VANCOUVER (NEWS 1130) – Real estate groups in British Columbia say a foreign buyers tax will do little to cool the markets where it’s been expanded and lack of supply is the bigger problem.
Foreign buyers tax is being increased to 20%, and being extended Victoria, Nanaimo, Fraser Valley, Central Okanagan on top of Metro Vancouver (where the tax already exists)
— NEWS 1130 (@NEWS1130) February 20, 2018
A 15 per cent tax on foreign buyers has applied in Metro Vancouver since 2016, and on Tuesday the province announced it would hike the levy to 20 per cent and impose it in the Victoria and Nanaimo areas, as well as the Fraser Valley and central Okanagan.
The changes took effect Wednesday and Tanis Read, president of the Okanagan Mainline Real Estate Board Association, says she’s troubled the government didn’t consult with local industry first because what’s really needed is more home construction.
Provincial data shows that last year foreign transactions made up 1.8 per cent of home purchases in the central Okanagan, 1.4 per cent in the Fraser Valley, 4.3 per cent in the Victoria area and 4.4 per cent in the Nanaimo area.
Cameron Muir, chief economist of the BC Real Estate Association, notes that after the tax was imposed in Vancouver there was a temporary cooling effect on detached homes, but prices rebounded in less than a year.
Finance Minister Carole James said Tuesday that foreign buyers should contribute more for the high quality of life they enjoy in BC, and expanding the tax ensures that international speculators aren’t simply being pushed from Vancouver to other markets.
“BC’s real estate market should not be used as a stock market,” said James. “We will introduce a new annual speculation tax starting in BC’s urban areas. It’s going to tax foreign and domestic speculators. This tax will apply to property owners who don’t pay income tax here, including those who leave their units vacant.”
On top of an addition of taxes, there is a promise to build 114,000 new housing units over a decade for some families, seniors, and students. Renters will also see a $930 per year increase to the rental income assistance program.
James admits the $400 renter rebate promised before last year’s election is still in the works, but she says it won’t happen this year.