Housing Development Through Tax and Mortgage Insurance Reforms - Ontario Housing Supply Working Group, November 2002
• Options for Changes in Federal Taxes to Encourage New Rental Construction - Ontario Ministry of Municipal Affairs and Housing – March 2002
• Fiscal Impact of Federal Tax Legislation on Residential Rental Rates in Canada - Prepared by Crawford Paterson Campbell for CFAA, 1999
• Economic Impact of Federal Tax Legislation on the Rental Housing Market in Canada - Canadian Federation of Apartment Associations – November 1998

On September 27, the Mayor’s Task Force on Housing Affordability released its final report that outlines its recommendations for affordable housing solutions in the City.  Vancouver City Council will vote October 2nd on priority action items developed by City staff based on the recommendations of the Task Force.  These priority items have been identified as having the potential to contribute to affordability in the immediate term and are targeted at moderate income households with incomes ranging from $21,500 to $86,500:

• Action 1: Implement an Interim Rezoning Policy that increases affordable housing choices across Vancouver’s neighbourhoods
• Action 2: Implement the Thin Streets concept identified through the re:THINK HOUSING ideas competition
• Action 3: Develop an operational and organizational model for a City Housing Authority, including a business plan.
• Action 4: Use current community planning programs to increase the supply of affordable housing
• Action 5: Revise and clarify Council’s inclusionary housing policies (i.e. the 20% Policy) to emphasize a flexible and creative approach to the delivery of affordable housing in large developments.
• Action 6: Identify additional City-owned lands that may be underused and undertake planning work to bring these sites forward for affordable housing development.

The action items presented in the report focus on actions that the City itself can take to address housing affordability for moderate income households.  Missing entirely from both the priority action items and the additional action items presented in the staff report is any mention of the role of senior governments in the development of affordable housing, and rental housing specifically.  The Task Force report suggests using the influence of the City and the Task Force membership to lobby for federal and provincial tax incentives to stimulate the development of purpose-built rent housing, but these recommendations are absent from staff’s action items.  The City of Vancouver is to be commended for its leadership and its efforts to find solutions to affordability.  However, it is important that senior governments are not let off the hook as cities cannot solve housing affordability on their own.  Addressing the affordability challenges facing Canadian cities requires the cooperation of all levels of government.

• Staff Report and Mayor’s Task Force on Housing Affordability Final Report
• The Canadian Rental Housing Coalition Charter

Media coverage of Mayor’s Task Force Final Report:

• Globe and Mail
• Vancouver Sun