Province to tax foreign buyers of Metro Vancouver homes

[Jack T. Colton]

This could be the beginning of the end. They will tax in Vancouver and then in Toronto. The buyers will dry up and prices will fall. Portugal, Italy, Greece and Spain are still in shit. Brexit is putting pressure on the economy. The presidential election in the US is making things uncertain around the world. We are still healing from the fires out west. Any more might set off the shit avalanche.

 

[chowzilla]

Shorter men just need to find a shorter girlfriend lol

 

[BookerL]

Metro Vancouver foreign buyer tax: New poll shows high support

http://vancouversun.com/news/local-...foreign-buyer-tax-new-poll-shows-high-support



An overwhelming majority of Lower Mainland residents believe the B.C. government made the right decision imposing a 15 per cent foreign buyer tax, a new public opinion poll suggests.

Ninety per cent of those polled by the Angus Reid Institute say they support B.C.’s new tax, which would apply to foreigners purchasing real estate in the Metro Vancouver area. And 87 per cent say they also support the move to give local governments the power to tax owners who leave their properties vacant.

The poll was an online survey of 737 Metro Vancouver adults who are members of the Angus Reid forum.

The poll shows 82 per cent of respondents believe the government failed to act fast enough to curb the white-hot housing market.

In June 2015, Premier Christy Clark pointedly rejected an appeal from Vancouver Mayor Gregor Robertson for an extraordinary tax to cool speculation.

And up until a week ago, the province maintained there was little evidence significant foreign money was flowing into Metro Vancouver’s housing market. It now says at least 10 per cent of homes are being bought by non-residents.

The poll also shows that 71 per cent of respondents are pessimistic about the long-term value of the new tax, believing that affected buyers will figure out a way to skirt it.

Strikingly, four in 10 respondents also think that neither the new property purchase tax nor Vancouver’s proposed vacancy tax will improve housing affordability or access to more rental housing.

“There is a big question mark in the minds of the people of this region over whether or not these measures, while significant, will actually be effective,” said Shachi Kurl, executive director of the Angus Reid Institute.

The high level of public support is in direct contrast to the Liberal government’s long-standing resistance to bringing in the tax, she said.

“We know that as far back as a year ago, and probably even further back, people in this region were clamouring for government action on this issue,” she said, noting that the government suggested “there was no story here” when a June 2015 poll showed “people were screaming for government action.”

Now the government has swung in the other direction.

“In bringing in these measures, it is a sign I think that the provincial government recognized it was politically vulnerable on this issue and it is releasing a pressure valve by bringing in these measures,” she said.

Whether the tax, which is due to come into effect on Aug. 2, will cool the market is unclear. But some potential homebuyers see it as a useful exercise. One of those is Jonathan Ross, a young Vancouver lawyer.

“Will this make a difference? I don’t really know,” said Ross, who lives near the long delayed Little Mountain redevelopment. “It frustrates me as somebody who is completely priced out of the single family market that we can’t afford to buy in the area.”

The Angus Reid poll revealed a divide between what homeowners and renters hope will happen in the Metro Vancouver market. More than 53 per cent of owners — who have a vested interest in the equity in their homes — hope housing prices continue to increase or at least stay where they are. Only 22 per cent said they hope prices will fall by 30 per cent or more. Conversely, nearly three-quarters of renters hope prices fall by 30 per cent or more, illustrating their desire to become new homebuyers.

The poll also showed a high percentage of those polled (65) believe foreigners investing in the local market are responsible for the region’s housing misery.

Other reasons cited:

• Wealthy people investing in the real estate market — 41 per cent.

• Condos and houses being left empty by investor-owners — 37 per cent.

• Lack of government action on housing — 33 per cent.

Yet when it comes to the effect the new property purchase tax or tax on vacant homes will have on people, most polled were either ambivalent or feel it will help them. Fifty-six per cent of homeowners and 39 per cent of renters said the new purchase tax was neither good nor bad news to them. A majority of renters (56 per cent) said the tax was good news. The government’s decision to re-regulate the real estate industry and to also use money from the property purchase tax to ease affordability issues also drew high marks. Eighty-one per cent felt it would be effective or highly effective for the province to no longer allow the B.C. real estate industry to regulate and police itself. And slightly less than three-quarters of respondents supported the idea of once again collecting sales data to track real estate purchases by foreigners.

On whether the new measures are enough, the majority of those polled weren’t satisfied. Only three per cent said the taxes were adequate, with 71 per cent saying it was a step in the right direction.

