I live in Vancouver and have been following this closely. This proposal is disappointing. The better solution imho is to tax based on where the owners file their taxes[1], not based on whether the buyer is a citizen or permanent resident.
Reasons: citizenship is for sale through the Quebec Immigrant Investor Program[2] so if you're wealthy, you can effectively bypass this tax. If you can't, using a relative as a proxy buyer will let you bypass the tax.
And preventing non-permanent residents from buying means any immigrants who come to Canada but aren't PRs will pay this tax. These seem like the exact kind of people you don't want to disincentivize from buying - people who are willing to take a risk to come to Vancouver, but aren't rich enough to just buy their way in.
Taxing people based on where they file their taxes makes a lot more sense to me - if you're paying taxes in Canada, you're not using Vancouver housing strictly as an asset class which is what should be discouraged in order to have a healthy, diverse city of people who own where they live.
This policy affects foreign persons, but the issue is really foreign capital. As you say this does nothing regarding the issue of persons buying citizenship via the QIIP and coming over to BC, which is what the vast majority of people using the QIIP do.
I have no idea what the process would be, but a real step forward would be to for the Federal government to work to end the QIIP, though I recognize this would probably open a can of worms and raise a bunch of new issues with Quebec.
> I have no idea what the process would be, but a real step forward would be to for the Federal government to work to end the QIIP, though I recognize this would probably open a can of worms and raise a bunch of new issues with Quebec.
According to Ian Young the Feds can end the QIIP[1]:
Although Quebec is in charge of choosing its immigrants, Federal authorities actually issue their certificates of permanent residency, and decide the speed at which to do so.
According to Vancouver immigration lawyer Richard Kurland, there is no doubt that “the feds have the legal right, pure and simple, to cancel the program”. “This is not about a constitutional or legal barrier. There is neither,” he said.
They have the legal right, but it would be politically awkward, and I'm not sure Trudeau is looking to annoy his base in Quebec to serve the interests of British Columbians, who have never been a part of the LPC's base and only recently elected more than a couple Liberal MPs.
Similarly, it's well within the Federal Govt's rights to mandate free trade within Canada, but they only had the political willpower to suggest provinces work together to reduce barriers.
Any idea why that is? I've often wondered why they don't just mandate it - I don't see the massive political fallout from mandating free trade in goods and services within Canada...
Because all of the protectionism in Canada is in support of local interests: dairy farmers, brewers, etc. Remove the trade barriers, and the crappy ones will die. That's a much bigger deal politically than the win from efficient firms doing better and prices going down.
The federal government just has no real incentive, short of it actually being in the nation's best interest, to force internal free trade. They would have to expend significant political capital to do so.
Your proposed solution doesn't solve the problems you brought up.
Someone willing to take a risk to come to Vancouver will have last filed last year's taxes in a foreign country, and will still be subject to the land transfer tax. Plus, it still won't stop the use of relatives as proxies.
A tax based on previous tax location is effectively an immigration tax against home buyers.
I'm already being bit by the existing home transfer tax because I've only been back in Canada for 6 months, and so I'm disqualified for tax relief on my home; the exact opposite of what the tax law was intended to accomplish. With your proposed law, I'd be hit with the new tax as well.
If you waited a year to file your taxes in Canada before buying you'd avoid the tax.
If you read the article above about taxing based on where you file, the economists who proposed the tax propose it as an annual tax. So if you bought before you filed in Canada, you'd only pay in the first year. Subsequent years you'd file in Canada and be exempt from the tax.
Another thing they could do is make it refundable: if you actually move in and start filing taxes there, then you get the first one (where you were taxed because the previous tax filing was out-of-province) refunded to you the next year.
Now the government gets its cut, and comes to rely on the revenue, and works hard to ensure there are on ongoing streams of foreign buyers and revenue.
When governments tax foreign buyers all it does is entrench the foreign buyers.
Be it gambling or foreign buyers, governments always become addicted to revenue and the origin of the tax is forgotten.
Future government: "We're short on money! We need more gambling and more foreign buyers!"
Members of the BC Liberal cabinet are personally invested in the housing crisis; for instance, Mike De Jong and his 7 properties[0]. And maybe we should ask why the Ministry of Natural Gas Development is responsible for housing, as well[1]? It's like Minister Rich Coleman carries housing around with him wherever he goes; couldn't have anything to do with his sketchy behaviour[2]...
