Vancouver’s housing market has never been hotter and that has many residents concerned
From rising prices excluding residents from purchasing homes, to vacant properties decimating neighbourhoods, many Vancouverites are calling for some kind of regulation on foreign home ownership.
In Canada, foreign homebuyers are treated much the same as Canadians, although they may face higher property or transfer taxes. The only province in Canada that regulates home ownership is Prince Edward Island, which restricts non-residents of the island province from owning more than 5 acres of land or more than 165 feet of waterfront without special permission.
So what are the options? Here are some examples of the ways in which other countries are working to protect their residents, and restrict foreigner buyers from snapping up properties in hot housing markets.
The UK focuses on taxation as a way of limiting foreign investment in its real estate market.
- In April, the government introduced a capital gains tax on non-residents selling local property. The tax amounts to 18-28% of the property’s value for individuals
- In 2014, a 15% stamp tax was applied to corporations purchasing properties worth more than £500,000
British municipalities can apply their own taxes as well. Camden, a borough in north London, applies an 50% surcharge on the local council tax on properties left vacant for more than two years. The measure is said to have lead to a 40% reduction in vacant homes in the area but, while the measure is available for any borough in the city, few have implemented it.
Australia recently announced it would be tightening its laws on foreign home ownership, including:
- Restricting foreign real estate purchases to existing residential properties
- Only allowing foreign buyers to purchase new homes
- Charging fees on foreign investment, which start at $5,000 on residential properties worth up to $1 million AUS
Enforcement of the laws has been an issue but Prime Minister Tony Abbott promised to beef up its implementation, including fining Australian individuals and companies who aid foreign buyers in breaking the rules.
Singapore significantly restricts foreigners from owning property, including:
- Barring foreigners from owning vacant land or any property designated residential
- Curtailing foreign purchases of condominums, apartments and other residential developments
Hong Kong’s restrictions mirror Singapore’s.
- In 2012, the government began restricting the sale of certain residential properties to Hong Kong residents only for a period of 30 years
- Non-residents also face a 15% surcharge on real estate purchases
China has been restricting foreign ownership in its residential and commercial property market since 2006. In addition to set limits on foreign ownership, foreign buyer’s in China’s real estate market:
- Can own only one residential property for their own use
- Must stay in the China for a year before they are allowed to buy property
- Foreign companies who purchasecommercial real estate are required use it themselves