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Vancouver implements 15% tax on price of homes for foreign buyers.
- Thread starter freeofgreed
- Start date
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Trojita
Rapid Response Threadmaker
The 15% figure still will cut into profits long term. It will also be money going to the government that wasn't before. They really need to add something on top of this to prevent money laundering while allowing property to be bought without the tax if you are going to live there.
Earthstrike
Member
Doesn't the market data disagree with you?
AlphaTwo00
Member
That was stupid. Chinese Canadians like myself don't see it as racist, as frankly most of us who live here and make our living here are just a horrified by the influx of outrageous buying power clearly coming from overseas.
Most of use can't be dropping a million all cash to a bidding war.
Most of use can't be dropping a million all cash to a bidding war.
the tax was primary as a data collection point. Up till now there was no real metric on who is local or foreign. The stories of students buying large mansions with all cash was what started really raising eyebrows.
freeofgreed
Member
People immigrating to Canada would already be citizens???
freeofgreed
Member
The article does talk about Sydney quite a bit.
Didn't know that Australia just straight bans foreigners from buying already built homes.
TemplaerDude
Member
For now, yes. I'm willing to bet once the initial shock wears off it will go back to a money hole, unless more steps are taken.
Killer Queen
Banned
Ontario next please
That boat sailed a decade ago.
jellies_two
Member
They do but it's toothless
No investigation department no prosecutions.
You know Chinese and their blood is thicker than water thing even if they do get caught Aunty someone buys the place in an off market transaction.
The money to buy these places already sneaks out of China (they have strict capital controls) it is already dirty money so passing the last barrier, that isn't even enforced, is trivial. Every weekend there is a story about some happy 24 year old.student winning a 5m dollar bidding war for an existing trophy house with vague statements about being "supported by his family".
And just to be clear Sydney homes are not 15x income due to the economic boom. The boom is a bit like an American one: selective as to who it blessed. Most working people on salaries get little more than they did years ago but prices for.education etc have shot up but houses and land have gone up the most and The rise has been immune to the gfc immune to.the end of the mining boom and immune to every shock that would normally correct things. Because of a steady stream of people who find everything cheap vs the prices in Hong Kong or shanghai.
bonesmccoy
Banned
The feds just announced a bunch of stuff this week.
I am curious to see what else the Liberals do - this seems like such an easy weakness for the NDP to exploit.
AliasGreed
Member
I wish they did this on all US major cities. New York, Los Angeles, Miami. Rich foreigners come in buy property and destroy the market for locals.
There is no hypocrisy unless the person represents their foreign government. That's like saying it is okay to deny rights to foreign migrants from X country because of policies in X country.
Hong Kong's policy is also targeted at Mainland Chinese citizens. It has extremely favorable immigration policies for non-Chinese, which are not available for Chinese citizens. Trying to use Hong Kong as a comparison is not really helpful.
There can be no such tax on foreigners under the US Constitution, due to the 14th Amendment and various civil rights acts which prohibits discrimination on the basis of foreign origin and requires all persons, citizens or not, to have equal protection of the laws.
Maximus.
Member
"Racist tax" lol please. The market in Vancouver has got out of hand where locals are unable to afford homes and are pushed further away from their work or out of the city. Foreign investors are just laundering their money or driving prices up to make money. I know there are still a decent amount of people who are negatively affected by this, but that is the fault of everyone profiting and abusing the system. It's amazing someone who isn't a resident in a country can even buy land in my opinion. I'm glad detached homes are at least going down in cost but I don't think condos and townhouses have seen a decrease in price yet. There is still more to be done.
Ether_Snake
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My guess is this tax just gets passed over to the next buyer. If it's another Chinese from China, it won't do anything, and if it's a local it will just give him a bigger debt load or price him out.
KyanMehwulfe
Member
They're starting to... not nearly enough and it's politically timed... but there is a start at least. And relatively speaking, BC is the only 'rich' (at least in terms of cash flow) province in the country. BC posts ~$1m surplus regularly while most of the other big provinces now post deficits, ON anywhere between $6-12 billion deficits (per capita it's almost comparable to Greece).