I'm very conflicted on this. I want the best people to come into my country, but I don't believe that being wealthy in an undemocratic country where corruption is more acceptable should qualify you for admission outright.
They had this until a few years ago, but Canada ended the program with a prodigiously long waiting line.
Predictably, there was an uproar in China.
>The Canadian Immigrant Investor Program was created by the federal government of Canada to promote the immigration of business people and their families. It enabled qualified investors to obtain permanent resident status in Canada. Under the program, successful applicants and their families received permanent and unconditional Canadian residential visas and were then eligible to obtain Canadian citizenship. With the passing of Bill C-31 on June 19, 2014, the program was terminated and undecided applications were cancelled.[1]
Is there a good general solution to making government leaders accurately account for the ephemerality (or danger) of a specific revenue source? Constitutional provisions? Equity stakes for decision makers? Better voters?
Everyone looks at this ass-backwards. Foreign buyers who park their money in unoccupied real estate are not a problem. These are essentially ideal owners from the city's perspective and what every city council should be courting: people who pay ridiculous tax rates yet use essentially no city services.
The problem is the lack of housing supply. Get rid of the ridiculous regulations, allow more stock to be built, and revel in all the free foreign money that's being showered on your city.
Yes, more housing stock is going to change the "charm" of your little haven. Guess what? Cities change. All of your precious cities are nothing like they were 50 years ago. That's how life goes. Every alternative you have results in a change to the status quo: (1) do nothing and watch all the artists and misfits (then the middle class) get priced out of the city, (2) impose even more regulations to try to keep rents affordable (which is never a solution, see San Francisco), or (3) build more housing.
Only one of these solutions makes any sense. But, no surprise, it's always easier to blame the foreigners than it is to risk your political capital.
There may be a problem with supply but how are vacant properties a good use of the supply that already exists? What's the point of a city full of empty sky rises?
If it's enough of a problem to cause systemic decline of the city the property prices will have to drop. I just can't see how they would keep on buying and buying till nobody lives there anymore. Granted it is possible, but if they are in fact that crazy then you can still argue it's better to pocket the money and go build another city?
Somebody else mentioned supply is being added at a decent rate. So perhaps there just isn't really a problem?
This has been going on for well over a decade and it's accelerating. There are lots of vacant properties and new properties are purchased instantly for above asking.
Supply is being added at a decent rate for the population of the city but not everyone purchasing property lives in the city.
A perfect source of tax revenue? Or, if you look at it (and implement it) the right way, a perfect way to take back the wealth that was transferred from working class people in western countries such as Canada to China over the past generation.
How did that "wealth transfer" work? When (say) $200 of the $800 I spend on an iPhone goes to Chinese manufacturers, they have $200, and I have an iPhone that I value more than $800.
To me it looks like we're both wealthier, not to mention the American company that's booking a few hundred dollars itself.
Nobody wants to talk about that. The narrative is that if you're foreign (meaning Chinese) it's unethical to provide for your children, especially if you're wealthier than me because you must have stolen it. Except if you came from Hong Kong. Then it's okay to buy your kids a fleet of Ferraris. You're just protecting your hard earned money from the corrupt commie Chinese.
There will be no talk of who is filling the cargo containers that arrive daily!
> The problem is the lack of housing supply. Get rid of the ridiculous regulations, allow more stock to be built, and revel in all the free foreign money that's being showered on your city.
I don't know how familiar you are with Vancouver, but housing starts in Vancouver are at a record high and supply has kept pace with population growth[1].
> But, no surprise, it's always easier to blame the foreigners than it is to risk your political capital.
Demand is clearly overheated by foreign capital. To imply that blaming foreigners is a straw man is to misunderstand what's actually happening in Vancouver.
> I don't know how familiar you are with Vancouver, but housing starts in Vancouver are at a record high and supply has kept pace with population growth.
