Is Rennie right? Will a 15 per cent foreign national house tax make Metro Vancouver affordable again?
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Foreigners will have to pay an additional tax of 15 percent for the residential homes they buy in the Canadian province of British Columbia, authorities said Monday.
Foreign nationals could avoid the tax, which would take effect on August 2, by purchasing properties through locals – something that is already suspected to be common practice.
Before it’s here, it’s on the Bloomberg Terminal.
A financial report last week showed the province collected about $1.5 billion from the property transfer tax in the last fiscal year, up nearly $450 million from the previous year.
Premier Christy Clark said the goal is to keep the dream of homeownership for the middle class alive, amid criticism that skyrocketing real estate prices have made it unaffordable for most ordinary British Columbians to afford homes.
“I do think we are going to see fewer foreign buyers … the question is whether that foreign money will continue to find its way into the Vancouver housing market anyway, through related parties”, he told CKNW radio.
The cost of a typical home in the Vancouver area jumped 32 per cent over one year to hit C$917,800 (NZ$992,803) in June.
It is in addition to the province’s general property transfer tax, the B.C. government said in a statement on Monday.
In the budget in February, de Jong increased the property transfer tax to three per cent on value of homes more than $2 million, and raised the exemption level to $750,000 for the purchase of new homes, in an effort to encourage new supply.
Ontario Finance Minister Charles Sousa said on Tuesday his province “welcomes” British Columbia’s tax on foreign buyers, and didn’t rule out doing exactly what BMO is calling for.
And this 15 per cent property tax may not deter many foreign buyers.
Clark’s Liberals have signalled for months that change was coming for the real estate industry, tackling unscrupulous sales practises and offering tax incentives to first-time home buyers, but it was previously lukewarm to calls to act on foreign investment.
And how far will B.C. go to help make Vancouver’s vacant homes tax – which is still very much needed with an estimated over 10,000 empty houses – have the effect it’s supposed to?
The province will also allow the City of Vancouver to impose an annual vacancy tax on some residential properties that are left uninhabited.
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Vancouver Mayor Gregor Robertson has already publicly anxious that the BC government may not give the city access to the information it needs to make the tax work.
