XPost: bc.politics, van.general, vic.general   
      
   Is There BC HST on Rent?   
      
   Many renters have asked us this question already: Is there BC HST on rent in   
   Vancouver and   
   around the province? Does BC HST impact rental housing rates and what are the   
   implications   
   and impact of the British Columbia Harmonized Sales Tax on rents and rental   
   rates in major   
   cities where vacancies are still at record lows? To answer your questions as   
   simply as we   
   can, there is no direct BC HST on rent in the province. Therefore, a landlord   
   or property   
   owner renting their home or condo to renters DO NOT charge 12% BC HST on   
   Vancouver rents.   
   Basically, what you see is what you get in terms of BC rental pricing.   
      
   HOWEVER, because of the implementation of the BC Harmonized Sales Tax in July   
   1st, 2010,   
   there is an indirect effect of the 12% HST on rents in Vancouver and   
   throughout British   
   Columbia. Not only will the B.C. HST impact residential housing rents, but it   
   will also   
   ultimately affect commercial rents next year. Again, these is no BC HST on   
   commercial   
   rents directly. However, the commercial property owner will have their hands   
   tied as the   
   12% new tax will be applied to all operation costs, maintenance issues,   
   renovations and   
   professional services. What this means is that the BC HST on commercial rents   
   will   
   increase indirectly due to the increase tax burden on the British Columbia   
   commercial   
   property owner. In this article, we will try to examine the negative impact of   
   the BC HST   
   on rent, even though it is indirect.   
      
   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.   
      
      
      
   THE BC HST RENT IMPACT IS TWO-FOLD, AFFECTING BOTH RENTERS AND LANDLORDS. THE   
   IMPLICATION   
   OF THE BC HST ON VANCOUVER RENTS WILL CAUSE RENTAL RATES IN BRITISH COLUMBIA   
   TO INCREASE.   
   THIS WILL RESULT IN A DECREASE IN HOUSING AFFORDABILITY FOR RENTERS, LANDLORDS   
   AND HOME   
   OWNERS.   
      
      
      
   THE LANDLORD OR BC PROPERTY OWNERS’ PERSPECTIVE on the indirect implication of   
   the BC HST   
   on rent and BC HST impact on rental housing rates   
      
   One thing to remember is that even though there is no direct HST tax on rents   
   in British   
   Columbia, landlords and property owners will be taxed the 12% HST on other   
   goods and   
   services that are required to run a rental home, condo or townhome. Remember   
   that the   
   landlord only sees the bottom line or the monthly cashflow (either negative or   
   positive)   
   that he or she gets from a BC rental property. With the implementation of the   
   BC   
   Harmonized Sales Tax in July 1st, 2010, the BC and federal government will   
   apply the 12%   
   HST tax to all goods and services associated with operations, maintenance and   
   renovations   
   to any property, including new rental housing. These increased costs and   
   expenses to the   
   property owner or landlord will result in a tigher cashflow and bottom line.   
   And you know   
   what that means. With less income coming in, guess who will end up paying for   
   the increase   
   in expenses to a BC rental home? Yes, you guessed it …. Most likely, the   
   landlord or BC   
   property owner will add any extra expense to the rental rate. This is why we   
   call it an   
   indirect implication of the BC HST on rents. The BC HST impact on rental   
   housing will be   
   profound. Just think about this: if all the goods and professional services   
   cost 12% more   
   than they do currently, BC landlords and property owners will probably   
   increase the rental   
   rates on rental homes, condos and townhomes by the same 12% (twelve per cent).   
   What this   
   means is that $1,000/month may be jacked up by 12%, taking it to $1,120/month   
   rounded up   
   to $1,150/month for the exact same rental housing unit in BC. Here are 3 main   
   reasons why   
   the indirect effect of the BC HST on rents will likely increase Vancouver   
   rental rates and   
   decrease affordability for renters.   
      
        Reasons #1 – 12% HST Tax Burden on New Homes   
      
         The most obvious reason why Vancouver rents will increase due to the new   
   B.C. HST is   
   because the 12% tax will be applied to any new homes purchased, including   
   rental condos,   
   single family homes and rental townhomes. Although this is an upfront cost to   
   landlords   
   and property owners/investors looking to rent their suites and units, when it   
   comes to a   
   Vancouver real estate investment, the investor only looks at the cashflow or   
   bottom line.   
   If the numbers do not make sense, the investor does not purchase the property.   
   If the   
   numbers do make sense and the property investor can get positive monthly   
   cashflow from the   
   rental unit, then they make the numbers work as best as they can. However, the   
   BC HST on   
   rents is indirectly affected by the original purchase price of the rental   
   housing unit.   
   The increased original purchased cost through the BC HST tax burden will   
   ultimately be   
   serviced by an increase in Vancouver rents and rental rates.   
        Reason #2 - Cost of Operating a BC or Vancouver Rental Suite Goes Up   
         Essentially, through the adoptation of the 12% BC HST, landlords and   
   real estate   
   investors who rent out their homes, condos and townhouses will see an increase   
   in costs   
   for operating their BC rental housing. If the rental Vancouver home belongs to   
   a strata or   
   community, like most rental condos, townhouses and even some single family   
   homes in master   
   planned communities throughout British Columbia, chances are, the landlord or   
   property   
      
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