So, supply has tracked population growth, demand has outstripped population growth, and that proves that increasing supply doesn't work?
increasing housing supply sounds like the best straightforward solution but the outcome you want to avoid is one where the government rapidly increases housing supply to match demand in order to keep apartment prices stable, but when the cycle reverses and all the foreign non-occupier owners pull out of the market the local occupier owners face a collapse in their home value.
a lot of people feel that their apartment is the key to their wealth, so falling prices hurts (even though it also means they can move out into cheaper apartments because housing as a whole has fallen) and the government will want to avoid that scenario.
this seems to be slightly different from the issue in SF where housing is driven by industry growth and poor public transport (reducing residents' mobility increases desirability of specific areas) in addition to foreign buyers.
if one can easily separate non-occupier owners from local occupier owners and then apply a tax in order to discourage non-occupier ownership and that kind of behaviour (because it masks actual housing need which in turn makes urban planning difficult) then it will help a lot, i think.
the other solution is to create zones that are available to foreign buyers, encourage high-value developments for tax revenue, and then make the balance of the housing stock restricted to owner occupiers - the new sale restrictions imposed on existing stock will reduce the price of existing housing stock but will buffet foreign money driven fluctuations on essential residential stock, but still provide a pressure release value for increasing foreign demand in the city.
They are not ideal owners: they do not provide any sort of commerce to the city - which creates its own virtuous cycle. Taken (intentionally) to the extreme, your proposal would create a property-tax-generating ghost town; would you want to set up a business there? Would you want to live there?
People seem to be putting so much blame on foreigners and forgetting that Canadians are also buying homes and participating in the bidding wars. A friend of mine who sold her apt in Vancouver (for a nice amount of money) and moving to Montreal said her mother talks of the Chinese buying up property in Montreal. I thought to myself: "You will be buying property there too." She didn't sell her apt to a foreign speculator btw.
No one seems to talk about this but one reason Vancouver is popular is because it's the only major city on the west coast of Canada (with apologies to Victoria). It's obviously the most popular choice for many Canadians who want to move west or people who want to make their first home in Canada on the west coast. Contrast this to the US, specifically California, which has many nice West Coast cities.
You don't need housing supply for unoccupied real estate. Just do the equivalent of a stock split: split the apartments into smaller and smaller pieces. Before long, you will have speculating foreigners buying an individual one-square-foot "strata lot" for $750K, with a quarter inch "common property" border around it. The management fees will be really low, with tens of thousands of owners in one building! BC place stadium can be rented out for annual general meetings. Not that anyone will go, being in some other country and all.
I believe this should be an "unoccupancy" tax instead, where owners are taxed if the home is unoccupied:
* increases the supply of available housing
* includes all the properties that have already been purchased for speculation and hits every year
* substitutes an occupancy check (using data like utility utilization or direct observation) rather than a test of foreignness which is too easy to game.
* doesn't dissuade foreign investors but facilitates the creation of safe rental infrastructure serving them.
What's wrong with just having a relatively high property tax and using the resulting revenue to provide city services? That should disincentivize warehousing empty residential units.
There are some disadvantages versus an income tax -- the proverbial pensioners with a house whose value exploded under them but can't reasonably tap that value because of not much income to secure a mortgage against is one. But judiciously targeted tax rebates can help there.
Because I can't pay taxes with my home "value". Income tax makes sense, when you've got fungible goods coming in, spend some as taxes. No income this year, fine, you're off the hook.
Property, not being fungible and being mostly atomic, is a horrible thing to tax.
Some locals are concerned that a disproportionate amount of the very highest value properties now being purchased are owned by those with no income. Poverty level. Asset rich, and rich in foreign cash. No income.
When such owners (OR, often, their elderly and school-aged family) take up residence in Vancouver then the result is 1) a net loss in income tax to support social services (such as education and health care), plus 2) a net increase in the cost to deliver those services because of our new and impoverished residents.
I'm not arguing for more property tax, but it's complex and very different than in the "good 'ole days". Not long ago, an asset-rich person could be assumed to have paid significant income tax into the public coffers during their life before they and their offspring drew down on public resources. Now, many do not. Food for thought?
So when they sell, they'll have to pay taxes. Sooner or later they'll have to sell (the point of investment properties is the ultimate profit), and that profit is taxable.
And really, how much money does an empty house need from the city? Street cleaning? Street maintenance? Some paperwork overhead? Except for the last one, they benefit all who use the street (the public), not just the property owner.
I think raising income tax is fairer than raising property taxes.
Incidentally, I think income tax bracket should be calculated on a rolling average income, not a monthly income (to prevent unduly punishing people who make large sporadic income)
They send their children to buy and live in the properties and go to UBC. So when they sell it is non-taxable since it is the child's primary residence.
What taxes do they pay if they sell? Most of them I'm assuming will have one spouse listed as the owner and there's no capital gains taxes on principal residences in Canada.
