To tax or not to tax: foreign property owners

Will taxing foreign property owners in BC make a difference in housing affordability in the lower mainland? Vancouver Mayor Gregor Robertson seems to think so, and has called repeatedly for a special levy on foreign owners and speculators. BC Premier Christy Clark isn’t so sure (although signs point to a review of that thinking recently). The premier, like others, is calling on Ottawa to collect more data on the degree of foreign investment and the federal government has earmarked $500,000 for a study by Statistics Canada.

“The issue of foreign investment in the real estate markets of Vancouver and Toronto dominates cocktail party conversations,” writes Benjamin Tal, the deputy chief economist at Canadian Imperial Bank of Commerce, “The good news is that we are not alone. Newspaper headlines in Australia, New Zealand and the U.K. are very similar to ours. The bad news is that policy makers in those countries are as confused about the issue as we are.”

In Canada, foreign ownership can be controlled at the provincial level — in fact, Prince Edward Island has already placed restrictions on out-of-provinces purchases.

Tal says other countries have also taken action on foreign ownership and notes that in Australia, since the summer of 2015, foreign investors can receive permission to buy only if they are developing or building new housing stock and the property must be for their personal use.

“It’s way too early to assess the impact of those changes, but there are some early signs from Australia showing that it’s working; the share of foreign buyers in new housing demand fell from 16 per cent in the third quarter of 2015 to the current 12 per cent,” he says.

Tal adds Canada Mortgage and Housing Corp. is “working hard” to understand the prevalence of the issue and British Columbia is also working on its own statistics.

Read more from the original Financial Post article in the Vancouver Sun, here.