“This is short-term approval, but nobody thinks this is enough,” Kurl said.

Cheers




Booker

 

[BookerL]

New B.C. tax on foreign homebuyers will help Canadian banks: Moody’s

http://business.financialpost.com/n...gn-homebuyers-will-help-canadian-banks-moodys

The British Columbia government’s move to slap a 15 per cent tax on foreign homebuyers in Vancouver is positive for the country’s biggest mortgage lenders, Moody’s Investors Service said Wednesday.

“This land transfer tax is credit positive for Canadian banks because it should slow the significant rise in Vancouver house prices over the past few years, helping stabilize banks’ mortgage collateral values in that city,” the ratings agency said in a report.

Three-quarters of outstanding residential mortgage debt in Canada is held by the largest seven banks, according to the report penned by analysts led by Moody’s assistant vice-president Jason Mercer.

House prices in Vancouver have been on a tear since 2005, climbing by nearly 250 per cent, faster than any other major Canadian city.


Related
Housing prices overheated in 9 Canadian markets, Vancouver at high risk: CMHC
How B.C.'s 15% tax on foreign homebuyers could drive up prices in Toronto
“This growth has accelerated in the past 12 to 18 months,” the report says, adding that the Canadian Real Estate Association says Vancouver experienced a 32 per cent year-over-year increase in house prices in June alone.

There isn’t a great deal of available information to track foreign ownership in Canadian real estate, but preliminary data from B.C.’s ministry of finance and Moody’s own research “suggest it is not immaterial,” the ratings agency report said.

“Therefore, we believe this tax will likely slow down the steep house price appreciation evidenced over the last decade in the Vancouver real estate market,” Moody’s said.

The additional land transfer tax, which was announced Monday and is to go into effect Aug. 2, will be on top of existing general property transfer taxes. It will apply to the full value of a residential real estate transaction where the purchaser is not a Canadian citizen or permanent resident.

Mercer, the Moody’s analyst, said a foreign buyer will pay $168,000 in land transfer taxes on a $1 million home in Vancouver after Aug. 2, when the new foreign buyers’ tax kicks in, compared to the $18,000 cost for a Canadian citizen or permanent resident.

The ratings agency’s report notes that other jurisdictions including Hong Kong and Australia recently imposed similar taxes designed to stem foreign investment in real estate.

“We believe the absence of such a tax [in B.C.] accelerated the pace of foreign investment in Vancouver and this levels the playing field with those jurisdictions,” the analysts wrote.

However, they cautioned that the new tax “may push investment into other Canadian markets, such as Toronto,” which would have the effect of “precipitating price increases” in those cities.

Cheers





Booker

 

[rollingstone]

Its a problem not unique to Vancouver. In London, lots of foreigners park their money buy buying up real estate and only using it a few weeks every year (if that even). I read somewhere that there is a money laundering component to this (can't find the article now). I don't support a one time purchase tax though, they need to increase the cost of keeping a Vancouver home non-resident foreigners through additional annual property taxes. They could include exceptions for those who actually live on the property (though that would make them residents, not non-residents).

 

[blkone]

An easy question - WHY ARE FOREIGNERS ALLOWED TO BUY OUR LAND AT ALL?

When it comes to residential properties, only citizens of the nation should be allowed to buy in. If you are not a citizen, or, do not plan to become a citizen, you cannot purchase Canadian residential property. It should be as simple as that!

 

[blkone]

An overwhelming majority of Lower Mainland residents believe the B.C. government made the right decision imposing a 15 per cent foreign buyer tax, a new public opinion poll suggests.

They would support a 100% tax! If given the option these people polled would prefer that foreigners cannot purchase an inch of our land. Again, shame on these governments who have allowed us to be treated as a colony!!! All blame lies on these liars who have stabbed this nation in the back!

 

[BookerL]

Foreign home buyers: How other countries limit money from abroad

CMHC says it is looking for new ways to track foreign money in Canadian housing markets


http://www.cbc.ca/news/business/real-estate-housing-foreign-buyers-1.3479508

It was revealed this week that the Canada Mortgage and Housing Corporation is trying to keep tabs on foreign money in Canada's residential real estate market.

The national housing agency has come under fire in recent years for a conspicuous lack of reliable data about the money coming from abroad and how it may be contributing to soaring home prices in cities like Vancouver and Toronto.

Our neighbours to the south, for example, keep detailed records of who is buying what and for how much.


Part of the problem has been defining exactly who qualifies as a foreign buyer, and figuring out what it all means in the bigger picture.