If you make a large sporadic income, it's either from holding multiple payroll jobs, in which case you can file a form that adjusts your yearly income to the CRA such that your withholdings will make sense, or you're a contractor/business owner and you're paying your own taxes, possibly in installments anyways.
It's not like you're taxed at your peak monthly income. Withholdings are just estimates that can be adjusted.
You can pay taxes with your home value. Your home has a value as a home. That 'value as a home' can be quantified as rent. If you rent out your home to someone else, you can pay a portion of that as tax. If you would prefer not to do that, and to live in it yourself, you would make that decision after weighing the fact that you have to cover that tax yourself.
Property taxes aren't obviously absurd. I realise that there are counter-arguments (see supporters of prop 13 in California) but it's not as simple a situation as your comment suggests.
Then your home (and those of everyone else in the same situation) is horribly overvalued.
Property may be atomic, but their ownership can be split. Walmart is pretty damn unitary, but I can own shares in it, entitling me to a share of its profits. Similarly, a municipal government levying property taxes can allow you to pay the tax in shares in that property, entitling them to a share of the profits. In this case, the profits are imputed rent, i.e. the rent you avoid/pay yourself due to owning the place.
How do you propose to measure that? If someone commutes to a work camp outside Fort Mac and is only physically present in Vancouver for two weeks each month, do they pay the tax? What if someone spends 4 months every winter in Florida? How about someone who gets hit by a truck and spends six months in a hospital? Or an elderly couple who move into a care home because the husband has dementia, but want to keep the house they lived in for 50 years because the wife (who is still in good health) might move back there after the husband dies?
I think it's to prevent the unoccupied house bank account. You could make an exemption for your official registered home address.
That way if you own more than one house, the unoccupancy tax creates an incentive to put the locked up supply on the rental market, but would sidestep the complexity you just stated.
That is a residency problem that immigration and canadian income tax has systems to deal with that. And if they somehow get around all of those controls, it would only apply to one house, so it would limit the financial scope of it.
There is already some process available to measure this as Canada has tax deductions available specific to your "primary residence". CRA definitely has a way of auditing this. Sharing that information with a provincial level organization may not be possible, though.
I think "occupancy" is pretty much a solved problem for purposes of taxation. In the U.S., for example, there are settled rules about which state gets your income taxes if you live or work in multiple states.
A simple solution to the problem at hand would be to let everyone designate any one residence as their primary residence taxed at a lower rate, with any additional property they own being taxed at a higher "secondary/unoccupied residence" rate unless they can prove it is being rented out.
Residency is a solved problem for income taxes. But that's a completely different issue from occupying a particular residence; for example, an international student may for tax purposes be a resident of his country of nationality despite not setting foot in it all year.
They are also adding that, but the city has to legislate it:
"The B.C. Liberal government will also introduce legislation this week that will allow the City of Vancouver to impose a tax on vacant homes; and follow through on an earlier promise to end self-regulation of the real estate industry."
We have that in Vancouver, in a way. If you reside in a property, you get a discount from your property tax: the so-called "Home Owner Grant". Seniors get an additional discount.
A foreign buyer is also considering the future performance of the $2M. If they believe that this new property transfer tax will cool the market such that the $2M will not grow (or maybe even shrink), they might look elsewhere. The tax is a heavy burden attached to a property. Whenever that property changes hands, the government takes a slice, and now that slice is a whopping 15% if the buyer is a foreigner. If a foreigner is is willing to pay 1,150,000 for your property, you're only getting 1,000,000. The money is sucked out of value of the transaction; it's neither the buyer's money nor the seller's money; it's both!
Vancouverite here. I applaud this as a reasonable question.
I understand why immigrating to Vancouver from China makes sense. It has great climate, is postcard attractive, easy China-YVR flights, has a dominant Chinese culture already with lots of Mandarin spoken and Chinese writing/advertisements, and it's generally very welcoming and embracing of Chinese.
But for the investor only, who doesn't plan to live here ... it's a little harder to understand "why only Vancouver?" Some insight ... Vancouver has become very familiar to Chinese investors, so it's a known and well-researched entity to Chinese. Ask a friend, "where should I move my money?" and "Vancouver!" is a respectable answer. There is also now a large marketing machine that straddles China and Vancouver, whereby new and old Vancouver real estate deals are (sometimes exclusively) marketed directly to China. Systems like this (right or wrong) take time to develop and now have momentum. In short ... familiarity, habit, and support systems.
