Foreign homebuyers looking to purchase property in Metro Vancouver will have to dig deeper into their pockets thanks to a 15% increase to the property transfer tax rate that takes effect today.
The increased tax rate is designed to help manage foreign demand and to relieve pressure on the local housing market.
“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 a release in July.
“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 Gregor Robertson calls the new tax a “major acknowledgement” by the province on the role they play in the city’s housing market, but said they 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,” he said in a release.
“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.”
Speaking to Daily Hive shortly after the additional tax announcement was made, Thomas Davidoff with UBC’s Sauder School of Business says he believes the tax could reduce home prices by 10%.
“It could also trigger a crash,” he said. “I don’t think that’s the likeliest outcome, I don’t think there will be a crash, but it could happen.”
And it seems some local realtors are already coaching foreign buyers on how to circumvent the additional tax. In an email sent to clients, real estate specialist Mike Stewart instructs them to assign the pre-sale purchase contract to a Canadian citizen or resident.
The Real Estate Council of BC says they’re investigating the incident.