Starting Tuesday, foreigners will have to dig deeper into their wallets and off-shore bank accounts to buy real estate here.
For that run-of-the-mill $1-million property in South Surrey or White Rock, an international buyer will be forced to cough up an extra $150,000 in tax. That $5 million luxury home? That’s an extra $750,000.
If the current pace of buying by foreigners continues, the new tax would generate an additional $1.4 billion in property transfer tax for the province. That’s a lot of dough, and Finance Minister Mike de Jong did say this week that that money could support affordable housing and rental-assistance programs in the future.
But the insatiable demand for housing in Metro Vancouver and elsewhere in B.C. isn’t about to go away.
That’s why the affordability of housing needs to be given weight in all decisions as governments build and improve our communities.
Indeed, the issue is complex. For some, an affordable home is having enough money to rent a simple basement suite. For others, it’s being able to buy an apartment near a town centre. Still others interpret affordability as a single family home in a nice neighbourhood.
This suggests a range of options and policies are key in shaping our community’s future and ensuring a bright mix of people comprise it.
Many market observers agree this new tax on foreign buyers will slow the rapid rise in housing costs. Critics, however, have noted multiple weaknesses in the tax policy – namely that foreign buyers will find workarounds to avoid the tax, and that it doesn’t address foreign buyers who arrive via the Quebec Investor Immigration Program.
Undoubtedly, governments can make more moves to improve affordability. A progressive property surtax has been suggested, along with the cancellation of the Quebec investor program, and cracking down on tax evasion and money laundering.
The affordability question won’t be answered overnight. But B.C.’s new 15 per cent tax shows government is finally paying attention. Now that attention needs to hold.
–Peace Arch News