Canada is not alone, however.

Countries around the world have tried to make home ownership more affordable with an assortment of different approaches. Some seem to work, others ... not so much.

The following is hardly an exhaustive list, but it provides a glimpse into the options Canada might consider down the road:



Australia


Foreign real estate ownership is a hot-button political issue Down Under and the Australian government has gone to great lengths to curb it.

Generally, buyers from outside the country are limited to newly constructed houses and apartments, and the Foreign Investment Review Board — which yields broad power over money flowing into Australia — acts as gatekeeper. It costs $5,000 just for the right to make an offer on a place costing up to $1 million, and $10,000 for each subsequent million-dollar leap in purchase price.

Foreigners who buy vacant residential land have to build on it within two years.

Australia has stepped up enforcement with a crackdown that began in earnest last year. Foreign investors shown to have broken the rules can face up to three years in jail or a fine of $127,500. Individual real estate agents who help a foreign buyer circumvent the system can be fined up to $42,500, while companies could be hit with a $212,500 fine.

As of January, the government says it forced the sale of 27 homes bought illegally, including a $39-million Sydney mansion previously owned by a Chinese real estate firm. More than 1,300 property sales have been investigated, according to Reuters.

Australia also forces foreign investors to register purchases with the federal government, part of an effort to gather and analyze an extensive data set on the issue.

Canadian critics of foreign ownership sometimes hail Australia as a model for policies that can be applied here at home, but there's much debate over that sentiment.

United Kingdom


Lawmakers in the U.K. responded to public anger over ballooning home prices, particularly in London, with a considerable capital gains tax.

The move was intended to level the playing field between overseas real estate owners and residents of the U.K., who usually pay a capital gains tax of 18 or 28 per cent, depending on their income, on the sale of a residential property that is not their primary home.

As of April 6, 2015, the taxman takes up to 28 per cent at the point of sale on foreign-owned residential property.

The capital gains tax for overseas owners was introduced shortly after the government took steps to cool sales of luxury homes by boosting the stamp duty — a progressive tax paid on most residential properties in the U.K. — for homes valued at more than 1 million pounds, or about $1.9 million.

The municipalities surrounding London also have the option to levy their own taxes on home sales.



Switzerland



The Swiss are serious about strict rules on foreign home buyers.

Each year, the government assigns quotas to the country's 26 cantons, limiting the number of residential properties that can be sold to foreigners.

The cantons have far-reaching authority to impose further restrictions. For example, they can limit out-of-country buyers to real estate that is already foreign-owned or forbid foreigners from selling a property for a fixed period of time, sometimes up to a decade.

And deep-pocketed foreigners looking to build a mountain fortress should think again, as special permits are needed to build a home larger than 1,000 square metres.

Mexico



Mexico has a fairly novel approach to limiting home ownership by foreigners in areas where much of its prime real estate is found.

While foreigners can buy land and property throughout the interior of the country, a constitutional provision prevents them purchasing property in the "restricted zone." This area is defined as the land 100 kilometres from Mexico's borders, and 50 kilometres inland from its coasts.

The Mexican government is currently considering an amendment that would end this limitation, but it has yet to pass the upper house.

But fret not, beach bums. There's a way to bypass the restrictions called the fideicomiso — an agreement in which a Mexican bank holds the property deed in trust for the buyer.


​Hong Kong






While Hong Kong is part of China, its housing market stands apart. In fact, it is consistently ranked the most expensive market in the world.

The median price of a Hong Kong home is about 19 times the median income of its citizens.

The government has responded with a 15-per-cent surcharge on homes purchased by non-permanent residents.

And in 2012, the city announced the establishment of areas with new dwellings that can only be sold to permanent residents of Hong Kong for the next 30 years.

There are only several thousand of these units, though, so in a city of more than seven million people, the policy is not expected to have much of an impact.

Cheers





Booker

 

[Roy Bean]

I hear the tax is having a devastating effect already.

 

[BookerL]

I hear the tax is having a devastating effect already.

Would you be able to provide a link to the article that mentions

the devastating effect

Cheers





Booker

 

[westwoody]

I hear the tax is having a devastating effect already.

I don't think it will have much effect. It is just a show to give the appearance of action. The offshore buyers are very wealthy people. For them, an extra $500,000 on a five million dollar house is no problem. These are people who give their kids Lamborghinis. Read the Vancouver newspapers, there are frequent stories of exotic car smashups and seizures.

