Premier Eby just promised a new tax on unsold condos across the province, part of the BC NDP's platform heading into next month's provincial election. On the surface it sounds like exactly what frustrated buyers want to hear: force developers to stop sitting on finished homes and get them into people's hands.
Here's the pitch
Any finished condo unit that sits vacant for more than a year would get hit with a tax equal to 2 percent of its assessed value, climbing another 1 percent for every additional year it stays empty. Alongside that, the existing Speculation and Vacancy Tax would go up too, from 1 to 2 percent for BC residents and 3 to 5 percent for foreign owners. Eby pointed to roughly 5,000 unsold condos sitting in Metro Vancouver worth a combined 4.5 billion dollars, including one Burnaby building he said is 76 percent vacant, more than 250 units. His words: "They are brand new. They are ready for people to move in. They have been built."
Worth being clear on: none of this is law yet. It's a campaign promise, made three days into the provincial election campaign, and it would need the NDP to win and then actually legislate it.
Why this matters here too
This isn't only a Vancouver story. Kelowna, West Kelowna, and Penticton are already designated areas under the existing Speculation and Vacancy Tax, so the rate hike would apply here too, not just in the Lower Mainland. Whether the proposed Unsold Condo Tax itself would extend to our market specifically hasn't been spelled out anywhere I could find, so that part is still an open question.
The part of the story that gets left out
Here's what doesn't add up. At the same time this tax was announced, the province is running a separate program buying up unsold condos directly, and Eby has been upfront that government expects to pay below construction cost to do it. His words on that one: "we expect developers to be taking losses on many of these initiatives." Metro Vancouver had over 4,300 completed, unsold condo units as of this spring, and the province said the economics of that buyback program don't really work in Vancouver itself, but they do in places like the Fraser Valley, Vancouver Island, and the Okanagan.
Read that again. The government's own numbers say developers are already distressed enough to sell at a loss just to stop bleeding on carrying costs. If that's true, a 2 or 3 percent annual tax isn't the thing that finally tips them into selling. They're already trying to sell. The problem was never stubborn developers holding out for a better price. It's that construction costs, financing costs, and buyer demand don't line up at the prices these projects need to hit to break even.
A tax like this makes for a clean headline. It doesn't touch any of the actual reasons a condo sits empty for a year.
What I'd watch instead
If you're trying to read where this market is actually headed, construction costs, financing rates, and how fast presale contracts are closing tell you more than any new tax will. A policy aimed at the symptom doesn't usually change the underlying math.
This is my read as someone who watches this market closely, not tax or legal advice, and not a comment on how anyone should vote. Talk to your accountant about how any of these changes might apply to your own situation.
Sources
- Eby's BC NDP promises new tax on unsold condos, higher vacancy tax (Daily Hive)
- B.C.'s Eby says NDP would tax new, unsold condos, raise speculation, vacancy fees (Global News)
- Eby promises increase to B.C.'s speculation tax, create new 'Unsold Condo Tax' (Chilliwack Progress)
- Developers to take losses in rent-to-own condo acquisitions, says B.C. premier (Daily Hive)
- Taxable areas for the speculation and vacancy tax (Province of British Columbia)
Tarynn Liv Parker, REALTOR®
Sutton Centre Realty Kelowna
