VANCOUVER — Relief is on the way for British Columbia homeowners concerned that their soaring home values will exclude them from an annual grant and hike property taxes.
Finance Minister Mike de Jong announced Tuesday the eligibility threshold for the province's homeowner grant program will increase by a third this year, to include properties with an assessed value of up to $1.6 million.
The $400,000 jump from last year's limit will ensure that 91 per cent of homes across the province are eligible to receive a basic grant of $570, he said, adding the program will apply to 83 per cent of the homes in Metro Vancouver.
The province's latest policy was in response to the hot real estate market in B.C.'s Lower Mainland, despite sales having tempered in recent months.
Property assessments have gone up by 50 per cent for some homeowners in the Lower Mainland and on Vancouver Island.
"We are doing our part to help keep housing costs affordable for families," de Jong said in a statement.
"The strength of the province's economy and sound fiscal management have put us in a position to raise the threshold by such a large amount this year to help homeowners."
De Jong told a news conference that the new program is aimed at people such as seniors who may have bought their home decades ago and seen a dramatic rise in the assessed value of their property and who would suffer if they no longer qualified for the homeowner grant.
"Those are the people, in those circumstances, that we are trying to address."
However, Tom Davidoff, a housing expert at the University of British Columbia, criticized the change, calling it a politically motivated subsidy for the wealthy.
He said it would do more harm than good by artificially inflating real estate prices.
"You're taking the money from people who don't own homes and giving it to people who do," Davidoff said. "And when you give a gift to homeowners, you not only help homeowner with cash today, you increase the value of the homes."
He dismissed the suggestion that elderly property owners whose equity may be stuck in their homes will suffer, pointing to the province's property-tax deferral program.
"People like to give the sob story of grandma on her limited income who can't pay her property tax, but grandma is able to defer her property tax until she sells her home," he said.
"At one per cent interest, anybody in the province who doesn't defer their property tax over the age of 55 is making a huge mistake.
"The province gives a giant gift in the form of incredibly low-interest loans. Even if you're rich you should just take the money and put it in the stock market."
Davidoff suggested a more effective policy would be a reduction in sales or income tax for people living in regions with high property values.
The homeowner grant program is expected to cost British Columbia an extra $12 million compared with last year. The province reimburses municipalities for decreased revenues resulting from the grant so local coffers are not affected by the change.
In 2010, the homeowner grant applied to homes assessed at a little over $1 million. That threshold rose to a high of nearly $1.3 million in 2013 and back down to $1.2 million in 2016 before catapulting to $1.6 million this year.
The province has introduced various measures to deal with rising home prices, including the introduction of a 15 per cent foreign buyers tax. The federal government clamped down on mortgage rules, making it more difficult for homebuyers to secure financing.
The homeowner grant policy was introduced as B.C. residents prepare for a provincial election on May 9.