- Joined
- Sep 25, 2007
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- 201
Hi All,
The following article is from this week`s issue of Business in Vancouver newspaper. There is nothing like having your costs increased on you and not being allowed to recover them, in whole or in part, from your clients (formerly known as tenants). It creates a nice Catch 22 - the tenants don`t want to pay more in rent because their units aren`t modern and landlords find it increasingly difficult to improve them because they can`t justify the investment.
HST hits landlords
Given the hullabaloo over the HST and its impact on the housing industry, it seemed right to pause for a moment and turn back to what this columnist was hearing in March 1997 when the HST was set to debut in Atlantic Canada. It was a source of confusion, faint hope and general interest – and for many of the same reasons critics fear a combined sales tax will hurt B.C.
Softening renovation intentions are helping drive the fears. A recent Ipsos Reid survey found the proportion of B.C. residents planning to renovate within two years had fallen from 69% last year to 65% this year. The average budget is $10,129.
But with the HST potentially dampening those intentions further, the Canadian Home Builders` Association of B.C. fears "unscrupulous renovators" will work for cash. The home builders advocate a provincial renovation tax credit that requires receipts so consumers use reputable tradespeople (if they want the credit). Similar fears were floated in Atlantic Canada back in early 1997, where under-the-table work was commonly expected to increase in response to a harmonization of sales taxes that would actually reduce the taxes paid on many items from 18.8% to a straight 15%.
Also similar to the current concern in B.C., many pointed to an impact on residential housing costs. Observers expected landlords to face higher operating costs that would be passed on to tenants.
But Marg Gordon, CEO of the B.C. Apartment Owners and Managers Association (BCAOMA), said it will be virtually impossible to do that in B.C., thanks to limits on annual increases in rents. What it will do is increase pressure on landlord budgets, because the HST is projected to cost apartment owners $25 million to $30 million a year.
"The cost comes directly out of the landlord`s pocket with no possibility to pass it on to the consumer," she said.
While accommodation was made for grocers – who sell another HST-exempt necessity, food – no provisions were made for residential landlords providing shelter. Gordon said the province acknowledges the oversight, but pointed the BCAOMA to Ottawa to make its case.
Given the financial pressure landlords face from various other tax changes, including property taxes, Gordon said tenants might not pay more for the rental housing they`ve got but the overall condition of the rental stock isn`t likely to improve because landlords won`t be able to justify the investment as easily.
Keith
The following article is from this week`s issue of Business in Vancouver newspaper. There is nothing like having your costs increased on you and not being allowed to recover them, in whole or in part, from your clients (formerly known as tenants). It creates a nice Catch 22 - the tenants don`t want to pay more in rent because their units aren`t modern and landlords find it increasingly difficult to improve them because they can`t justify the investment.
HST hits landlords
Given the hullabaloo over the HST and its impact on the housing industry, it seemed right to pause for a moment and turn back to what this columnist was hearing in March 1997 when the HST was set to debut in Atlantic Canada. It was a source of confusion, faint hope and general interest – and for many of the same reasons critics fear a combined sales tax will hurt B.C.
Softening renovation intentions are helping drive the fears. A recent Ipsos Reid survey found the proportion of B.C. residents planning to renovate within two years had fallen from 69% last year to 65% this year. The average budget is $10,129.
But with the HST potentially dampening those intentions further, the Canadian Home Builders` Association of B.C. fears "unscrupulous renovators" will work for cash. The home builders advocate a provincial renovation tax credit that requires receipts so consumers use reputable tradespeople (if they want the credit). Similar fears were floated in Atlantic Canada back in early 1997, where under-the-table work was commonly expected to increase in response to a harmonization of sales taxes that would actually reduce the taxes paid on many items from 18.8% to a straight 15%.
Also similar to the current concern in B.C., many pointed to an impact on residential housing costs. Observers expected landlords to face higher operating costs that would be passed on to tenants.
But Marg Gordon, CEO of the B.C. Apartment Owners and Managers Association (BCAOMA), said it will be virtually impossible to do that in B.C., thanks to limits on annual increases in rents. What it will do is increase pressure on landlord budgets, because the HST is projected to cost apartment owners $25 million to $30 million a year.
"The cost comes directly out of the landlord`s pocket with no possibility to pass it on to the consumer," she said.
While accommodation was made for grocers – who sell another HST-exempt necessity, food – no provisions were made for residential landlords providing shelter. Gordon said the province acknowledges the oversight, but pointed the BCAOMA to Ottawa to make its case.
Given the financial pressure landlords face from various other tax changes, including property taxes, Gordon said tenants might not pay more for the rental housing they`ve got but the overall condition of the rental stock isn`t likely to improve because landlords won`t be able to justify the investment as easily.
Keith