Memo to NDP leader John Horgan: hate to say I told you so, but once again Premier Christy Clark has given you a textbook lesson on the “power of the pivot,” which I talked about in my last article in the Straight.
As I said then, “I would not be at all surprised if this latest move by Clark on the consumer protection issue is only the first pivot of many on the housing file. Watch for her to go much further than most of her critics are expecting in advancing each of the 'six principles for affordable housing' that she highlighted for action in her recent You Tube video.”
Indeed, that is just what her government has done today through its masterful 180-degree pivot on the issue of taxing foreign buyers.
A 15 percent additional property transfer tax on residential property transfers to foreign entities in Greater Vancouver? Who would have thunk it?
Bravo, I say, as I suspect many others will as well.
We have not been persuaded by the apologists for the foreign buyers and absentee owners who have compounded B.C.’s housing crisis by further reducing limited housing supplies with their unwanted, incremental demand.
Count me among the countless other British Columbians who deeply believe we have been taken for a ride at our residents’ expense by those who have bought up so many of our prime properties and so much of our precious housing stocks, to own them from abroad.
Whatever proportion of today’s affordable housing problems are attributable to that extraneous foreign demand, it is too much for my liking.
Short of placing legislative restrictions on foreign ownership, as I have also advocated, Finance Minister Mike de Jong’s new tax on foreign property purchases is arguably the toughest step that the government could have taken to achieve the same thing.
It places a serious financial impediment on foreign buyers in the region that has been hardest hit by their speculative investment.
Tax could depress unwanted incremental demand
It is a politically risky move, insofar as I dare say it will work pretty much as intended to depress foreign interest in buying up ever more of Metro Vancouver’s increasingly pricey properties.
If it results in a price depression, the government will wear it. But if the problem of foreign ownership is as minor as most of the development community and the real estate industry suggest in putting undo pressure on housing prices, it should not pose too much of a problem in respect of depressing homeowners’ windfall equities.
Nevertheless, adding a 15 percent price premium of potentially hundreds of thousands of dollars to the types of properties that have been most targeted by foreign buyers, especially those from China, should have its intended effect on depressing that incremental demand.
Once again, the B.C. Liberals have outflanked the New Democrats and are actually doing something bold and emphatic on the perceived problem of foreign ownership that NDP housing critic
It is a move that is all the more remarkable in contrast to the comparatively tepid and confusing tax on vacant properties that Mayor Robertson is still struggling to figure out. It is much more significant than even the two percent property tax premium the NDP has suggested imposing on absentee owners who don’t pay income tax in British Columbia.
Moreover, the Clark government has also served notice that its new tax on foreign property purchases, together with its reregulation of the real industry and its move to assist Vancouver’s vacancy tax, are only the opening salvos in its belated assault on the housing crisis it largely created.
Of course, there are problems with the new tax.
In the short run, it will probably serve to push Metro Vancouver’s housing affordability problems farther afield, to the Fraser Valley, Greater Victoria and the Okanagan.
It doesn’t apply to commercial properties, so it will likely also succeed in expediting the shift that is already taking place in which foreign investors are rapidly diversifying the nature of their real-estate portfolios.
More foreign money will flow even faster into other speculative ventures—in hotels, golf courses, water rights, wineries and other agricultural properties.
I can’t wait to see what the next elements of the government’s housing strategy might be, as it looks to outflank the opposition and local governments as well on the need for more affordable housing supply, particularly in regard to rental housing.
Marketing legislation should be amended
Here is one more suggestion, in addition to the many other measures I previously advanced in respect of helping affordable home ownership.
While the House is sitting to repeal the self-regulatory powers granted under the Real Estate Services Act in 2004, it should also amend the Real Estate Development Marketing Act that it introduced that same year.
That act mostly afforded more consumer protection in respect of condo and strata property presales.
Why not amend that act to give British Columbians a first crack at buying and renting the condos that are supposedly being built to increase B.C.’s housing supply for B.C. residents?
The government could specify that all new multi-unit housing projects in price-pressured areas must first be marketed domestically for a prescribed period of time before being marketed abroad, or sold to foreign buyers.
That would eliminate the type of problem we have seen, whereby entire condo projects have been premarketed in China or in other countries, before they are even made available to British Columbians.
It would be similar to the “first dibs to Londoners” initiative that London England’s new mayor Sadiq Khan has proposed, which would oblige developers to market new units for the first six months exclusively to city residents.
Personally, I would go even further than that.
I would amend the law to preclude any foreign marketing of fee-simple B.C. housing projects in any countries that do not allow British Columbians to purchase fee simple properties at all in their nations.
If the government is not willing to restrict foreign buyers of designated properties, as so many other countries have done, perhaps it might be willing to at least restrict marketing of B.C. properties to within Canada and to within other countries that enjoy a reciprocal property buying relationship.
Here’s the thing.
Now that the government will be once again in charge of regulating the real estate industry, including its marketing practices, it will be in a much better position to insist on those changes and to enforce compliance.
Transparency could be improved
Finally, if the government really wanted to do something helpful it could amend section 49 of the Business Corporations Act.
To reverse the changed made by the Campbell government in 2002.
That change made it impossible for journalists or others to investigate shareholders' lists of companies, thereby also making it impossible to ascertain who owns the shares of companies that are buying up B.C. real estate.
It was an unconscionable change that in retrospect never got the scrutiny that it deserved, although many journalists have since extensively commented on the subject.
To tell you the truth, as someone who participated in the cabinet legislative review committee at the time that change was made, it was not one that I certainly understood or that was questioned to the extent that it should have been.
We need to fix that law, which might even conceivably violate the Charter of Rights and Freedoms' “freedom of the media” provision, if ever put to the test.
Transparency is key to rebuilding public confidence in respect of foreign property purchases, as the government itself has belatedly acknowledged with its recent move to once again collect citizenship and residency data on property transfer tax forms.
In the meantime, the Clark government deserves credit for its bold move today.
John Horgan and the NDP would do well to embrace its changes and to look for new ways to recapture the lead they have just lost in owning housing as their best wedge issue in the next provincial election.