Is B.C.'s foreign buyers' tax on housing just like a tariff? | Daily Hive

Roman Makedonsky/Shutterstock

Is there a double standard in British Columbia’s approach to tariffs? While the provincial government condemns U.S. trade restrictions, it continues to impose its own punitive tax on foreign investment in real estate, argues local real estate firm Goodman Commercial.

In a post published today, the firm’s analytical Goodman Report critiques the provincial government’s stance against U.S. President Donald Trump’s tariffs on Canadian exports. They assert that B.C. has itself imposed a similar trade restriction in the form of its foreign buyer tax on real estate.

Originally introduced in August 2016 as a 15 per cent tax by the last BC Liberals-led provincial government and later increased to 20 per cent by the BC NDP, which expanded the tax to more regions of the province, the levy applies to not only single-family houses, townhouses, and condominiums, but also whole multi-family apartment buildings, nursing homes, daycares, and residentially-zoned development sites.

You might also like:

While the policy was framed as a measure to curb foreign speculation and improve housing affordability, the company contends that its impact on multi-family housing investment is akin to a tariff, restricting much-needed capital and exacerbating the housing crisis.

“When it prevents foreign individuals and companies from investing in multi-family housing and development sites, it is no different than the hated tariffs,” they wrote, referring to the policy as “a tariff on apartment buildings.”

They also drew a parallel between B.C.’s approach and Trump’s tariff policies, noting that while the president pursued protectionist measures in an effort to secure better trade deals, he often overlooked the domestic consequences, such as higher prices. Similarly, they argue that the foreign buyer’s tax has not improved affordability despite being in place for nearly a decade.

“The fact that the tax reduces much-needed investment in rental properties and seniors’ homes, making affordability worse for those most in need of help, is more nuanced and unlikely to win votes,” reads the post.

While the company is against the U.S. tariffs impacting Canadians, they argue that if the B.C. government truly wants to support affordability and investment, it should “start by removing its own destructive tax, clearing the way for investors and actually helping the rental housing industry.”

This otherwise limits the land acquisition and construction financing methods of builders and developers to a narrower range of traditional sources, such as banks and investment firms, and it strains pre-sales for strata projects. As well, while there is currently a major focus in building new secured purpose-built rental housing projects, there has been a decrease in new condominium projects. Unsecured rental housing provided by the individual owners of strata condominium units accounts for a significant portion of the overall rental housing supply in Metro Vancouver.

According to a 2024 study by the Sauder School of Business at the University of British Columbia (UBC), after the B.C.’s foreign buyer’s tax was first introduced, single-family house prices in neighbourhoods with more foreign buyers fell six per cent more than in other neighbourhoods. Furthermore, the percentage of foreign buyers dropped from 13.2 per cent of single-family house transactions in the six weeks before the new tax announcement to 1.7 per cent in the three months after.

But the price of multi-family homes — townhouses and condominiums — did not see a similar drop, even in neighbourhoods with more foreign buyers. The UBC study asserts that due to the far greater supply of townhouses and condominiums, such housing typologies are less likely to be as strongly affected by foreign demand fluctuations.

While the tax increase to 20 per cent in 2018 didn’t resolve Vancouver’s affordability issues, it did lower home prices in some areas. The study’s authors suggests the impact may be greater than reported, as local buyers likely stepped in to purchase homes in neighbourhoods previously dominated by foreign buyers, softening the price drop.

“You can’t say, ‘Let’s just ban these people and that’ll solve our problems without disrupting everything.’ Complicated problems don’t have simple solutions — or the solutions may be simple, but they don’t actually change things,” said UBC Sauder associate professor Tsur Somerville.

Other jurisdictions with a foreign buyer’s tax include Ontario, which modelled its tax after B.C., as well as Australia, New Zealand, Hong Kong, and Singapore.

In September 2024, a report by real estate firm Royal LePage asserted the federal government’s temporary foreign buyers’ ban, which first began in January 2023, is not a huge factor for luxury home prices in Vancouver.

You might also like: