As the B.C. election draws near, the UBC Sauder School of Business is taking a closer look at the promises the B.C. Liberals, NDP and Greens are making to voters through their political platforms.
We begin this four-part series by speaking to Professor Tom Davidoff about promises made to improve housing affordability.
The Liberal platform places emphasis on subsidizing home purchases, the NDP is focused on supporting renters, while the Greens hope to increase the supply of affordable accommodation. Which approach will benefit British Columbians most?
I think whether we promote rental or ownership affordability is less important than dealing with affordability at all. What matters most is making sure we have a tax system that encourages people to make a living in British Columbia rather than encouraging people to invest in property here. While the government has taken some recent steps towards that direction, there’s more that can be done. So far, both the NDP and the Green party have suggestions in their platforms that go in that direction.
Right up there with tax reform is zoning reform. A lot of very valuable land is wasted on single family homes that are unaffordable to almost anyone working for a living in and around Vancouver. The province needs to force municipalities to enact reasonable zoning laws.
On the supply side, the Greens are proposing major changes to zoning practice. Zoning that forces people to build single family homes or nothing at all is destructive, because middle class families cannot afford single family homes near Vancouver and probably never again will be able to. Like the other parties, they will spend billions to create about 15,000 affordable housing units. That is not my favorite. I think the government can create market rental units that make housing more affordable for everyone, while making sure taxpayers get a good return on investment.
In the end, if there are enough housing units – particularly family-friendly ones – that are being built, and if taxes make it hard to own property without either being a landlord or an owner occupier, we can improve affordability a lot.
How effective will the parties’ platforms be in making housing more affordable for British Columbians?
A lot of the new Liberal proposals amount to giving people money for buying homes, which cannot be effective when supply is fixed. Stimulating demand when supply can't adapt quickly due to zoning means already existing home owners get most of the benefit. I prefer the NDP’s $400 per renter grant as opposed to the Liberals’ spending to build new units, since the grant doesn’t encourage renters to rent larger or better-situated units.
On the other hand, the NDP proposal to build units should be tweaked to ensure taxpayers get a decent return on their investment. I think we can get more housing units built if the subsidies are not too large. If the BC government forced municipalities to upzone publicly-owned land and then partnered with private builders, taxpayers could likely make money creating market-rate rental buildings. However, when the province invests in buildings, they typically charge very low rents, and thus lose a lot of money on each deal. So we get a small number of highly subsidized units built. I’d prefer lots of less or not-at-all subsidized units that serve the function of creating purpose-built rental supply.