Posted by admin on September 11, 2011
THE RENTERS PERSPECTIVE on the confusing implication of the BC HST on rents and Vancouver rental market
The 12% BC HST will likely and indirectly increase costs to the renter in 2 ways.
Firstly, all rental home utilities will be subject to the twelve per cent harmonized sales tax. Therefore, hydro, electricity, water, heat, gas and any other utility you currently pay will increase in cost because of the 12% HST that will be implemented on July 1st, 2010. In addition, common household necessities such as land phone lines, cell phones, high-speed internet as well as cable TV will also be subject to 12% tax. All purchases of goods and services such as appliances, utensils, furniture, bookshelves, computers and other household items will also be taxable. Therefore, the indirect impact of the BC HST on rent is that the cost of living will certainly increase a lot by this new tax.
Secondly, landlords and property owners renting out their homes to you will also feel the pinch. Not only will they have to deal with the Harmonized Sales Tax when purchasing new homes in BC and in Vancouver, but they will also experience the 12% HST tax burden on their operations costs, maintenance costs and other professional fees. Undoubtedly, this increase in expenses to the landlord will certainly increase the rents in Vancouver due to the HST tax. So is there BC HST on rent? No, BUT, the BC HST impact on rental rates and rental housing will certainly be felt for years to come as affordability for renters will go down yet again.
Vancouver Renters Can’t Escape the BC HST Tax
According to an industry leader from the B.C. Apartment Owners and Managers Association, the implications of the BC HST on rent and rental housing in British Columbia wil be devastating and may even casue a crumbling of the rental housing stocks throughout all the major centres. Because landlords and property owners already pay GST on such things as materials, renovations, maintenance and labour costs, the BC Harmonized Sales Tax will hike those fees by another 7% to 12% HST on rental housing maintenance and operations. According to the B.C. Apartment Owners and Managers Association, there is no way for them to recoup the increase in expenses to run their BC rental housing. In addition, current Vancouver bylaws have rent controls that limit increases in rent to only 3.7% for 2009, which is minimal when considering the 7% HST tax on rent. The result according to the B.C. Apartment Owners and Managers Association is that landlords and property owners will not go through with much needed maintenance and renovations on their rental properties because of the tax burden and also, they will seek maximum annual rents and also charge the maximum allowable rent increase every year just to pay for the extra 12% HST tax on rental housing operations. In addition, BC homebuilders and developers now have even less incentive to build new rental housing stock in the province and Greater Vancouver, where it is much needed to ease the tight vacancy rates as small profit margins will be shaved down even more.