CALGARY — The Harmonized Sales Tax in British Columbia has been a ‘disaster’ for the recreational property market in the province and the scrapping of it will open the doors for prospective buyers, many from Alberta, who have been sitting on the sidelines.

“It’s going to be well received. It’s going to be huge because the HST has been a real detriment to recreational properties, developed lots on lakes, secondary houses, people coming out and buying a place on the ski hill, a condo,” said Philip Jones, of Royal LePage East Kootenay Realty.

“It’s had a very staggering impact on our recreational market in the Okanagan and the Kootenays.”

In a referendum, the people of British Columbia voted to scrap the HST, which was 12 per cent, and now the government will transition back to its former provincial sales tax. The HST had replaced the GST and the provincial sales tax.

Jones said about 80 per cent of the Kootenay region’s recreational market is from Alberta.

He said many potential buyers have been sitting it out since the HST was introduced in 2010.

“A large pool of buyers have been just waiting for this,” said Jones. “They’ve been looking but they’re not buying. One of my realtors alone has got 22 people that are waiting to buy something that does not have HST on it. They’re all Alberta buyers. Alberta by far is our biggest market and that goes for the Okanagan too.

“For businesses, the HST’s a good tax. But for recreational property it’s a disaster.”

Eric Watson, vice-president of real estate for Bellstar Hotels and Resorts, said the move should be a positive one for the industry but there’s need for clarity on the issue.

“But assuming everything is the way it was before, it’s definitely going be a big plus,” he said.

“We have a project in Kokanee Springs where it certainly will be a big plus.”

Don Campbell, president of the Real Estate Investment Network, said the scrapping of the HST will increase the demand in the condo market.

“When the HST came on it actually put a bit of a cap on demand,” said Campbell. “You’ll start to see new homebuilding increase over the next six to 12 months.

“But my concern would be that it will take some of the demand off of the resale market because now people who are moving to resale and doing renos will now be able to go back into the new market.”

Campbell said the HST is not a big financial deal but more of a psychological one as people feel they have more money in their pocket.

“The psychology of the HST coming off new property is a big difference,” he said. “I think what you’ll find on the recreational property is that there hasn’t really been that much of a negative response. It slowed down just because the economy has slowed down a little bit, but the HST itself didn’t really have a major effect on that because it really was only on the new build property. During this downturn, there hasn’t been a whole lot of new build being built in the recreational world.”

Mike Bucci, of Vancouver-based developer Bucci Developments Ltd., said transitioning from one tax regime to another creates significant confusion in the purchasing process.

“We experienced a lot of confusion when we went to the HST. Nobody really understood how it was going to get rolled out and what the rebates were. And going back I think you’re going to see some of that confusion again. We have 18 to 24 months to transition back and there will be a lot of questions in buyers minds over what taxes and rebates they’d be paying during that period,” said Bucci.

“It doesn’t help. And the recreation property market needs all the help it can get right now.”

mtoneguzzi@calgaryherald.com
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