News / Vancouver

Study, panel explore missing element in Vancouver's housing debate: banks

Raging debate between increasing supply and regulating demand ignores key role of Canadian financial institutions, say report authors

BCGEU treasurer Paul Finch in a February 2016 file photo.

David P. Ball / Metro

BCGEU treasurer Paul Finch in a February 2016 file photo.

A 30-point plan to solve Greater Vancouver's affordable housing crisis will be discussed at a panel organized by the province's largest union on Monday evening.

The plan is contained in a new report, Building an Affordable B.C., which argues for more aggressive taxes on land speculation and long-term vacant investment properties.

Co-author Paul Finch, the B.C. Government & Service Employees' Union (BCGEU)'s treasurer, will speak about his research with CUPE 1767 vice president Harpinder Sandhu on the panel.

"On the real estate crisis, you have two camps," Finch said in a phone interview. "You have one group of people saying it's foreign capital causing this, and then you have had a group of people in total denial, saying, 'This isn't happening,' or 'We just need to build more condos.'

"But it's domestic bank lending that's actually creating this situation … Global capital is creating a high watermark for prices, but it's bank lending that's allowing people to chase those prices. And that's inflating rents."

One big factor is that rents of five to 10 years ago are no longer enough to support interest paid by property owners.

"If you are real estate rich but cash poor, the only two ways to get equity is to either sell your house or to get a reverse mortage," Finch said, "but you'd need some kind of income to pay off the interest and to a certain extent that has to come from renters.

"You need to renovate your property, evict the tenants, and rent it out at a higher rate."

Other speakers include Vancouver Green party Coun. Adriane Carr, Tesicca Truong of the advocacy group Generation Squeeze, Sandhu, and BCGEU's vice president Kari Michaels.

The report proposes a land value tax aimed at speculators sitting on empty or underused properties.

Finch said the B.C. NDP's first full budget, released last week, contained some promising elements on housing, including luxury real estate tax measures — but warned that without more focus on land taxation, speculators could simply shift their activites into the $500,000 to $1 million range of homes and drive those prices even higher.

And because mortages yield much higher returns than other forms of loans, "when governments do not tax and regulate properly, private entitites like banks and financial institutions are picking up that money left on the table," Finch said. "We just need to shift our thinking to understand that compound interst applied to residential and commercial real estate is just a different form of taxing them, except its the private sector picking it up.

"In order to stabilize the market, the government needs to tax and regulate real estate high enough that they squeeze out the private interests effectively taxing and regulating the sector themselves."

The BCGEU-organized public forum will be held Monday 6:30 p.m at Vancouver Public Library's Kaye Room (350 W. Georgia St.). Read the housing report at Affordable B.C.

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