With files from Shelby Thom
“Today we are taking measures to ensure that home ownership remains within the reach of the middle class and that we continue to put British Columbians first.”
Premier Christy Clark and her government are going further than many expected in addressing the housing affordability crisis in Metro Vancouver.
The government is bringing in an additional property transfer tax of 15 per cent to apply to foreign nationals who buy homes in Metro Vancouver. The tax takes effect August 2nd.
“All this year, I’ve been saying everything is on the table.”
It’s a far cry from last May, when the premier shot down pushing foreign buyers out of the market, because it could cut into homeowners’ equity.
But Speaking with Global News, the premier says times have changed.
“You know, we want to protect people’s equity. Absolutely. But we have to do something about the skyrocketing prices we see in especially in Vancouver, but we see it all over the Lower Mainland.”
WATCH: Premier Christy Clark explains the new tax
Finance Minister Mike de Jong introduced the new property transfer tax as part of new legislation introduced today, including:
- Creating new measures to help make home ownership more affordable,
- Establishing a $75 million fund for market housing and rental initiatives,
- Strengthening consumer protection,
- and giving the City of Vancouver the tools it requested to increase rental property supply.
The $75 million fund will be set up using a portion of the $730 million budget surplus the government earned this fiscal year.
NDP leader John Horgan says this is something new from the Clark government, and clearly recognition the matter can no longer be ignored.
LISTEN to the full interview with NDP Leader John Horgan:
Robertson cheers decision
Vancouver Mayor Gregor Robertson is cheering the 15% property tax for foreign buyers.
“I’ve been calling for years now for the province to take bold action to deal with housing affordability and the impact of global capital in our market here. I’m pleased to see this first step, we’ll see what happened on the ground.”
Robertson says he hopes it has a positive effect on slowing down the high-end side of the real estate market.
NDP leader says it’s a step in the right direction
Horgan says the New Democrats have been quite vocal on this issue.
“….And every time we did it, Christy Clark and Mike de Jong said there is no problem here; if you don’t like it, move to Kitimat. Well clearly, they have been listening to us, they have been listening to the people in the Lower Mainland, who are talking about this every day, all day long. It is the only issue on peoples’ minds.”
Horgan was speaking on the Simi Sara Show with guest host Michael Smyth.
Will it work?
UBC Professor Tom Davidoff thinks the best way to identify whether or not people live and work here is determining whether or not they’ve paid income tax, not what their nationality is.
“The goal here is ‘let’s make Vancouver affordable to people who live and work here.”
He says the province has gone with nationality, which doesn’t address Canadian citizens or investor immigrants, or astronaut families who don’t necessarily work here.
Finding the loopholes
A Canadian broker who sells property to Chinese clients thinks the tax on foreign nationals will further fuel Toronto’s red hot housing market as foreign buyers move their capital out east to avoid the punitive tax.
However Alex Majdpour with Sans Souci Executive Realty says there are always loopholes to tax policy.
“The kids always come here to go to university, to go to colleges, and they usually come here on a student Visa. Eventually it turns into a permanent residency, and if that’s the case the parents usually do buy under the kid’s name. Or if they decide to move here themselves when they become permanent residents, then they just transfer from their kid’s name under their own name and they go around the tax implications.”
Majdpour says they have an “overwhelming client base” in China as people look to move their money out of the country, and foreign buyers will figure out ways to get around the tax.
Buyers may turn to other markets, such as Toronto
At the same time, he also thinks the punitive tax will encourage foreign investment elsewhere in Canada.
“Yes it will have an impact because as a realtor it is my job to educate the clients and I will very tell that person, that individual who has two to three million dollars, ‘listen if you want to buy over there you can buy in Toronto, and use that extra $300,000 that you are going to get taxed on and actually purchase a brand new condominium’.”