I grew up near Main and King Edward in Vancouver. There are a few big houses around there, we call them "Vancouver Specials" because they completely fill up the property. These may have three generations of one family living in them, fifteen or twenty people. Growing up in the sixties and seventies there were houses with stacks of chicken cages in the back, I even remember a few goats kept for milk and meat. Right in the city. The stink of chickenshit...oh thank god they were not next door. Of course everyone complained, the people with the animals said they were pets, nothing got done.

Vancouver has huge problems with zoning and developers. For decades there was little to no enforcement of zoning laws, because the city council and staff were all in league with developers or were developers themselves. Everyone had "mortgage helpers", illegal rental suites in the basement rented out for undeclared income. On my parents' street everyone now has new garages built with apartments on top to rent out. It is technically illegal but everyone does it.
There was also an old corner store that was converted into a slum tenement with four tiny apartments. Everyone on the street complained about the noise, garbage, children running around all night and not going to school. It was three doors from our old house. It was there from early 1987 to just a few years ago. That's how slow the city is to act!

 

[BookerL]

I don't think it will have much effect. The offshore buyers are very wealthy people. For them, an extra $500,000 on a five million dollar house is no problem.
I grew up near Main and King Edward in Vancouver. There are a few big houses around there, we call them "Vancouver Specials" because they completely fill up the property. These may have three generations of one family living in them, fifteen or twenty people.

Vancouver has huge problems with zoning and developers. For decades there was little to no enforcement of zoning laws. Everyone had "mortgage helpers", illegal rental suites in the basement rented out for undeclared income. On my parents' street everyone now has new garages built with apartments on top to rent out. It is technically illegal but everyone does it.
There is also an old corner store that was converted into a slum tenement with four tiny apartments. Everyone on the street complained about the noise, garbage, children running around all night and not going to school. It was three doors from our old house. It was there from early 1987 to just a few years ago. That's how slow the city is to act!

Very interesting comment from a ex resident ,I've lived 9 years on Helmcken and Howe and now King George Hgwy and 72 nd ave Surrey .
Making taxation phenomenom interesting ,having many properties in Cloverdale




Cheers





Booker

 

[westwoody]

Right in the west end, very convenient for picking up ladies on the Davie stroll!

I used to love hanging out on Robsonstrasse before it became the crappy yuppie shithole it is now. The chocololate store with the giant bunnies, the open air Chinese grocery, the weird magazines at European News, and German restaurants with good food and unpronouncable names.....good times man

Sigh...

 

[BookerL]

German restaurants with good food and unpronouncable names.....good times man

My favorite European restaurant was Crocodile on Burrard and I love the chic Boutiques also




Cheers




Booker

 

[EagerBeaver]

You don't have to leave Montreal to find German food- Alpenhaus on rue St. Marc although ostensibly Swiss and specializing in fondues, have a full service menu that has all the German goodies you would expect like Wiener schnitzel, sauerbraten and spaetzel and strudel etc. Germans still make the best Sauerkraut in the world but I recently bought some very good American Artisan Sauerkrauts made with craft beers that were very good!!!

 

[westwoody]

Here is a perfect example of Vancouver zoning insanity. Most places require new construction to complement the existing homes. In Vancouver you go ahead and build any stupid crap you want, to hell with your neighbours. This is in one of the most beautiful neighbourhoods in Canada, full of elegant homes.

Sadly a very nice, perfectly usable house was torn down to make way for this. Someone paid 3.5 million for a house they immediately tore down! Money is nothing for some people.

http://www.cbc.ca/news/canada/briti...-point-grey-compared-to-wwii-bunker-1.3707583

 

[blkone]

Here is a perfect example of Vancouver zoning insanity. Most places require new construction to complement the existing homes. In Vancouver you go ahead and build any stupid crap you want, to hell with your neighbours. This is in one of the most beautiful neighbourhoods in Canada, full of elegant homes.

Sadly a very nice, perfectly usable house was torn down to make way for this. Someone paid 3.5 million for a house they immediately tore down! Money is nothing for some people.

http://www.cbc.ca/news/canada/briti...-point-grey-compared-to-wwii-bunker-1.3707583

A citizen should be able to build whatever 'hideous' home he/she desires if they have paid for the land.

 

[BookerL]

A citizen should be able to build whatever 'hideous' home he/she desires if they have paid for the land.

If you know how properties are evaluated ,you might see where the problem is ?





Cheers





Booker

 

[Al Swearengen]

Here in Montreal there are quite a few neighborhoods that restrict the style of buildings, especially in the downtown area. They want homogeneous look.

