In a surprise move, the BC Liberal Government has introduced a new 15% foreign homeowners tax that will apply to residential real estate deals in Metro Vancouver—as well as from Bowen Island to the Maple Ridge/Langley Township. According to the legislation, the new levy will be introduced Aug 2, and predictably response so far has been varied.
Premier Christy Clark’s announcement set off shockwaves in the real estate and construction sectors. Some real estate agents and developers have cried foul, warning that the new tax could dampen real estate and construction sales, potentially costing the province millions of dollars.
In a letter to Premier Christie Clark, President Scott Cressey of the Cressey Development Group warned that it expects to see buyers—half local, half foreign—rescind on $20-million worth of sales contracts by Friday. However, condo marketer Bob Rennie predicted that foreign buyers with the assets to move from one country to another were unlikely to be swayed by a 15% tax and would absorb it after a period of adjustment.
Perceived as a response to those decrying that foreign investment has made the Vancouver housing market unaffordable, the new tax has the potential to generate hundreds of millions in revenue that could be reinvested into affordable housing and other projects, and public response to that has generally been favorable.
A poll conducted by Angus Reid found that 92% of Greater Vancouver residents—nearly nine out of ten—support the new tax, although about 42% believe that the tax will not be very effective in cooling the market.
On Monday, the premier said that the move is about ensuring that British Columbians get first crack and best crack at buying new homes and existing homes on the market.
“Whether or not it accomplishes that is something British Columbians will have to wait and see,” says Vancouver Townhouse Realtor, Ariane Benjamin.