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Taxes Crushing New Development Potential


 

From UDI

How much do taxes and fees affect new housing costs? 

Taxes and fees levied by all levels of government continue to be major cost drivers on new housing development, but how much do these add to the cost of a new home? 

The Urban Development Institute (UDI) recently released study to answer this question. 

Taxing Growth: Analysing the Taxes and Fees on New Housing Development reviews each tax and fee that goes into the cost of building new housing in Vancouver, Saanich, and Kelowna.

Example: Vancouver condominium

Here are the costs that go into a typical wood-frame condominium development in the City of Vancouver. 

Building assumptions 

Building valuation and revenue Notes / Per sq. ft.
Total market value revenue $59,500,000 $1,400
Buildable sq. ft. 50,000  
Hard costs and contingency $30,000,000 $600
Land value $18,750,000 $375
Units 53  

Taxes and fees 

Assuming an average unit value of $1,120,000 and an average unit size of 800 sq. ft.

Per sq. ft. charges 
Building permits $1,376
Developer permit $3,992
Empty homes tax (5%) $60,000
Development Cost Levy (DCL) - Residential $28,368
Property Transfer Tax $13,688
Property tax including additional school tax $11,480
Community Amenity Contribution (CAC) $89,992
Public art $1,584
Per unit charges 
GST (5%) $56,000
Greater Vancouver sewer (flat rate per unit) $1,988
TransLink DCC (flat rate per unit) $1,554
Property Transfer Tax paid by buyer (if not exempt) $20,400
Subtotal fees for unit buildable $290,422
Total fees for unit saleable $327,565
Total government fees as % of unit value29.25%


Note: The Metro Vancouver Water DCC has been given a third reading and is under review by the province. If the Water DCC is included this would increase total fees per unit to $331,826.53 or 29.63% of the total government fees as a % of the unit value.

Cost by unit type

Cost on typical unitsSizeTaxation $Taxation %Purchase price
Bachelor 500 sq. ft. $204,728 29.25% $700,000
One bedroom plus den 700 sq. ft. $286,620 29.25% $980,000
Two bedroom 900 sq. ft. $368,511 29.25% $1,260,000
Family three bedroom 1,200 sq. ft. $491,348 29.25% $1,680,000

Vancouver condo taxation by government 

LevelTaxation $Taxation %
Municipal $218,014.12 66.56%
Regional $3,542.00 1.08%
Provincial $50,009.41 15.27%
Federal $56,001.53 17.10%
Total $327,565.53 100%

Project viability?

"The updated Vancouver condo analysis demonstrates a project that is not viable in today’s environment if the purchase price for a 700 sq. ft. one bedroom unit were set at $980,000."
 
- Excerpt from the UDI report Taxing Growth: Analysing the Taxes and Fees on New Housing Development

The estimates for hard costs and contingency, land costs, and government taxes and fees almost exceed the total market value revenue for the project, according to UDI.  

UDI believes this project faces viability challenges even before factoring in the estimates of soft costs, financing, and the margin for risk. This project would likely not be financeable.

UDI

UDI represents land developers, property managers, financial lenders, lawyers, engineers, planners, architects, appraisers, real estate professionals and others involved in property development. 

Read the UDI report, Taxing Growth: Analysing the Taxes and Fees on New Housing Development, (opens 19-page pdf). 

If you have questions about this report or its content, contact Harriet Permut, director of government relations at [email protected]

 


Westbank Proposal for 720 Beatty, Central Heat site



New St. Paul's Hospital in False Creek Flats, COV Survey Open Until February 8th


The City of Vancouver is taking public input into the proposed use of False Creek Flats, but the survey is only open until tomorrow.  The area under discussion will be the new site for St. Paul's Hospital and is bounded by Prior Street, Clark Drive, Great Northern Way and Main Street.  This is already home to the new Emily Carr campus.

http://vancouver.ca/home-property-development/false-creek-flats.aspx

 

st paul s rendering



Connaught Edgemont Village Coming Along


 

I love this development by Grosvenor in Edgemont Village in North Vancouver and am so grateful to have sold a great unit to my pals.  The excavation is nearing completion and the project is almost sold out.

http://www.connaughtliving.com/

connaught



Paul Merrick, Westbank Development in Horseshoe Bay


Horseshoebay, a new development by Westbank promises to modernize Horseshoe Bay while respecting its inherent beauty and the natural contours of the hillside.  The project is being offered first to locals before outlying buyers. It is designed by one of the West Coast's notable architects, Paul Merrick.  The property will feature a wonderful boathouse at its waterside entrance.  Villas are: oceanfront, bay view, forest or cherry blossom outlooks.  There are also ocean "pavillion" villas.

horseshoebay