Starting Tuesday, foreigners will have to dig deeper into their wallets and off-shore bank accounts to buy real estate here.
For that run-of-the-mill $1-million property in South Surrey or White Rock, an international buyer will be forced to cough up an extra $150,000 in tax. That $5 million luxury home? That’s an extra $750,000.
Will this tax cool the white-hot market? Likely. But the real estate will still be a hot commodity, especially since the majority of buyers are from Canada.
Will this tax improve housing affordability? Doubtful. But at least the tax shows politicians are paying attention to a complex issue that should be top-of-mind for all levels of government now and in the future.
If the current pace of buying by foreigners continues, the new tax would generate an additional $1.4 billion in property transfer tax for the province. That’s a lot of dough, and Finance Minister Mike de Jong did say this week that that money could support affordable housing and rental-assistance programs in the future.
But the insatiable demand for housing in Metro Vancouver and elsewhere in B.C. isn’t about to go away. If Expo 86 put us on the map, the 2010 Olympics cemented our place on a list of most desirable places to live in the world.
That’s why the affordability of housing – perhaps our second-greatest need as humans – can no longer be an afterthought by policy-makers. It needs to be given weight in all decisions as governments build and improve our communities.
Indeed, the issue is complex. For some, an affordable home is having enough money to rent a simple basement suite. For others, it’s being able to buy an apartment near White Rock’s town centre. Still others interpret affordability as a single family home in a nice neighbourhood.
This suggests a range of options and policies are key in shaping our community’s future and ensuring a bright mix of people comprise it.
Many market observers agree this new tax on foreign buyers will slow the rapid rise in housing costs. Critics, however, have noted multiple weaknesses in the tax policy – namely that foreign buyers will find workarounds to avoid the tax, and that it doesn’t address foreign buyers who arrive via the Quebec Investor Immigration Program.
Undoubtedly, governments can make more moves to improve affordability. A progressive property surtax has been suggested, along with the cancellation of the Quebec investor program, and cracking down on tax evasion and money laundering.
The affordability question won’t be answered overnight. But B.C.’s new 15 per cent tax shows government is finally paying attention. Now that attention needs to hold.