Also, if an investor (or, often, their children) wants to spend any time at all living in their investment ... Vancouver tips the scales for the reasons in the first paragraph.
What is the main motivation for getting the money out of China? Are they hiding the money from the Chinese government? Trying to leave China or planning for political instability? I don't understand why all this money seems to be pouring into just a few oversold cities instead of more diversified assets.
China has more capital controls in place now to control outward money flow. I suspect a $300k tax that you may never get back is going to be a big demotivator to investing in Canada.
People often forget that foreign realestate investment is often a way to offshore money to keep it away from _local_ (to the investor) governments. Keeping $2M away from the PRC is probably worth $300k if you fear it will be entirely taken away from you.
The main thing this accomplishes is:
1. It allows the current administration to claim they're doing something.
2. It gives funds to the current administration that can be used for things like politician pay raises, additional government worker benefits, and maybe, just maybe, some roads too.
At this point, some government worker benefits would be welcome. BC Teachers have been losing wages to inflation for the past decade and a half. (The raises are lower than the cost of living increases.)
There 'aren't enough teaching jobs to go around' because the government has increased class sizes, dumped special needs students in with the general student body, and has closed down a large number of schools.
More work, less pay, worse public outcomes. Neo-liberalism in a nutshell. Mind you, BC is still much better off then many US states in this respect. Mind you, as it is not a petrostate, BC also needs a functioning education system more than some of its neighbours.
I don't expect that teachers will see any of this money, of course. It'll probably go towards worthless crown corporations like ICBC.
As a consequence of all this: it is hard to find software developers (are they still middle class?) to work in offices in Vancouver core.
The only reasonable option to live for devs is in 1.5-2 hours away of driving and public transit. 2-3 hours per day wasted in traffic just to get to and back from the office is too much. Half of the time spent in traffic are considered (or should) as working hours - thus increased salary demand as de facto there are not 8 but 9-10 working hours per day.
Big software houses shall consider moving R&D offices outside of Vancouver (core) I think.
I grew up in Vancouver, went to high-school there, whet to UBC there. My family is in Vancouver. The majority of my friends are in Vancouver. I own real-estate in Vancouver. I eventually want to move back to Vancouver. I can safely say I love Vancouver. However, I currently live in Seattle.
> "it is hard to find software developers ... to work in ... Vancouver"
Plain and simply, even though software developers make some of the highest salaries in Vancouver, the salaries are relatively abysmal. It would be an effective 50% pay cut for me to move to Vancouver.
The housing crisis is a problem, but its not one that effects the lack of talent in Vancouver. Vancouver's almost only tech talent problem is the lack of competitive salaries.
I saw a senior Rails contract job in Toronto that was paying $40 per hour and a mid-level Rails Dev at $15 per hour. I find that rather hilarious as well.
Software development should be remote. Zero reason for me to drive X hours to look at a computer screen and use Slack when I can do that exact same thing from my house. Companies can save huge on office space and employees can save the commute as wel as improving the environment by not commuting each day. Sitting around a whiteboard once per sprint isn't very good justification for working on site.
> The tax will apply to buyers who are not Canadian citizens or permanent residents, as well as corporations that are either not registered in Canada or controlled by foreigners.
Aren't we still letting people just buy permanent residence?
Yeah but they actually have to live in Canada - the loopholes around buying permanent residence as an insurance policy and then just never living in Canada were closed a long time ago.
So if someone wants to full-hog move to Canada and buy a home in Vancouver, I feel like that's not the kind of activity we necessarily want to discourage.
Canada does not have exit immigration controls, so PR residence fraud is still an issue. An agreement with the US to share data on people leaving Canada via the US has been announced and re-announced, but hasn't been implemented yet. Which is all to say that if you land in Canada, drive over the border and then fly abroad, the immigration bureaucracy still has no idea you've ever left.
You would need a new passport for that to work, and it increases barriers to doing so.
In any large scale endeavor it's often about decreasing the number, changing the balanace vs. reducing it to zero. And it's often a ratchet, adding a law here and there to get to a result.
Any thinking around the expected impact from locals who bought despite the prices? Sounds like they could be royally screwed if prices plummet as a result.
I think the logic is that if you're a local, the primary purpose of the residence is for living, not speculation. If prices drop your illiquid asset # drops, but you still have a place to live and you're going to pay less property tax. Of course, people could end up underwater, but that's all dependent on how crazy a mortgage they were able to get (I think there is less craziness here than there was in the run up to 2008 amurica).
