The provincial government has announced plans to increase the property transfer tax rate by 15% for foreign buyers of real estate in Metro Vancouver.
“The additional tax will take effect Aug. 2, 2016, and will apply to foreign entities registering their purchase of residential property in Metro Vancouver, excluding the treaty lands of the Tsawwassen First Nation,” reads a press release issued Monday.
Daily Hive has verified the new tax will not apply to permanent residents, but it will apply to temporary foreign workers.
“The data we started collecting earlier this summer is showing that foreign nationals invested more than $1 billion into B.C. property between June 10 and July 14, more than 86% of it in the Lower Mainland,” said Finance Minister Michael de Jong in the release.
“While investment from outside Canada is only one factor driving price increases, it represents an additional source of pressure on a market struggling to build enough new homes to keep up. This additional tax on foreign purchases will help manage foreign demand while new homes are built to meet local needs.”
The government says it is also introducing other initiatives to try to tackle the housing crisis in Vancouver:
- creating a $75-million Housing Priority Initiatives Fund for provincial housing and rental programs
- amending the Real Estate Services Act to end self-regulation of the real estate industry
- amending the Vancouver Charter to allow the city to implement and administer a tax on vacant homes
“Owning a home should be accessible to middle-class families, and those who are in a position to rent should be able to find a suitable home,”Premier Christy Clark said in the release.
“These changes are about helping to make sure that British Columbians can continue to live, work and raise their families in our vibrant communities.”
Mayor calls for more action
Responding to news of the extra property transfer tax for foreign buyers, Mayor Gregor Robertson said he’d been asking the province for help for a long time.
“I’ve been calling on the province for over a year to take bold action on our overheated housing market and address the impacts of unregulated, speculative global capital on local real estate,” said Robertson in a statement.
“Today’s legislation is a major acknowledgement by the Province that they have an important role to play in the housing market and affordability is not simply an issue for municipalities to deal with.”
However, Robertson said, there was no single solution to the affordability crisis in Vancouver, and the provincial and federal governments need to do more.
“I urge the province to match their efforts to cool the market with a commitment to invest in creating new low and middle income housing in Vancouver and throughout BC.”
“Ultimately, the issue is not who buys, but how housing is being used: people who use housing solely as a means to make money – rather than living and working in Vancouver – should be taxed as such.”
For full details of the financial implications of the foreign buyer’s property transfer tax increase, check the government’s info sheet: Additional Property Transfer Tax