VANCOUVER (NEWS 1130) – The head of the B.C. Green Party wants the provincial government to follow the lead of New Zealand and ban foreigners from buying residential property.
The housing crisis on the Lower Mainland has long been blamed, in part, on foreign buyers scooping up properties and driving up the prices of homes in the region. There’s already a foreign-buyers tax put in place by the province and the City of Vancouver has implemented an empty homes tax to encourage more properties to be rented out but that isn’t enough for some.
Andrew Weaver says the NDP has been tinkering with the problem, trying to address offshore speculation, but it needs to get serious.
“The time for studying this problem is over. It’s time to actually take action to deal with it,” says Weaver, suggesting an all-out ban on foreign buyers.
“One of the things we can do is actually model what New Zealand, Australia, many European nations, many South Asian nations have done.”
He says the Green Party called for this kind of policy previously when they were mapping out a housing plan.
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“The problem is not [domestic] speculation in our housing market. We know that there are seven billion people in the world and there’s only four million in British Columbia. In times of [economic challenges], money looks for a safe haven. And one of the safest havens you could think of is real estate or land in British Columbia and we need to take steps to curb this,” he says, adding he’s hoping to see the kind of action that New Zealand has specifically taken.
That country has moved to banned people not living in that country from purchasing residential property there. The only exception to the rule would be Australia and Singapore residents as they have free trade deals with those places.
Weaver says that type of policy could be effective here, but he thinks a fear of political fallout is likely what’s delaying bold action.
“The attorney general has done an admirable job getting and going after the money laundering aspect and how that’s had an influence on the real estate sector, but we know what the problem is,” he says.
“There’s a lot of offshore money flowing into the Metro Vancouver market, which has lead to outrageous increases in price such that many people in Vancouver say ‘I’m cashing out and moving to Victoria, Nanaimo, Kelowna, etc.’ and they cause an affordability crisis in those areas as well.”
He says instead of viewing this as an opportunity to generate revenue via taxes, the province needs to go after the source and make it illegal to purchase homes unless you live and pay taxes in B.C. He also calls the speculation tax a “dog’s breakfast” in the sense of how difficult it is to enforce.
The Green leader says his party will continue to push for this kind of change, adding individual cities in the province are also pushing for that.
Ban wouldn’t hit heart of housing issue: expert
A ban on foreign buyers wouldn’t stop the flow of foreign money into the real estate market, according to Josh Gordon, assistant professor of public policy at SFU.
“A lot of the money is coming through people who have gained permanent residency or citizenship in one way or another but who don’t have a strong connection to the local labour market and yet are using foreign money in order to buy housing and in order to pay for mortgages,” Gordon said.
He says the government’s proposed speculation tax and current foreign buyers tax is a more targeted approach because they focus on people who don’t actually live in the homes they are buying and applies to both existing and future properties.
“[A foreign buyers ban] doesn’t address existing and future ownership that’s on the basis of foreign income or wealth as long as those people gain citizenship or permanent residency then they would fly under the ban,”
The speculation tax would be applied on properties that are not the primary residences of the owner in Metro Vancouver, Abbotsford, Chilliwack and Mission, most of the Capital Regional District except the Gulf Islands and the Strait of Juan de Fuca, Nanaimo-Lantzville, Kelowna, West Kelowna.
It would not apply to certain communities such as Whistler, which relies heavily on people from outside B.C. purchasing resort properties. Such communities would likely also fight an outright ban, according to Gordon.
“The key dynamic is you want people in big urban markets to have a connection the labour market that they are going to be buying in… so they’re on a kind of a level playing field with the rest of local buyers,” he said. “So what you want to say is if you’re not engaged in the local or Canadian labour market, then you should pay a steeper property tax to compensate for the fact that you aren’t pitching in terms of income taxes so that you’re on a level playing field.”
However, Gordon admits an outright ban will be a popular policy among voters, especially those hit hardest by the problem of affordability.
“In the context of very intense affordability challenges, measures that are fairly draconian of this sort will be popular amongst a lot pf people who just want the problem to be addressed and quickly,” he said.
-With files from Dean Reckseidler