The BC Government , seeing the politics of housing affordability or lack thereof, with an election not far away , aggressively entered the housing business big time . What was to be a legislative move by the Province to amend legislation allowing the Vancouver City Council to impose a tax on vacant homes became that and much much more.
The Province is going to impose a new 15% transfer tax on homes in not just the City of Vancouver but in Merto Vancover bought by people from outside the country ; people who are not citizens or permanent residents. On a $2 million dollar house that is an extra $300,000. Corporations with a foreign involvement will also be captured by the new law. But Corporations listed on a Canadaina Exchange will be exempt. This is suppose to cool the amount of foreign buyers entering the hot ‘lower mainland ‘market .
Well, you can never know just how far Canadian Governments will go these days in managing the economy. Or trying to manage it , better said.
So , first, the principle of the thing rubs me the wrong way. More Government involvement and regulation.
And when you start down this road where do you stop? In this case won’t foreign buyers ,if eager to buy houses in BC , just go outside the Metro Vancouver area. Hey, how about Metro Victoria , wonderful place. How about Nanaimo , an up and coming small city in the centre of Vancouver Island . Or the Comox Valley . Perhaps to the Okanagan !
Second , the real estate industry in Metro Vancover says they were not consulted. Strange for a Government that brags about consultation and has actually held up a nation wide trade barrier agreement because it must consult its businesses first.
Third , will it really do the trick ? Many are saying that it will not given that it is known that many foreign investors already funnel investment in housing through family and friends who are Canadian citizens. Won’t this continue and even expand denting any real gains?
Fourth, as hinted above, isn’t this discriminatory? Imposing a housing tax in one geographical area of the Province ? Does a hot market override the discriminatory nature of this measure?
Fifth, by so doing , the Province will place a hardship( increasing lack of affordability) on other nearby cities that are not covered by the tax since foreign investors are likely to invest in homes in these places exacerbating an already hot market there, especially Victoria and Nanaimo.
And finally, it does not send a very good signal to foreign investors who , seeing this, may hesitate to engage in other investments in the Province.