| Not going to get into the discussion of PBR vs condo and why you'd want to do either, but I'll elaborate more on how the taxation makes PBR unviable. The difference between these two scenarios is in the financing, and financing is critical in the entire viability of the project. In the Purpose Built Rental scenario the builder has to pay lets say 12% for each of these 100k condos in a 125 unit building, which ultimately results in the building costing an additional $1.5M to build. They need to find that money or find financing for that money. In the condo example the building is $1.5M cheaper to build as they do not need to find that money, they simply sell all the condos and the buyer pays. It's easier to get financing for a smaller amount of money, and so the condo becomes more viable and more likely to be built. Now 1.5M maybe doesn't sound like a big deal, but from my understanding of the development industry all this really matters and adds up. We've seen in Canada the entire market for PBR pretty much disappear and be entirely taken over by condos so this is not really any sort of debate. The development industry has talked about this a lot. The core underlying point is though then that if there is political desire to build more PBR than condos, it's not just a provincial issue, since the fundamental taxation difference is an important part of the underlying incentives that drive people to make different sorts of housing tenure types, and this is a federal issue. This is just one example. There's all sorts of ability for the federal government to change incentives via taxation. (in the past one of the biggest reasons why so many apartments were built was all sorts of other capital gains tax benefits around apartment development which no longer exist) |