On a grey day, a red and white real estate sign stands out against a brown and green early spring scene. The sign says "Royal LePage Atlantic," and lists a photo number and email address. Behind the sign is a green house on a quiet street.
A for sale sign on a property in Dartmouth on Thursday. Photo: Zane Woodford

A Liberal MLA’s bill designed to help first-time homebuyers get into an increasingly hot housing market has been panned by both the housing minister and the province’s largest municipality.

Cole Harbour-Dartmouth MLA Lorelei Nicoll introduced Bill 100, an act to amend the Municipal Government Act, last week, and it received second reading in the house on Wednesday.

The bill would waive deed transfer tax for first-time homebuyers. That tax is levied on the buyer of any property, residential or commercial. The Municipal Government Act allows municipalities to charge up to 1.5%. In Halifax Regional Municipality, the tax is the full 1.5% — $7,500 on a $500,000 home, for example.

“I would encourage this government to support this bill, which would serve as a practical tool in incentivizing young people to stay and lay their roots in this province,” Nicoll said during second reading on Wednesday.

“This would directly support the goal that we are already striving for. What I need to emphasize is that this bill would not remove the deed transfer tax in its entirety. As a former councillor, I understand how the revenues generated by this tax and these fees can be necessary to operate and run municipalities’ infrastructure and services. However, in the grand scheme of things, the revenue generated solely by the taxes of first-time homebuyers would make a small difference in the overall revenues of municipalities, but would make a huge difference in the lives of those looking to create a life for themselves in this province.”

Halifax Needham NDP MLA Suzy Hansen argued the bill wouldn’t help those who need it most.

“Eliminating the deed transfer tax for first-time buyers would make it easier for those who can already afford to enter the property market,” Hansen said.

“It does nothing to address the core structural issues of affordability. To do that, we have to talk about increasing incomes, which means putting more money in Nova Scotians’ pockets and increasing the number of non-market affordable homes.”

Municipal Affairs and Housing Minister John Lohr said he didn’t like the idea of downloading the plan onto municipalities.

“I can tell you that the municipalities are tight for money. They watch every penny and they don’t want our good ideas costing them money,” Lohr said.

Lohr said on top of the lost revenue, municipalities would also have to dedicate human resources to determine eligibility for the waiving of deed transfer tax.

“We realize we’re in a housing crisis and we’re moving to address it in a number of different ways. But as I said, I think that our municipalities would be rather shocked at this bill, because this bill is telling them what to do. And it’s my goal as minister not to do that,” Lohr said.

Nicoll, previously the Halifax regional councillor for Cole Harbour-Westphal, suggested the province could use the revenue from the extra deed transfer tax being charged to out-of-province buyers, 5%, to make up the loss for municipalities.

Given Lohr’s comments, it’s unlikely the bill will move past second reading.

But in a news release, HRM confirmed the minister’s concerns, saying it “strongly opposes” any legislation created without consultation with municipalities:

Housing affordability is an issue for many Nova Scotians. The Halifax Regional Municipality and the Province of Nova Scotia are working constructively together with Canada Mortgage and Housing Corporation, the private sector and non-for-profit housing organizations to increase the supply across all housing types.

Remaining focused on the supply of housing is important and urgent at this time and we applaud the province for its proactive approach in that respect – as highlighted by yesterday’s announcement that it is investing nearly $22 million to create more than 370 affordable housing units in Dartmouth.

It is premature to predict the full extent of the impact of this proposed legislation on municipalities throughout Nova Scotia. However, the deed transfer tax is an important source of revenue to all municipalities and any decreases will result in either higher property taxes or reductions to municipal programs and services.

In 2016, municipal staff estimated 35% of residential sales involved first-time buyers. Council considered options to waive or spread out the deed transfer tax for first-time buyers back then, and the annual cost was pegged at $7 million. Deed transfer tax now accounts for more municipal revenue, budgeted at $83 million for 2022-2023, compared to $32 million in 2015-2016.

Municipal staff recommended keeping the status quo in 2016 because there was little evidence deed transfer tax “impedes market growth or is a barrier to entry into the real estate market.” Councillors voted in favour of the recommendation, but Nicoll, then a councillor, moved for another staff report “on how the Deed Transfer Tax could be used to stimulate home sale[s] in Halifax Regional Municipality.”

That motion failed, but it’s notable that Nicoll recognized then that waiving deed transfer tax would stimulate the market. The same holds true today: in an already overheated market, waiving deed transfer tax would likely further increase demand.

Subscribe to the Halifax Examiner

We have many other subscription options available, or drop us a donation. Thanks!

Zane Woodford is the Halifax Examiner’s municipal reporter. He covers Halifax City Hall and contributes to our ongoing PRICED OUT housing series. Twitter @zwoodford

Leave a comment

Only subscribers to the Halifax Examiner may comment on articles. We moderate all comments. Be respectful; whenever possible, provide links to credible documentary evidence to back up your factual claims. Please read our Commenting Policy.