A new tax on foreign home buyers will only increase the volatility of the Greater Vancouver real estate market.
Dan Morrison, the president of the Real Estate Board of Greater Vancouver, said the government is moving too quickly and without proper consultation in implementing the new 15 per cent tax on foreign home buyers in Metro Vancouver. It will be added to the property transfer tax, beginning Aug. 2.
The tax will be applied to all residential sales in Metro Vancouver to foreign nationals or foreign corporations. It does not apply to Canadian citizens, including those who live abroad, or permanent residents.
“Implementing a new real estate tax… with just eight days’ notice and with no consultation with the professionals who serve home buyers and sellers every day needlessly injects uncertainty into the market,” said Morrison.
On Monday the BC government announced the new tax that could cost a foreign buyer an additional $300,000 on a $2 million home.
Foreign home buyers have raised the price of real estate says government
“There is evidence now that suggests that very wealthy foreign buyers have raised the price of overall housing for people in British Columia, said premier Christy Clark. “We need to make sure that we do everything we can to try and keep houses affordable.”
But just two weeks ago finance minister Michael de Jong said foreign nationals comprised only a small percentage of real estate buyers in Metro Vancouver; only 5.1 per cent of the 5,118 residential real estate transactions completed between June 10-29 were by foreign nationals.
The REBGV said tracking the residency of home buyers in the province is long overdue to determine what is behind rising residential real estate prices in Greater Vancouver; but more data needs to be collected to determine trends.
“Government has had a long time to take action on the affordability issue, yet they decide to bring this new tax in over a long weekend, with no notice, and no time to prepare,” said Morrison who also urged the government to exempt real estate transactions that are already in the process of closing from the new tax.
“It would have been prudent to seek consultation from the people most knowledgeable about the impact,” said Morrison.
As I pointed out in a recent blog, we haven’t seen a lot of foreign home buyers in New Westminster. But we are seeing the trickle down effect as Vancouver home owners cash out and look for new homes that offer better value.