The Town of Qualicum Beach in British Columbia recently made the controversial decision to not authorize short-term vacation rentals outside of specific commercial exceptions, a choice expected to reduce the coastal community's tourism revenue. At the town council's regular meeting on April 10th, a majority of officials voted for an in-depth study on the issue to be undertaken in 2027 rather than take immediate action. This decision comes on the heels of new provincial regulations on short-term rentals aimed at alleviating British Columbia's shortage of affordable housing.

Town planner Luke Sales provided an overview of the implications for Qualicum Beach once the Short-Term Rental Accommodations Act comes into effect on May 1st. Currently, short-term vacation rentals are prohibited in residential zones, yet data shows approximately 116 are operating illegally, bringing in $11 million in annual tourism spending. The new law will restrict rentals to principal residences with either a secondary suite or accessory unit, which Sales says will decrease Qualicum Beach's rentals to around 20, generating just $2 million. To mitigate the loss, he suggested bylaw amendments, temporary use permits, and increased fines.

However, council endorsed postponing any authorization of owner-occupied short-term rentals until 2027. Councillor Scott Harrison alone opposed this, asking if it essentially bans all short-term rentals, which Sales confirmed aside from commercial properties. Harrison suggested a public hearing before decisions are made. Councillor Anne Skipsey indicated the 2027 review was decided during strategic planning given delays from provincial legislation. Councillor Petronella Van der Valk added that while tourism dollars may be lost, the change could make housing more affordable since households paid an estimated $15.6 million more in rent from 2016-2021 due to short-term rental activity in the area.

The British Columbia 2024 budget announcement is out, and here's a quick rundown of how the recent budget changes might affect you in the world of real estate:

1.        BC Home Flipping Tax:

    o    Premier David Eby has been clear that speculators are in his crosshairs, and with the 2024 budget, his government has announced details of a new "BC Home Flipping Tax."

    o    Starting January 1, any profits made from the sale of a residential home within two years of buying it will be subject to the tax – with exceptions.

    o    The tax will see a sliding scale: 20 percent on profits made on a home sold within the first year, gradually declining to zero after two years of ownership.

    o    Divorce, death, illness, and relocation for work, “among others” would be grounds to avoid paying the tax.

    o    The tax revenues are earmarked toward the construction of new affordable housing in the province.

2.      Speculation and Vacancy Tax Amendments:

    o    Effective January 1, 2024, leaseholders registered with the Land Title and Survey Authority will bear the responsibility of the speculation and vacancy tax. Say goodbye to fee simple owners carrying the load!

3.      Property Transfer Tax Gets a Facelift:

    o    Calling all first-time homebuyers! As of April 1, 2024, the threshold for property transfer tax exemption skyrockets to a fair market value of $835,000.

    o    Newly built homes also get a boost, with the exemption threshold jumping to $1,100,000.

    o    Looking ahead to 2025, transactions involving new purpose-built rental buildings receive a golden ticket. Qualifying purchases can kiss the general property transfer tax goodbye.