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Manufactured home sees 60K dwelling tax assessment increase.

On December 5th, 2022 the BC Assessment Authority announced that province wide, homeowners could expect a 5% to 15% increase in their 2022 property tax assessment values. On that same day, BC Assessment mailed out Advance Notice letters to property owners who’s assessments saw considerable increases compared to the average in their jurisdiction.

It is prudent to remember, that a yearly increase in taxation value, does not always result in an increase in property taxes owed. That is, unless your property value is above the average value change for your jurisdiction and property class.

A client, who was notified by one of these advanced letters, has relayed that their assessed 2022 taxation value is set to increase by a whopping 54%, compared to the draft 18% average in their Jurisdiction, 727 – Williams Lake Rural. 

Keep to mind, this particular property is ten rural, riverfront acres with a single wide, 2 bedroom mobile home, manufactured in 1995. One might jump to conclude that this huge increase in taxation value can be attributed to the riverfront land being the catalyst of the large increase. But you would be wrong, the lion share of the assessed 2022 value increase is on the mobile home itself!

A 27 year old mobile home, previously assessed at $55,400 in 2021, is now being assessed for $116,000, a $60K increase, year over year. BC Assessment had previously de-valued the mobile by -$1700 in 2021 even with an increase in the land value.

After speaking to a BC Assessment Authority representative my client was told that they are one of many manufactured home owners province wide, that will see large 2022 dwelling assessment value increase. Having previously owned several older mobile homes on acreages in BC over their lifetime, my client’s experience had always been a small year over year depreciation in their dwellings value, even after renovations and improvements.

A historic drawback to owning a manufactured home has always been their questionable long-term value, and the main reason many will not entertain owning one. Manufactured homes are factory built to CSA Standards, and if they are installed with rodent proof insulated skirting, lived in year round, receive proper annual maintenance and re-roofing when required, they can remain structurally sound. Even so, the longevity, mortgage-ability, and equity building capacity of a manufactured home is less than a conventional built home on a foundation. 

After a manufactured home reaches 25 years of age it no longer qualifies for an insurable mortgage through CMHC and willing lenders will require at least 20% down-payment, if not more, based on the determined remaining economic life of the manufactured dwelling. Manufactured homes over 25 years old drastically increasing in assessed taxation value, some above conventional built homes in the same neighbourhood, is something unseen, until now! 

The BC Assessment Authority reported last April that less than 2% of property owner contested their 2021 Assessments and attributed it to the correctness and fairness of their evaluation processes. It could also be attributed to the growing number of BC homeowners that welcomed a higher valuation in hopes of using their property as wealth to borrow against their homes equity, or, that homeowners plan to sell their homes in the not too distant future and want the increase in valuation to help support a higher asking price. 

Homeowners must realize that lenders only entertain mortgage and equity loan applications based upon current market appraisal value for all types of dwellings. BC Assessment uses a dated snapshot of jurisdictional market values and comparable property sales to assess your properties taxation value, but, you cannot use your BC Tax Assessment value alone to determine your properties current market value.

The unprecedented, top of cycle demand has disappeared, but it is yet to be seen how this will disproportionately affect the 180,000+ households living in manufactured homes. A great number of whom are seniors and low income earners, at a time when they are already struggling with energy and food inflation. Mobile home owners could end up paying higher taxes and higher insurance rates for many years to come with an uncontested 2022 over-valuation.

The logical reason for the increase in 2022 tax assessments is because of the 40 year high inflationary spike in operating costs to provide the fundamental municipal and rural services required including; hospitals, schools, libraries, policing, and road maintenance. Along with services, your rural property taxes help to fund the Municipal Finance Authority that ensures local governments get lower interest rates when they need to borrow money. 

Going forward, manufactured homeowners will themselves face higher interest rates in mortgage refinancing for several years with no protection while dealing with lending policies that continue to deem their dwellings as sub-par. 

If you do qualify for the purchase of a manufactured home on a lot or acreage, understand that your dwellings value for taxation purposes may increase and at the same time decrease in market value much faster than a traditional dwelling, along with being harder to obtain financing, refinancing and insurance on in the future. Make an informed and educated decision about the properties current and future longevity and investment value. The pros must outweigh the cons for any property investment to be deemed worthy of your hard earned dollar.

Freddy & Linda Marks, 3A®Group RE/MAX Nyda Realty 875 Words • January 18, 2023

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