Now it's now clear cut and dry cuz some of those surpluses by BC also raid funds from other places like BC hydro or whatever. But other provinces do that too (e.g. QC) so relatively speaking BC still has rather strong budgets. I went through the accounting a while back and it had pretty solid 5-10% YOY growth in income tax, transfer tax, and property tax -- and if you add up just the growth amount of all 3 (or just the tax revenue from real estate) it usually is pretty close to the size of the surplus. So it definitely does line the tax revenue coffers and BC gov't spending would be a lot worse had real estate been flat (or at the rural Canadian average, for example) for the last few years.
They're starting to do some subsidization.. big new place over by False Creek that's subsidized and only for Van residents (5+ years) but it's not close to enough.
Which is why I mostly think marginal taxes are the best solution if they also want to avoid crashing the home values of over-leveraged Canadians with mortgages ... smart and targeted taxes that fully go toward either subsidizing more properties, reducing vacancy, and also attract more tech companies to VAN
that last part is really the only long term solution cuz relatively speaking, the problem in VAN is not that prices are simply too high (cheaper than a lot of other alternative cities) but that median wages are shit... so only way to not crash housing prices (of overleveraged Canadians) AND fix affordability in the long run is just getting more industry to VAN -- things like using real estate taxes to fund more 'tax credits' for tech, film, etc companies.
TemplaerDude
Member
There is definitely a lot of development going on in Vancouver, if you take a drive down Cambie street you will see entire blocks have been sold off and are being built up. Considering the vacancy rate is below 1% right now it's certainly nice to see but it means absolutely nothing if most of those units end up on a luxury market.
I've accepted that I'm never going to own property in this city and that's fine, it doesn't owe me a house or condo. The problem is I don't even know if I'll be able to find a place a rent, single bedroom basements are starting to climb towards $1200 a month, a decade ago I had a decent single bedroom apartment downtown for that price. There are also almost no protections for tenants, landlords can "renovict" you out of nowhere and my landlord has been threatening us for a few months now. The amount of people taking advantage of this crisis (which is what it is, anyone who says otherwise is bullshitting) is saddening, but not surprising.
Every major City needs to do this, tax them to hell. Buy Apartment and never even live in nor even know where it's located. All some of these buyers know is they have an apartment somewhere in a major city.
Isn't the irony here that the people who own without living there is destroying the local economy because they don't buy any goods locally because they don't live there. They are only taking from the local economy. I guess they do inject into the construction market, but if these are investment properties, isn't mostly inherent that the investors are taking more money than the construction costs? In the end the net is only a raising in housing prices with no benefits to locals unless they own housing as well, and slowing of monetary velocity because of raised rents/leases and goods.
Though I honestly have no idea what I'm talking about.
KyanMehwulfe
Member
Airbnb from locals really hurts this as much or more than foreign owners/investors... I know folks that basically just rent Airbnb full time, lots of properties. I've heard (and believe based on the source) of ppl with over 50+ full time Airbnbs, they're basically like hotel operators lol. And so many people I know, more who are actually Canadian, don't want to rent their condos or house basements to long-term rentals because they can make much more money doing daily-rent even just half the month on Airbnb.They make so much Airbnb that they won't even consider anything below $1200 anymore (and if they do it's at a loss just for the peace of mind and better legal contract).
You can find 'em around $1100-1200 in Van proper, but they'll have 3-5 applicants within 6 hours of going on Craiglists/Kijiji lol and then they just go based on credit/maybe previous landlord recommendation. Still some basement suits around $1000 but again it seems like less and less as people consider Airbnb if they have any decent location new the Skytrain
PeakPointMatrix
Member
Fucking add a 30% tax for the US please. China is making it impossible to make a life here in big cities.
The idea with luxury housing is that old luxury stock is then sold at a lower price.
The political problem with that concept is the portion of the population that OWNS their residence do not want their property to devalue, as it should, and instead vote for and utilize established systems to keep the cost of housing rising.
freeofgreed
Member
Nothing is 'going down'. If anything, it'll hover around where it is now for a little while until it starts climbing again.
