Exemptions to the province's speculation tax have some communities close to the Lower Mainland worried they might face an increase in foreign buyers and empty homes.

The provincial government tweaked its speculation tax after criticism and it now only applies to properties left vacant in large urban centres. The tax no longer applies to properties in several areas, including Bowen Island and Squamish.

But some believe the tax should apply to these two places, which are both struggling with housing affordability.

"We have a serious challenge with the availability of housing," said Squamish Mayor Patricia Heintzman.

"By our exclusion [from the tax], there is some concern that situation might get worse."

The housing market in Squamish is closely connected to the Lower Mainland's market, but that seems to have been overlooked in the choice to exempt the area, she told Stephen Quinn, host of The Early Edition.

"We are part of that bigger cup of housing," she said. "If the Lower Mainland breathes in, we breathe in. And if they exhale, we exhale," Heintzman said.

Squamish council is evaluating the impact of the tax and deciding whether to ask the province to be included, she said.

Michael Chapman, an affordable housing advocate on Bowen Island, said his community faces similar issues to Squamish and should not have been excluded from the tax either.

"Bowen Island has become a hotel for Vancouver with our residential long term properties becoming Airbnb [rentals]," he said. "It's dire, people are living in cars and boats and it's not looking good."

Properties on the Gulf Islands, Parksville, Qualicum Beach and rural Fraser Valley are also excluded from the tax.

Not a 'blanket policy'

Some communities included in the tax, which are further away from the Lower Mainland, have expressed concern that it will affect those who have owned seasonal or vacation properties for years.

Kelowna city council, for example, drafted a letter to the provincial government after the tax was announced saying the city is "fundamentally opposed" to the vacancy-based speculation tax and wants to be excluded.

West Kelowna and the Regional District of Nanaimo expressed similar concerns.

Justin Fung, spokesperson for Housing Action for Local Taxpayers (HALT), said tweaks were necessary to the tax.

"We first heard about this as a bit of a blanket policy across the whole province," Fung said. "Now we are seeing that it is being refined."

Fung is confident the tax will help address speculation and affordability.

"It makes sense in some of these places that have traditionally been places with vacation homes," he said. "[Municipalities that are exempt] may regret it in a couple years time when their housing prices have started to soar."

With files from The Early Edition.