Speculation tax fails to target property flippers: Kelowna staff report

The City of Kelowna is joining the chorus of impacted B.C. cities denouncing the NDP’s proposed speculation tax.

A staff report to city council on Monday is highly critical of the tax.

It states the tax will “have a negative impact on the local real estate market from out-of-province purchasers.”

READ MORE: Speculation tax could delay major Kelowna development

The speculation tax, announced in last month’s provincial budget, will apply to homeowners in six regions who don’t live in their property or rent it out long-term.

It’s aimed at homeowners who park their money in real estate and drive up prices.

The rate is proposed at 2 per cent of assessed value starting next year, which will result in a new bill of thousands of dollars.

The city said the punitive tax will send a message to out-of-province buyers that they aren’t welcome in Kelowna.

City staff say the province should scrap the speculation tax and replace it with a tax that targets property flipping.

It also says that any new revenue generated from a real estate tax should stay within city limits to go towards affordable housing initiatives.

READ MORE: West Kelowna and Regional District of Nanaimo want out of B.C.’s speculation tax

Real estate broker Jerry Redman said his firm has already fielded calls from uneasy prospective buyers.

“A lot of people have been looking and shopping to purchase in Kelowna for a while [are] stepping back and deciding not to purchase,” he said.

Redman said people with vacation homes will be unfairly targeted.

“If it’s my vacation home, how do I come here and spend my vacations in my off season if I have to put a tenant in it?” he asked.

READ MORE: Kelowna’s rental vacancy rate lowest in the country

“The government took away fixed-term tenancies, so you can’t rent a property out and have them move out at a specific time so you can come and enjoy your property, so it just doesn’t work.”

The report said the speculation tax will, on the other hand, address Kelowna’s dismal rental vacancy rate, currently one of the lowest in the country at 0.2 per cent.

City staff say it could create up to 900 units of higher-end rental housing if owners put their empty homes on the rental market to avoid paying the tax.

City council will debate the report before taking an official position on the controversial tax.

WATCH BELOW: Speculation tax leading to negative speculation in the Okanagan