The dust is yet to settle from the release of BC’s Budget 2026.
Weeks later, developers are still reeling, and say that it does nothing to encourage the housing development that the province badly needs. Even worse, they worry that tax measures introduced are actively discouraging it.
“A signal was sent to individual industries and for housing — it really was,” says Michael Drummond, who is the interim vice president and CEO of the Urban Development Institute (UDI) in BC. “We have been raising the cost-of-delivery crisis for a number of years, and there was nothing in the budget to help address that.”
UDI is one of 19 signatories on a February 24 statement urging the Province to walk back on one of the particularly contentious measures introduced in the budget: the expansion of the 7% PST burden to accounting services, architectural services, engineering and geoscience services, security services, and commercial real estate services, effective October 1, 2026. These services have not generally been subject to PST in BC.
“BC cannot afford policies that raise input costs, discourage investment, and weaken our competitive position,” says the joint statement, which represents the opinion of not just housing market stakeholders, but business organizations across the board. “BC’s PST is already the most uncompetitive sales tax in Canada, and Budget 2026 doubles down. This expansion creates a massive new administrative burden and a 'tax on a tax' for every project.”
In one pro forma provided to STOREYS by Drummond that factors in the PST expansion, the consultancy spend on a 21-storey, 330-unit concrete rental would jump by about $275,000 (about $800 per unit), while operating expenses would rise by about $20,000 per year (about $60 per unit, per year).
“It doesn't sound like that much until you look at what that would do to the cap rate. And basically, you take [a $470,000] loss in the value of the asset,” Drummond explains. He also gives a second example of a five-storey, 150-unit wood-frame rental that would see consultancy costs and yearly operating expenses rise increase by $150,000 and $10,000 respectively, resulting in an asset value loss of $250,000.
“But it's less about that, and it’s more about the signal that government chose to put on an additional tax on development at a time when very few projects are penciling, the presale market has collapsed, rental margins are tightening, and the market is not signalling a near true recovery,” he adds.
While the PST expansion has gotten a lot of attention, it’s not the only tax measure included in Budget 2026 that will exacerbate pain-points in BC’s housing market.
The Province has also opted to bump the Speculation and Vacancy Tax rate for the 2027 tax year up to 4% (from 3%), and, effective January 1, 2027, the additional school tax rate for properties with a residential component is set to be 0.3% (up from from 0.2%) on the portion of value between $3 million and $4 million, and 0.6% (up from 0.4%) on the portion of value over $4 million.
“We basically have shut investors down. Like, why would you invest in BC?,” says Wesbild President and CEO Kevin Layden. “And this just isn't the speculation tax that's discouraging investment, it's the overall taxation environment and the lack of being able to get projects moving forward.”
“The bigger issue for me is the school tax, which is an asset tax. And for us, we're a land developer, we own a lot of land that we're now going to have to pay additional school taxes on, that we can't bring to market because of how long it takes to bring it to market,” Layden adds. “It's just ridiculous… and it's going to lead to more people leaving BC.”
And the implications stand to run even deeper than that. Layden reveals that Wesbild has already started to park a number of their projects, including its plans for the Poco Place Shopping Centre in Port Coquitlam, which it acquired back in April 2024.
“We have a very strong development permit application in place, but the math doesn't work. […] It'll stay as a shopping centre unless there's some kind of significant change to the expectations of bonus density or DCCs, because the rents have dropped,” he says. “And I’m all for rents dropping, I think it’s good for the market, but the Province and municipalities need to adjust to the market realities that we're all faced with. What I've said to city councillors is that you can raise taxes and the DCCs, but you’ll get 100% of nothing, because the project won’t go forward.”
While Layden feels that BC could take a page out of Ontario’s book by introducing a GST rebate for first-time homebuyers, he also underscores that the province has a lot more to worry about than its lacklustre housing output. Budget 2026 revealed a 39% increase in operating expenses, but just 18% increase in revenue — and the Province is projecting a record-breaking $13.3 billion deficit for the 2026-2027 fiscal year.
With everything that BC’s latest budget has revealed and introduced, Layden says he’s “worried for British Columbia” and what this is all going to mean for future generations. And he's certainly not alone.
