VICTORIA – Foreign buyers in Vancouver’s scorching real estate market will soon pay a new tax that Premier Christy Clark says is aimed at making housing more affordable for British Columbia’s middle-class buyers.
The government took aim at foreign buyers Monday, highlighting housing data that indicates they spent more than $1 billion on B.C. property in a five-week period starting June 10, with 86 per cent of that spending recorded in the Lower Mainland area.
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.
Clark said recent housing data played a large part in the government’s decision to levy the additional property transfer tax on foreign buyers.
“There is evidence now that suggests very wealthy foreign buyers have raised the overall price of housing for people in B.C.,” she said at a news held in front of a local commercial and residential construction project.
“If we are going to put British Columbians first, and that is what we are intending to do, we need to make sure we do everything we can to try and keep housing affordable,” said Clark. “Ultimately, the goal is to affect the demand by making sure it’s maybe a little tougher for foreign buyers to find their way into our market.”
Finance Minister Mike de Jong, who flanked Clark at the news conference, said recent housing data helped persuade the government to impose the 15-per-cent tax on property transfers.
“We have a better sense of the degree of that today than we did even a month-and-a-half or two months ago,” he said, adding that revenue from the tax would be used to fund housing, rental and support programs.
The additional tax for foreign buyers takes effect Aug. 2. It means a foreign buyer would pay an additional $300,000 in tax on a $2-million purchase.
All purchasers have to pay a one-per-cent tax on the first $200,000 of their purchase, two per cent on the remaining value up to $2 million, and three per cent on the portion above that.
Last month, the Real Estate Board of Greater Vancouver said its benchmark price for detached properties in Vancouver had risen above $1.5 million.
A financial report last week showed the province collected about $1.5 billion from the property transfer tax in the last fiscal year, up almost $450 million from the previous year.
The legislation introduced Monday also enables Vancouver to amend its community charter to levy a vacancy tax, satisfying a request from Mayor Gregor Robertson.
“Today’s legislation is a major acknowledgment by the province that they have an important role to play in the housing market and affordability is not simply an issue for municipalities to deal with,” he said in a statement.
Opposition NDP Leader John Horgan said the government has waited too long to act.
“A day late and a dollar short from premier Clark and her crew,” he said. “Just months ago, they were telling us there was no problem.”
The president of the Greater Vancouver real estate board, meanwhile, accused the government of acting too quickly.
“Housing affordability concerns all of us who live in the region,” Dan Morrison said in a statement. “Implementing a new real estate tax, however, with just eight days’ notice and no consultation with the professionals who serve home buyers and sellers every day needlessly injects uncertainty into the market.”