The NDP plans to take province-wide an arrangement it in Vancouver. The result could be up to 25,000 new homes within five years if the party wins the next election, B.C. Premier David Eby said today at a soggy news conference in Surrey.
The cost to taxpayers would be up to $1.29 billion per year, he added.
Eby suggested last week that his party wanted to expand the initiative province-wide so today's announcement was no surprise.
The policy proposal sees provincial government subsidizing 40 per cent of newly built homes for selected first-time home buyers who are currently renting. Those home buyers would front 60 per cent of the home's cost with the province covering the rest. The home buyer would then pay the province back for its financing of 40 per cent of the home's market value when the home is sold, or after 25 years, whichever comes first, as well as 40 per cent of any price appreciation.
While the arrangement on the Heather Lands, between West 33rd and West 37th avenues at Heather Street, was in partnership with the Musqueam, Squamish and Tsleil-Waututh First Nations, the NDP's plan to roll out the same kind of home-subsidization structure across the province would be done in partnership with municipalities and other First Nations.
The Heather Lands initiative is not for freehold title. Instead it is for 99-year leases for land where the homes are built. It is possible that future projects across B.C. would be for homes on land the home owner would own outright.
The interest rate on the government financing that buys the 40 per cent of the home would be 1.5 per cent, according to Eby. The home owner would pay interest on that loan just as they would with any other kind of financing, he said.
"This is just one part of a plan that is going to create, according to experts, 300,000 middle-income homes for British Columbians across the province by getting rid of the red tape, the endless process, the multi-year application involving architects and experts and consultants in multiple city hall hearings," Eby said this morning.
The 300,000 figure that the premier is bandying about likely includes homes built via a program known as BC Builds, Thomas Davidoff, director of the University of British Columbia's Centre for Urban Economics and Real Estate, told BIV.
"They might also be giving themselves some credit for up-zoning, which makes more affordable housing than would exist otherwise," he said. "I'd give myself credit for that if I were them but I don't know if they are in that case."
He said he believes the NDP will be able to easily find demand from potential home owners for the kind of subsidized home-owning arrangement that they are touting.
"I don't think it's crazy to think that, on average, the province will probably break even," Davidoff said.
"I think the private sector would demand a bigger risk premium, very likely. So I think this is a good deal for borrowers, and, in that way, a bad deal for taxpayers. But 20 or 30 years from now, I wouldn't be at all surprised if the province actually winds up breaking even or making money."
Eby slammed his main nemesis in the current election campaign, the BC Conservatives, for not wanting to build affordable housing.
Davidoff said the BC Conservatives have two main policy planks for housing.
"One is atrocious and the other has a kernel of a good idea but is surrounded by some some less good ideas," he said.
The Conservatives' "atrocious" idea is to scuttle the province's law that up-zones large swathes of the province and forces municipalities to allow more density on sites that are currently restrictively zoned to only allow single-family dwellings, Davidoff said.
"The Conservatives are against that, which doesn't make any sense because they're a right-wing party, and they should say, 'Let the market do what it wants,'" he added. "It's pretty weird to have the left-wing party saying, 'Let's deregulate.' and the right-wing party saying, 'No. Let's regulate.'"
The Conservatives' yesterday floated a second main housing policy: exempting up to $3,000 per month of rent or mortgage interest costs from provincial income taxes.
The program would start with a $1,500-per-month exemption, and then be increased by $500 each year until it reaches the target amount in 2029. The party estimated that this would cost around $900 million in 2026, and eventually $3.5 billion annually.
"The other program they have that's sort of interesting is giving people money as a credit against their housing expense," Davidoff said.
He said the kernel of a good idea in the Conservatives' platform is that it gives poorer people money so they can afford homes. The problem with the Conservatives' policy is that it gives the vast majority of residents money, given that the threshold is so high and that households with incomes up to $250,000 are eligible, he said.
"The problem with their proposal is that low income households don't necessarily benefit," said Davidoff.
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