The Union of B.C. Municipalities (UBCM) is suggesting an increase to the extra tax that foreigners pay when they buy homes in Metro Vancouver.
The UBCM is also recommending an extension of the foreign buyer tax outside the region.
These measures were put forward in a report released by the UBCM Thursday (February 1), titled ‘A Home for Everyone: A Housing Strategy for British Columbians’.
“Revisit the foreign buyers tax rate to ensure that it is sufficient to curb rebounding rates of demand and potentially expand the geographic scope of implementation to limit spill-over effects between regions,” the report suggested.
The report was prepared by a special committee headed by Port Coquitlam Mayor and Metro Vancouver chair Greg Moore.
According to the report, “estimates of foreign investment provided by federal and provincial data are likely quite conservative”.
On December 19 last year, Statistics Canada and the Canada Mortgage and Housing Corporation issued a report noting that non-residents, which include Canadians as well as non-Canadians, own 4.8 percent of homes in Metro Vancouver.
A non-resident is defined as either a Canadian citizen born in the country, and whose principal residence is outside the Canada, or a non-Canadian, who was not born in Canada, but owns a property in the country.
Starting August 2, 2016, foreign nationals and corporations have to pay an additional 15 percent property transfer tax when they purchase residential property in Metro Vancouver.
According to the latest data released by the B.C. provincial government, 4.2 percent of home transactions in the region in December 2017 involved foreign buyers.
The December level was slightly lower than the 4.4 percent ratio in November last year. In October, that level was 3.1 percent, and in September, five percent.
The UBCM report suggested that foreign investments in Metro Vancouver real estate may be higher due to a number of reasons.
One is the lack of data on the pre-sales of condominiums, which are not covered by the foreign buyer tax.
Another is the use of “local proxies”, who include international students “as well as established friends, family and business associates”.
According to the UBCM, the argument for increased supply as a solution to the housing affordability crisis discounts a “substantial body of evidence built up over a decade highlighting the role of speculative demand – both foreign and domestic – in driving prices upwards”.
“This not only impacts home ownership, but by driving ownership out of the reach of many households, it creates additional pressure on already limited rental and affordable housing stocks, resulting in a ripple effect across the housing continuum,” the report stated.