Foreign buyers of Metro Vancouver real estate will be taxed an additional 15 per cent, the government announced Monday in new legislation.
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“The foreign buyer tax is meant to make sure we can keep home ownership within the reach of the middle class”, she said at a news conference in Vancouver.
The province of British Columbia released preliminary data earlier this month suggesting that foreigners were involved in 5% of real-estate transactions in metro Vancouver, accounting for 6.5% of the overall value.
Vancouver joins a growing list of countries or regions imposing new taxes on foreign buyers, according to the real estate firm Knight Frank.
The additional tax will take effect August 2 and apply to foreign buyers registering the purchase of residential homes in Metro Vancouver, excluding treaty lands in the Tsawwassen First Nation.
Foreign nationals invested more than C$1 billion in British Columbia residential property from June 10 to July 14, according to data the government began collecting this summer. So the tax would only be levied on a foreign-controlled company that purchases residential real estate or apartment or condo buildings.
“This will have, I hope, the impact of making sure, we reduce the amount of the number of foreign buyers in our market in the Greater Vancouver area”.
The government is also launching a new Housing Priority Initiative Fund for provincial housing and rental programs.
The market in this Canadian city has grown hot in recent years due to an influx of Asian money.
Local politicians have been facing growing complaints from middle-class Canadians that they can’t compete with the wealthy Chinese, who are looking for a place to park their wealth.
The legislation includes provisions to expand the property transfer tax beyond the Vancouver area if necessary, he said.
The Globe and Mail has also reported that some investors avoid property transfer taxes through bare trusts and shadow flipping, loopholes the government has said it has taken measures to close.
While Toronto’s real estate prices are high, Murtaza Haider, associate professor of real estate management at Ryerson University, says the city’s crisis is much different from Vancouver’s.
The president of the Greater Vancouver real estate board, meanwhile, accused the government of acting too quickly.
Vancouver has long pushed for tools to allow it to tax empty homes.
Vancouver’s Charter will also be amended, to give the city the legislative authority to implement and administer a tax on vacant homes. The Finance Ministry reported commercial and residential real estate sold in the 2015-16 fiscal year reached $93.67 billion, which generated property transfer tax revenues of $1.5 billion, a jump of 43.9 per cent over the previous year.
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Opposition housing critic Dave Eby of the NDP labelled the decision to focus on foreign nationals instead of foreign cash a “big mistake”.