TarpitCarnivore
Member
They have a very specific problem with Chinese citizens using Candian homes to funnel funds out of the country. A nasty side effect of this is that it's driving up housing prices like mad because the people aren't really interested in the homes, they're interested in using them as a form of currency exchange. A tax on foreigners raises the exchange rate, hopefully to a point where it dissuades people from buying homes for this reason.
If you are comparing this to Brexit or Trump, you are wildly ignorant on the situation. Vancouver housing is so outrageously expensive due primarily to foreign buyers who are not moving to the city. They aren't contributing to the economy, some aren't even renting out the property. It is literally an empty home for no other purpose than for the owner to flip it afew years later. I swear there are apartments across from me that have never had their lights on for the 4+ years I've lived here.
Local buyers are being priced out of their own fucking city. There are bidding wars for even the low-quality rentals now.
This has gone wildly out of hand, and this is a fucking lowball for what needs to be done.
fluffydelusions
Member
They aren't being used to funnel funds out, they are used to invest the money after the money has already been funneled out. There isn't a specific Canada problem because the money can be invested elsewhere. The issue is that Vancouver is especially attractive to Chinese due to its high Chinese population and the fact that you can secure permanent residency relatively easily through the Quebec investor visa program.
It is false that they are using homes as currency exchange. Their Chinese currency has already been converted at least once before they buy the home. Otherwise they would just be flipping homes immediately upon purchase to convert the currency, instead of driving housing prices up by keeping the property.
Granting everyone the free ability to purchase property anywhere can be highly detrimental to locals.
That is why many countries have everything from restrictions to outright bans on foreign ownership of land.
For a thought exercise, imagine if trade were normalized with Cuba and Americans could freely buy land there. You would see an influx of wealthy Americas quickly buying up all the prime beach property as well as prime locations in cities like Havana. Meanwhile, the locals would have -zero- ability to match the purchasing power and would essentially be pushed out.
That is why you can find support for protectionist housing policies pretty much across the political spectrum. No one wants to be screwed out of their city/state/region because rich folks from elsewhere in the world suddenly descended with bags of cash.
After the Civil War, the US even had a name for such folks: carpetbaggers.
I think in the US there's more to it than that. But I could be wrong since it's not one of the things I follow closely.
Enter the Dragon Punch
Banned
they should raise property taxes for properties where nobody is living in... so force them to pay higher taxes or rent their properties.
This would actually increase availability of lower rent apartments for most vulnerable part of community - renters. Lowering average price of property to 500k wont help people who cant buy apartment for 500k.
And then use tax money to widen availability of new building permits and new community developments.
This would actually increase availability of lower rent apartments for most vulnerable part of community - renters. Lowering average price of property to 500k wont help people who cant buy apartment for 500k.
And then use tax money to widen availability of new building permits and new community developments.
quackamole
Member
That would make me so damn happym can't beat people paying above market price and cash to boot.
it is only bad for the "locals" since other rich "locals" are stopping new property development to increase their existing property prices.
That is the real problem and not someone from outside investing their money into local economy.
Are PR holders included in the foreign tax? Because if not, I doubt this will do much to deter them. Most immigrants moving into Canada with a plan to settle down arrive with permanent residence many of those who don't have a PR are instead arriving with a work visa and the backing of a corporation that moved them overseas.
Enter the Dragon Punch
Banned
Anything to stop piece of shit houses and condos from hitting 1m+ simply for being in the area would help.
jellies_two
Member
It is being used to funnel funds out but it's a temporary end-pont. If you are a Chinese rich family then the way to protect your wealth from a change in political climate is to hide it in bricks and mortar in a country with a rule of law and a Chinese community to help you. The list of those cities is small but growing. This cash is tainted by association with its origin (perhaps a business associated with bribes and connections or otherwise vulnerable back in the mainland) and Chinese don't trust financial instruments real estate is king. Anything else can be potentially taken or devalued.
All this means normal market rules like ROI etc are meaningless. How can anyone compete against someone bidding who doesn't care about rental return or even capital appreciation?
I think cities should have the right to protect themselves against this kind of influence as it is destructive. And of course not reciprocated. Foreigners absolutely can't rock up and buy chunks of land in Shanghai. They can't buy industry either. The door is one way.
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