B.C.'s harmonized sales tax (HST) is dead but it continues to haunt developers of high-end homes, who say confusion over the HST phase-out has stalled sales and forced price discounting. The main issue is new homes priced at $525,000 or more, which don't qualify for HST rebates, a Vancouver Board of Trade panel discussion on the Metro Vancouver housing market was told last week.
"This is really hurting us in the new-home business," said Ward McAllister, president and CEO of McAllister Ledingham Ltd., a Vancouver developer. "We don't have any transition rules yet. What is amazing to me is that it took three days to bring this tax in and now they are telling us it will take up to 18 months to unravel it."
McAllister said, "Any of our product at $525,000 or over is just sitting." Developers are forced to make deals and discount prices, he said. The former president of the Urban Development Institute said the development industry has been "begging" for clear transition rules on the HST since a summer referendum killed the controversial tax. "The first meeting [with the province] to discuss this is November 15," he said.
According to a housing outlook from Canada Mortgage and Housing Corp., new-housing starts in B.C. are forecast to fall 2.5 per cent in 2012, to 27,600 units, after posting a 7.6 per cent increase this year.
from Western Investor December 2011