 

[BookerL]

Scuttled property deals, legal risks mount from Vancouver’s foreign property buyer tax: ‘It’s a domino effect​

British Columbia’s decision to impose a 15 per cent tax on foreign buyers to cool Vancouver’s scorching housing market is poised to derail more than 400 deals worth millions of dollars and may prompt calls for legal action.

At least 427 deals are likely to collapse due to the new measure, according to Dan Morrison, president of the Real Estate Board of Greater Vancouver, citing responses from 27 brokers to an e-mail inquiry. The group didn’t calculate the value of those sales, though they would be worth about $404 million based on the average purchase by a foreign buyer of $946,945.

That may just be the tip of the iceberg.

“It’s a domino effect,” said Elton Ash, Western Canada regional executive vice president for Re/Max Holdings Inc. Not only will foreign buyers be hit but also Canadians who had contracts to sell and had already put offers on their next house, he said. Morrison said the effects could take years to play out given some deals involve the sales of condos still being built.

Canada’s westernmost province introduced the tax for foreigners as price gains intensified this year. The cost of a detached home in Canada’s third-biggest city soared 38 per cent over 12 months to $1.58 million in July. British Columbia joins governments from the U.K. to Australia imposing measures to tame markets that have become unaffordable for many local residents. Public support for intervention was building in Vancouver, where anecdotes abound of offshore investors bidding up prices then leaving homes empty. The provincial levy only applies on homes in the Metro Vancouver area, where three-quarters of the foreign money flows.


Legal Challenges
Re/Max is still tallying the fallout of the tax, which took effect Aug 2. At least one $14 million sale in West Vancouver fell through because the levy would’ve added another $2.1 million to the cost, Ash said.

The measure will hit the lower-end of the market the hardest, such as $500,000 condos, where the cost won’t be so easily absorbed, said Ash. Some sellers will react by cutting prices to salvage deals, he said.

The province’s move may yet face legal challenges.

‘Just Shocking’
The new tax violates several treaties and agreements that Canada holds with at least 28 other countries, including the U.S. under the North American Free Trade Agreement, according to Barry Appleton, managing partner of law firm Appleton & Associates, who specializes in international law and has launched claims in Canada under NAFTA.

“It’s just shocking that a provincial government in Canada would choose to have a knee-jerk reaction in this way,” Appleton, who has been contacted by several entities but declined to name them, said by phone from San Francisco. Depending on the treaty in place, individuals or the state can sue Canada for losses related to the tax, as well as challenge the tax as discriminatory, he said.

It’s just shocking that a provincial government in Canada would choose to have a knee-jerk reaction in this way.
“All legislation is vetted to ensure it complies with the constitution,” said Jessica McLachlin, a spokeswoman for British Columbia’s finance ministry in Victoria. “The government received opinions on the additional property transfer tax and we believe British Columbia is within its rights to act as it did to protect the residential real estate market from distortions.”

Legal Precedent
France may provide a precedent for legal action. Foreign homeowners went to court in 2012 after the nation raised the capital gains tax on overseas investors to as high as 33.5 per cent, arguing discriminatory treatment was illegal under France’s bilateral tax treaties. They were successful, and France reduced the rate to 19 per cent for all sellers, said Miranda Bothe, founder of Paris Property Group.

In British Columbia, an individual U.S. investor could file a claim under NAFTA, as could residents in 28 other countries that have trade agreements with Canada, Appleton said. Chinese buyers, who comprise the majority of foreign investors in British Columbia according to the finance ministry data, could file individual constitutional challenges under Canada’s Charter of Rights and Freedoms. The Chinese government could also go after the Canadian government, Appleton said.

“This government has been going around the world telling people that Canada is open to foreign investment, and now they discriminate against those very individuals, and with little warning,” he said.

Tax Avoidance
In the ultra-luxury real estate market where homes go into the tens of millions of dollars, at least a dozen buyers and sellers moved the transaction closing date up before the tax came into effect, said Sotheby’s International Realty Canada Chief Executive Officer Brad Henderson.

Sotheby’s Canada had about 20 high-end home deals organized the week prior to the tax announcement, and those deals are still proceeding as planned, Henderson said.

A bigger risk than cancelling deals is the possibility that the tax may push some investment into the shadows as investors seek methods around the measure to avoid paying millions, he said.

Henderson’s firm found that the fastest-rising category of luxury homes were in the $4 million-plus space driven by foreign investors, he said by phone Thursday. “People are buying homes worth millions and if they have the means to avoid the tax, they’ll take that route.”

Cheers




Booker