Paper No. 01 · Housing & Affordability
BC's Housing Crisis: Adopt Intelligent Policy that Lowers the Cost of New Supply
BC’s condo oversupply has produced a predictable but wrong policy reflex: bail out developers and low-income residents on the backs of taxpayers through rent-to-own schemes. That’s not a solution; it’s a one-time transfer that leaves the underlying problem untouched. And it would land on top of an existing subsidy: CMHC’s Apartment Construction Loan Program, which has already committed more than $29 billion in below-market construction financing since it launched a few years ago. A better path exists: durable rather than one-time, and one that doesn’t distort the market, pick winners among developers and buyers, or hand the bill to taxpayers.
The argument that developers should cut prices further because “they got the call wrong” doesn’t hold up either. Foreign ownership bans, short-term rental restrictions, and a near-halt to immigration arrived in rapid succession, each individually defensible, but collectively a demand shock no developer could have anticipated when land was bought and financing committed years earlier. Governments encouraged the condo buildout too, collecting the taxes, fees, and construction jobs that demand generated, before it became politically necessary to disown it.
While a knee-jerk unconditional ban on foreign ownership and short-term rentals may have been understandable, it’s bad policy in its own right: BC’s tourism and economic ambitions depend on welcoming foreign capital, and forcing every foreign visitor and investor into a hotel every time they come to town risks turning away capital BC’s economy depends on. More fundamentally, the ban has the principle backwards: when foreign capital wants into a jurisdiction and the product isn’t illegal or harmful, the goal should be to harness it for residents’ benefit, not chase it away. The actual problem was never that foreign buyers existed; it’s that they competed for the same housing stock, at the same prices, as local buyers with local incomes. The fix is separating those pools, not eliminating one of them.
Much of the current commentary, including opinion pieces, press coverage, and opposition politicians, shares a common flaw: cheap, opportunistic attacks on developers and government that skip over how this happened and what the real problem now is, namely that all-in development cost renders new housing unaffordable for the average family, without offering any durable policy in its place. To many British Columbians, it may feel good to watch wealthy investors and developers take the hit, but chasing away investor capital and beating on developers is exactly what creates the next housing crisis.
Neither a developer bailout nor a buyer subsidy fixes the core problem: both are lazy policy, a quick headline that transfers wealth from one group of citizens to another instead of solving anything. The all-in cost of a new home, combining land, construction, and government development fees, exceeds what lower- and middle-income earners can service. Subsidize today’s vacant inventory and you clear a backlog, but almost no new project still pencils at a price families can afford. Within a cycle or two, we’re back to a shortfall.
BC is one of the most beautiful places on earth, and the last housing frenzy proved something worth remembering rather than resenting: demand from foreigners seeking condo ownership, and from investors chasing short-term rental income from tourists, is tremendous, and both are willing to pay a real premium for it. That demand didn’t disappear when the restrictions came in; it just stopped paying BC anything at all. The opportunity is to contain that demand within firm limits and turn it into a public revenue stream that supports local affordability instead of working against it.
Here is the proposal.
Create two certificate types: a Foreign Ownership certificate and a Short-Term Rental certificate. Each is a title-registrable right, separate from any specific unit. A buyer who wants both rights simply holds both certificates; there’s no need for a separate combined product, since two certificates can be registered against the same title.
Auction them subregionally, in areas such as Greater Vancouver, the Fraser Valley, and the Interior, administered by an experienced auction firm, under the direction of the housing ministry rather than municipal councils. Bidders submit what percentage of assessed value they’re willing to pay; the province sets how many certificates of each type are available, and they go to the highest bidders, clearing either at the lowest accepted bid, so every winner pays the same rate, or at each winner’s own bid, with the province also able to set a bid price floor. For illustration only, a market highly desired by foreigners and short-term renters, like Greater Vancouver, might clear around 20% per certificate, while a less sought-after market in the Interior might clear closer to 6%.
Certificates are portable within their subregion: a holder applies theirs to whichever qualifying unit they choose, paying the cleared percentage of that unit’s assessed value at registration. At an illustrative 20% rate, applying a certificate to a $10 million penthouse would cost $2 million; applying it to a $500,000 condo would cost $100,000. The holder picks the unit; the price scales to what they buy.
The province would adjust certificate supply subregion by subregion, releasing more where housing stock can absorb the demand and fewer where the market is tight. The province would cap the share of units in each building that can hold certificates, with 10 to 20% a reasonable starting band, and new construction allowed a higher cap, since that demand often makes a project viable, while existing buildings are held to a lower cap, so standing supply stays prioritized for locals.
Certificates register permanently on title, and 100% of auction proceeds fund first-time home buyer rebates and rent-to-own programs for locals.
Here’s why this beats the alternatives. It doesn’t ask taxpayers to fund housing, or developers to eat a loss they didn’t cause. Locals will often never realistically pay the premium prices foreigners and investors will for a tower’s penthouse and premium units, whose premium pricing is often what makes the entire project pencil in the first place. Under this model, a certificate holder can apply their right to that penthouse and pay a meaningful premium at registration.
There’s also a structural advantage that inverts what happened last time. Because the right being auctioned is the certificate, not the unit, competition among foreign buyers and local short-term rental investors bids up the price of the certificate, not the price of local housing. Last time, uncapped demand competed directly for units and hurt locals. This time, that same intensity of demand gets redirected into a fund that pays locals: the more foreign and investor demand wants in, the more locals benefit, instead of the more they get squeezed out. Kelowna recently offered real-world proof of just how strong this demand is: after the province exempted the city from its short-term rental ban this spring, developer Mission Group’s last unsold unit, which had sat on the market while short-term renting was banned, sold over asking with multiple offers within days of the exemption. Under this proposal, that same rush of demand wouldn’t bid up what the unit sold for on the open market; it would instead bid up what buyers pay for the certificate itself, with that money flowing into rebates that lower the cost of housing for locals.
None of the specific numbers here should be mistaken for the point. The clearing percentages, the building caps, and the split between new and existing construction are all still open questions, and all of it needs real modelling before it becomes law. What shouldn’t be up for debate any longer is the choice between two exhausted defaults: emotionally satisfying punishment of developers and investors, or taxpayer-funded stopgap bailouts.
This is just one component of a comprehensive set of smart policy steps needed to make new housing affordable. Other steps will be needed, which may include province-wide limits on development fees so they aren’t a source of municipal revenue beyond the incremental cost each project actually causes, and expanding the housing construction labour pool through smart immigration policy. The benefits of this proposal reach well beyond housing: expanded tourism through greater short-term rental availability, and expanded foreign business investment, as business owners and executives visiting BC can either own their own unit or stay in a short-term rental instead of being forced to stay at a hotel. It’s time to turn the page toward durable policy that actually helps address the ongoing cost of new homes.
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