A big challenge in the housing industry is Government-imposed charges or GIC’s. These charges often seem minor. However, collectively they are significantly increasing the cost of new housing, and increasing the cost to home buyers.
These charges can come in a variety of fashions development cost charges and lot levies, infrastructure-related charges, development application processing fees and building permits. Along with these various charges and taxes, GIC’s are adding to the heavy financial burden that many home buyers are struggling to carry.
According to the Examination into Government Imposed Charges on new Housing Construction report, municipal GIC’s on typical new houses in larger urban centers such as Surrey, B.C. ranged over $50,000; whereas in smaller centers across the country they were less than $5,000. The biggest influential factor for infrastructure charges including “soft services” such as educational and recreational facilities.
The ability to afford a home nowadays is a concern for many people. Coming out of the recession, banks are stricter about the eligibility for borrowing loans. The cost of raw materials to build a home has gone up substantially. Government regulations to build more energy-efficient homes add to the cost. On top of it all, GIC’s and other charges and taxes all add to the pile.
“The amount of building has nearly come to a halt here and in other areas because of these increasing costs,” says Leanne Hilton, owner and President of Rich-Lee Custom Homes.
This can be seen all over Strathmore and surrounding area. Even existing properties are sitting on the market with no bids, thus making the demand for new developments very difficult.
“People think they’re getting ripped off. This just isn’t the case. It’s all the little costs like taxes, increased cost of raw materials and the expense of energy efficient appliances and many other factors that are contributing to the increased cost of new homes. It trickles all the way down from the government to the consumerm” says Hilton.
According to Hilton, it really becomes one viscous circle. Taxes and charges that come directly from the government put a financial burden on builders and developers. These costs then have to be passed on down to the consumer in order for builders and developers to make any kind of a living.
These increased costs shy people away from purchasing new homes, and the economy grows at a slower pace. It is GIC’s and other various taxes, charges and costs that are keeping developers and builders from starting many new projects in Strathmore and Wheatland County, said Hilton.