First-time home buyers are drinking a pint of ale or sipping a cup of tea to the recent success of Great Britain’s National Association of Estate Agents (NAEA), the equivalent of the Canadian Real Estate Association (CREA), which has just won a hard-fought victory changing an onerous tax.
Chancellor of the Exchequer Alistair Darling decided to raise the threshold of stamp duty land tax (similar to our Manitoba land transfer tax) to £250,000 for two years. In Canadian dollars, based on the currency market on Tuesday, April 20, that works out to $383,185.
“For thousands of first-time buyers the dream of getting onto the property ladder was slipping out of reach,” said Peter Bolton-King, chief executive of the NAEA and a representative to the International Council of Real Estate Associations (ICREA).
“We have long argued that stamp duty is a tax on aspiration that smothered the natural demand of the market. We still believe that more reform is needed and there is more work to be done, but this is a good first step — a major victory for first-time buyers.”
Harry DeLeeuw, a local REALTOR® and associate broker with Shindico, passed on this international news to WinnipegREALTORS® civic and legislative affairs chair Don Cook. As a past-president at all levels of organized real estate, DeLeeuw now has the privilege of serving as CREA’s representative on the ICREA.
Through DeLeeuw’s working relationship with Bolton-King on ICREA, we may soon be able to find out how a national government was motivated and convinced to make such a positive move to enable first-time buyers to get into home ownership in Great Britain.
Did the current national election campaign have anything to do with it? Is there hope our own Manitoba Government may see fit to do something similar before they go to the electorate next year?
WinnipegREALTORS® has launched www.2much-
ltt.com to create public awareness about the Manitoba government’s lack of response to making reforms on its land transfer tax that was introduced in the late 1980s. The exemption for all home buyers remains at $30,000 or $19,573 in pound sterling. In addition, no changes have been made to the rates upon which property value amounts are taxed, with the exception of increasing the highest rate of 1.5 per cent to two per cent in 2004 for any amount over $200,000. It is the highest rate in the country and is the lowest amount where the two-per-cent level kicks in.
Earlier this month, WinnipegREALTORS® noted the following in its March MLS® market release.
Sales in the southwest quadrant of Winnipeg showed an average house price of $303,000, the first time it has reached and eclipsed the $300,000 price point. The southeast is second highest at $278,000 and third at $252,000 are the surrounding capital region rural municipalities. Winnipeg’s northwest quadrant had the lowest average price at $188,000.
In the southwest, an entire quadrant now has home buyers pay on average over $3,700 to the province in land transfer taxes and a registration fee. Southeast Winnipeg home buyers are not far behind. Even buyers in the capital region are required to come up with an additional $2,700 before they get title to the property they purchased.
There is no first-time home buyer exemption similar to B.C., Ontario, P.E.I or Great Britain’s Labour government.
Manitoba is clearly out of step with the rest of Canada and other countries.
WinnipegREALTORS® and a representative from the Manitoba Real Estate Association in a pre-budget meeting with Finance Minister Rosann Wowchuk called for a first-time home buyer exemption.
The land transfer tax proposal is accessible at www.2muchltt.com.
Will the fact that Great Britain decided to provide much needed relief to first-time buyers sway Premier Selinger, a graduate of the London School of Economics? Maybe not, but it is an indication a number of governments have noted the unfairness of a stamp duty or land transfer tax to home buyers’ aspirations.
Read what three of the other supporters of NAEA’s stamp duty land tax campaign had to say.
“Not only does Stamp Duty prevent those aspiring to own a home from doing so, it also impacts the whole property chain,” said Ian Potter, operations manager of the Association of Residential Lettings Agents (ARLA). “For ARLA members, this means having to pay Stamp Duty on the bulk price of a portfolio, when individual buy-to-let investors pay a lower rate on the single unit price.”
“The current Stamp Duty system in the U.K. is archaic and in desperate need of reform and modernization,” said Adrian Coles, director general of the Building Societies Association (BSA). “A fairer and transparent system is needed that doesn't discriminate against young and first time home buyers, and promotes an effective housing market.”
“Stamp Duty Land Tax is a pernicious tax which has failed to keep pace with house price appreciation,” said David Salusbury, chairman of the National Landlords Association (NLA). “It creates an unbalanced housing market and discourages investment in housing. Reform is needed now.”
WinnipegREALTORS® is buoyed by the success of estate agents in Great Britain.
“This recent international development only furthers our resolve and commitment to urge the Manitoba government to reform its land transfer tax,” said Don Cook, chair of WinnipegREALTORS® civic and legislative affairs committee. “Whether it is giving much needed relief to first-time buyers or adjusting the highest land transfer tax rate in the country to make it less onerous on move-up buyers, the time has come to do something.
“Stop trying to find increased government revenues on the backs of home buyers through a larger land tax grab based on increased house values,” he added.
When you compare Manitoba’s threshold exemption of $30,000 to $383,185 in Great Britain, it appears we have a way to go before we even start making the necessary changes to an unfair tax that keeps potential buyers out of the housing market.