Commercial and residential landlords and strata corporations in British Columbia face a 7 per cent increase on some key operational costs later this fall when provincial sales tax (PST) will be added to the purchase price of property management, security and accounting services and non-residential brokerage fees. These new levies, along with the introduction of 2.1 per cent PST on architectural, engineering and geoscience services, were announced in the 2026 provincial budget earlier this week, and are projected to generate roughly $534 million in revenue once they’re in place for the full 2027-28 fiscal year.

Formal adoption of the budget bill is still pending, but the new tax is scheduled to kick in Oct. 1, 2026. In justifying the move, the B.C. government notes that most other Canadian provinces already tax professional services, albeit with the obvious exception of Alberta, which does not collect provincial sales tax.

“B.C.’s economy has shifted significantly towards services, which have largely remained untaxed under the PST. B.C. currently has the narrowest sales tax base of all Canadian provinces that have a sales tax,” the budget document states.

The consumers in line for new costs don’t necessarily see it that way. While acknowledging the B.C. government is looking for new sources of revenue in response to daunting constraints elsewhere in the economy, industry advocates suggest targeting the housing and buildings sector will have repercussions for affordability and business competitiveness.

“With office occupancy and vacancy rates still not returned to normal, added costs will not help, but will only hinder our progress,” maintains Zach Segal, director of government relations with the Building Owners and Managers Association (BOMA) of British Columbia. “Adding costs to property management and several other building services, such as architecture, engineering and security, will make it more expensive for small businesses to lease space and run their business.”

“If you want affordable housing, it seems misdirected,” concurs David Hutniak, chief executive officer of the rental housing industry association, LandlordBC. “Licensed property managers deliver an important service to our sector. They’re the ones managing the tenant relationships and we really don’t need an extra cost for that.”

The new tax fallout might have been more muted for many business operators, including commercial landlords, if British Columbia had not withdrawn from the harmonized sales tax (HST) arrangement with the federal government in 2013.

“There is no ability for the purchaser (in B.C.) to recover the PST paid on those services,” advises Laura Gheorghiu, a tax lawyer and partner with Gowling WLG. “If this were an HST environment, an input tax credit (ITC) could be available provided the expenses were incurred in the course of commercial activities, the recipient was validly GST/HST registered and the other criteria for claiming the ITC were met.”

However, those other criteria exclude rental housing providers in any case. LandlordBC is now grappling with the implications of a raft of new unexpected costs. Hutniak confirms he will be voicing his members’ dissatisfaction to both B.C.’s Minister of Finance, Brenda Bailey, and Minister of Housing, Christine Boyle.

“We saw it for the first time when the budget was tabled. It just came out of the blue, and basically everything that’s on that list (for application of PST), our industry uses,” he says. “I’m confident the Housing Minister, in particular, is acutely aware of how difficult it is to deliver rental housing so it’s just really odd they targeted us.”

The 2026 budget also includes a tax boost for many holders of undeveloped residential land. As of Jan. 1, 2027, the provincial school tax surcharge on residential property valued in excess of $3 million will increase from 0.2 per cent to 0.3 per cent on the portion of assessed value up to $4 million, and climb from 0.4 to 0.6 per cent on the remainder of assessed value above $4 million.

For property taxpayers, that translates to a maximum $999 bump-up for the initial increment, and a extra $2,000 per $1 million dollars of assessed value in excess of $4 million. The B.C. government projects it will generate an additional $139 million in revenue through this mechanism in the 2027-28 fiscal year.

The government is additionally revising its formula for calculating school property tax. Increases will now be based on the three-year average annual change in nominal provincial gross domestic product (GDP) — replacing the practice of pegging increases to the inflation rate plus the tax on new construction. That’s projected to yield $31 million in new revenue from non-residential ratepayers and $124 million from residential ratepayers in the 2027-28 fiscal year.

“The share of tax revenue from provincial property taxes has decreased from 14 per cent in 2003/04 to 8 per cent in 2025/26,” the budget document states. “This policy change maintains the property tax base relative to economic growth, in line with other provincial taxes.”