Yes, some people will get screwed. Hopefully this will result in less locals being screwed than if nothing was done.
Given that current prices were completely out of whack, and that the govt kept warning that something will be done ... people who bought at the peak deserve what they got. I've been sitting on the fence (since the math didn't make sense) for years. All we got for being prudent was annual moves and seeing other people's homes paying them more than a 1%er's yearly salary. I welcome this move by BC. Ontario needs this stat for the GTA. We also need to tax the gains from home sales. The situation has gotten so bad, young people are leaving in disgust.
I just bought a 450K house in Victoria knowing I'll take a haircut. The problem with timing the market is it simply hasn't crashed and I'm out of time - it's time to start a family.
450K for a house seems cheap. In the GTA, you won't even get a townhouse for that much. A townhome (with monthly fees) probably goes for over 650K :'( I don't understand it.
If locals didn't overstrech financially to buy something they can barely afford, they should be able to weather the storm. If they blissfully took on massive mortgages in a highly overvalued market, well, I think they might get the short end of the stick. I don't think governments should provide safety net for foolishly risky behaviour.
I don't think prices will go down as a result. For dirty / at-risk money pouring in from overseas, the 15% tax is just the cost of doing business, and that's assuming they don't find a way around it like using a Canadian proxy buyer or shell corporation. If someone is buying a 50-year-old teardown with asbestos and mildew for $3 million, do you think they care if it becomes $3.45 million with the new tax? They just need to get the money the hell out of Dodge (China).
What the tax can achieve though, is build up a stockpile of money for the government to address the affordability problems by improving mass transit, building affordable housing, etc. This is the realistic best-case outcome. Prices are not going down.
of course not. How would adding new tax may result in lower prices in under-supplied market? If a person buys something for 2.3M instead of 2M it is higher price for that person (it doesn't matter who those money were consumed by). That person to make profit will be using the 2.3M as base to make selling decision, calculate profit, etc. Thus it will drive prices up.
Only in oversupplied(buyer's) market such tax may have resulted in lower prices by deterring buyers and thus decreasing liquidity.
just like Silicon Valley. Locals save and save but when they get ready to buy, the prices have gone up due to all cash offers from Mainland China whose buyers are buying sight unseen for god knows what reasons.
The only solution may be to require such foreign buyers to publish their real names instead of some shell Hong Kong or Cayman Island companies. If the buyer is a corrupt official using bribe money or a crooked businessman hiding black money, making this information public to the PRC Govt/ people, could get them investigated. This should dissuade people using ill gotten gains to inflate house prices here causing a speculation bubble. If they are legitimate, then there should be nothing to fear.
Really you want the Canadian government to act as an agent of the PRC? That's about as bad as the FATCA injustice foisted upon Americans overseas by Democrats. That is a horrible idea. "If they are legitimate, then there should be nothing to fear.." That's the same logic used by supporters of NSA domestic spying.
Only the guilty should care about privacy right? Innocent people have no need for it because they aren't doing anything wrong?
I would expect this to run afoul of any investor-state dispute resolution agreements that Canada has signed with other countries (NAFTA, Canada/China have an ISDS as well) - since it is a stamp-duty rather than an import duty.
Typically those agreements require that investors be treated as locals once the asset is purchased.
1. Each Contracting Party shall accord to investors of the other Contracting Party treatment no less favourable than that it accords, in like circumstances, to its own investors with respect to the expansion, management, conduct, operation and sale or other disposition of investments in its territory.
This seems more a gesture than putting a foot down. I expected the tax to be higher (15% may not deter overseas buyers already willing to overpay) and accompanied by comprehensive residency verification system with additional tax on non-inhabitated homes.
Government policy is a blunt instrument. Whatever the outcome of this post-fact political pandering, it won't be the desired outcome. Vancouver has a long history of speculation by the locals as much as anyone else. Mortgage debt is completely out of control, but people see it as safe or good debt. This could very well trigger a devastating collapse in market value and scare foreign investors from BC altogether, but I live at the other end of the country, so I mostly can just kick back and watch the fallout.
I find it really strange to find this on HN's aggregator. This tax is neither novel, technical, nor an actual solution. There are cities that have solved the speculation problem with social housing and/or planning - Vancouver (and San Fran's) only problem is a lack of will.
The property transfer tax is fucking stealing. End of story.
They hit old people with this shit who have no income but sell their house to go live somewhere else. Oh, that will be 20 grand please. Why? Just because!
Shame on this parasitic province.
British Columbia fleeces anyone who comes here; that's why we locals say that BC stands for "Bring Cash".
The surrounding areas are suburban, not farmland, just like any metro area for most of these cities. Greater Montreal is about 4m people for example. Canada is a whole hell of a lot more than just Vancouver and Toronto. Actually Vancouver is relatively small with its 600k population and greater metro area of only 2.4m. Toronto and Montreal are the real population and economic centers and Vancouver coming in 3rd place.
I'm a US citizen and I've been to some of these places. It blows my mind how dismissive people are of Canada. It has more than a little diversity, distinct regions, amazing people, and the population of California and almost its GDP. Its 10th on the GDP scale globally. This isn't some farmland country, its a economic powerhouse.
Actually Vancouver is relatively small with its 600k population.
That's just a coincidence of lines on a map. Vancouver is very much like San Francisco in this respect; unless you're a local, when you say "San Francisco" you're probably including areas like Oakland and Berkeley, and you might be including areas as far out as San Jose.
True, but that's also true for a number of those other cities. Ottawa has both Kanata and Hull for example (and possibly Orleans depending on what you consider Ottawa). My aunt and uncle own a berry farm within a short drive to Ottawa as well so there's a number of small towns around it (within about 30 minutes drive or so).
My sister lives in a city right by Montreal, but most people would consider it to be Montreal if you don't live in the area.
"Ottawa has both Kanata and Orleans for example (and possibly Hull depending on what you consider Ottawa)"
NCR, or Nation Capital Region refers to Ottawa + Gatineau (Hull is part of Gatineau) and surrounding areas. [0]
However, for those who aren't from Canada, Gatineau is in fact in the Quebec Province, and Ottawa in the Ontario province. They are separated by a river. You can walk over the bridge from Downtown Ottawa to Gatineau in about 5 minutes.[1]
In terms of housing prices though, Gatineau and Ottawa are completely different animals. Even inside Ottawa, the range is quite large.
I was more thinking about that Hull and Kanata are both enough outside Ottawa that they're in the NCR, but not Ottawa. But, Orleans is right by the main part of Ottawa so I know a lot of people who just thought of it as Ottawa.
I lived in Ottawa for about 3 years (and my aunt, uncle, and cousins all live in the area).
> Fwiw Toronto is quite affordable still; you can live like a king in a brand new condo with curtain glass walls overlooking the city for under US$500k.
Is this sarcasm? USD 500K translates to 660K CAD. Is this supposed to be affordable? I love Toronto but the real estate prices are out of control. They should implement similar measures in Ontario.
As a senior engineer you don't get anywhere close to what you're paid in SF or NYC either. And (sadly) the depth/volume of engineering jobs is a lot poorer.
I have numerous friends with several children and who live in a condo. Hell, the Mayor of New Westminster moved _out_ of his house and into a condo; he has three daughters. As usual, there's a Vancouver blog for this[0].
You obviously don't live in Vancouver. The free market has completely failed the city. The median Vancouver house now sells for 1.4 million CAD, while the median family income is $76,000 CAD.
These prices are not sustainable at local salaries. This isn't Silicon Valley, where a large part of the population is raking in cash hand over fist. This is a playground for the foreign rich.
Supply and demand only works when supply isn't fixed.
the supply in question is single family homes, particularly detached homes
vancouver is bordered to the north by mountains, the south by the us border and the west by the ocean. there's already suburban sprawl 2+ hours to the east. there is simply no room for more single family housing
there is a large amount of agricultural land, but it's part of a strategic reserve as it's some of the most productive agricultural land in canada and developing it is extremely controversial
So... build up? That's more expensive, tech wise, than single family detached homes, but at least it adds to the supply and constrains prices to some degree.
You don't have to do skyscrapers, you can do 3/4 stories like most European cities.
Not everyone can live in a single-family detached home with a big yard in a place with constrained land supply.
If you look around New Westminster, Gastown, Yaletown, Olympic Village, Burnaby, and even far-flung places like Port Moody or Coquitlam, you're going to see new 30-story condo construction. All around them, you're going to see new 3-5 story multi-use residencies.
Thanks to this, condo prices in the metro area are not mindbogglingly unaffordable - they are merely unaffordable.
Mind you, thanks to this real-estate boom, the construction in many of those condos is terrible - leaky roofs, non-working heating in the winter, constantly broken elevators... But since every unit is sold before the building breaks ground, that's what the free market asked for, right?
Vancouver has developed a lot of condos actually and has significantly less barriers to developing them than the SF bay area. It has gotten to a point where condo prices have stabilized relatively to SFH prices.
1 big problem with the condos: they don't make family sized ones. I've been trying to convince my parents & siblings to move into a cheaper condo due to housing prices in BC but there aren't many 4+ bedroom 1500sqft+ multifamily units available. There are far more SFH houses that match those conditions. In europe they have that kind of housing and it's frustrating to deal with that lack in BC.
Condos are being built constantly -- and most of them sell out before they go on the market. The condos are all designed to be investment properties because that is where the money is to be made. Unfortunately they aren't that great to live in.
I live near an absolutely massive condo development currently under construction. People actually slept in tents in line to purchase one (and I don't know how successful that was). It's complete insanity and saying "build up" or "build more" lacks understanding of the market, the geography, the culture, and the foreign investment.
If you build enough, they'll stop buying because they will realize there are better places to invest in.
Actually... you probably don't even need to do that. Just credibly threaten to allow the market to work, and enough to be built, and it'll likely start to cool things down.
The frustrating thing about the supply side solution is that the answer to every argument is always "add more supply!" even if the city is obviously already doing so at an aggressive pace.
The reality is that there are real world physical limits to adding supply. There are a limited amount of trades for example. There is a limited capacity to review and process development applications. It takes time to complete buildings.
Unlike Silicon Valley Metro Vancouver has steadily built condos for decades and the region currently has more housing starts than at any other time ever.
Vancouver's issues are deeper and more urgent than a one dimensional supply side solution can solve.
It's not nearly as simple as you're implying. The most obvious reasons have already been discussed, but I'll add that the construction industry in Vancouver is operating at full employment and has been for a long time.
So where do these workers come from? Who will employ them, and better yet… where do you house them? Chicken meet egg.
The problem is that the "foreign investors" are not _investors_. They are more like money launderers in terms of what they're looking for out of their "investment".
That is, for these people it's totally ok to pay X now and only get 0.9X out of the property later, because their other option is not having the use of the money at all. It may well be OK for many of them to pay X now and only get 0.5X out later, and for some of them it's ok to pay X now and only get 0.1X out later. They would obviously prefer a better deal, but unlike a normal home-buyer or real-estate investor expecting a huge loss on later sale of the property is not necessarily something that will stop them from buying.
There may be better places to "invest" in, but finding them may be more trouble than they are willing to take.
That's a fair point, and something that would warrant other solutions. It'd be interesting to read more about the actual numbers involved.
People invoke the 'foreign investor' bogeyman in places like New York City, but it turns out that it is a tiny, tiny percentage of housing there. Sounds like it's different in Vancouver.
> It'd be interesting to read more about the actual numbers involved.
Indeed. It's hard to get actual numbers because Canada is one of the few Western countries that doesn't make public the statistics it collects on who's buying stuff...
> but it turns out that it is a tiny, tiny percentage of housing there
The relevant metric is the percentage of sales, not the percentage of total housing stock. But yes, the situation in New York is nothing like Vancouver; New York has tons of rich locals driving up prices and even a lot of the absenteeish owners in New York really do want an apartment in New York to use for that one week a year they're in town. They may be somewhat price insensitive, but not desperate to buy anything right now to get their money into real estate in New York.
Reasons: citizenship is for sale through the Quebec Immigrant Investor Program[2] so if you're wealthy, you can effectively bypass this tax. If you can't, using a relative as a proxy buyer will let you bypass the tax.
And preventing non-permanent residents from buying means any immigrants who come to Canada but aren't PRs will pay this tax. These seem like the exact kind of people you don't want to disincentivize from buying - people who are willing to take a risk to come to Vancouver, but aren't rich enough to just buy their way in.
Taxing people based on where they file their taxes makes a lot more sense to me - if you're paying taxes in Canada, you're not using Vancouver housing strictly as an asset class which is what should be discouraged in order to have a healthy, diverse city of people who own where they live.
1- http://www.theprovince.com/business/proposed+could+high+cost...
2- http://www.immigration-quebec.gouv.qc.ca/en/immigrate-settle...