Legislation introduced today creates new measures to help make home ownership more affordable, establishes a fund for market housing and rental initiatives, strengthens consumer protection, and gives the City of Vancouver the tools it requested to increase rental property supply.
Bill 28, Miscellaneous Statutes (Housing Priority Initiatives) Amendment Act, 2016, was introduced in the legislature today.
“Owning a home should be accessible to middle-class families, and those who are in a position to rent should be able to find a suitable home,”Premier Christy Clark said. “These changes are about helping to make sure that British Columbians can continue to live, work and raise their families in our vibrant communities.”
An additional property transfer tax rate of 15% will apply to purchasers of residential real estate who are foreign nationals or foreign-controlled corporations. The additional tax will take effect Aug. 2, 2016, and will apply to foreign entities registering their purchase of residential property in Metro Vancouver, excluding the treaty lands of the Tsawwassen First Nation.
For mixed-use property, the additional tax would apply on the residential component of the foreign interest in a property. For example, the additional tax on the purchase of a home valued at $2 million will amount to $300,000.
“The data we started collecting earlier this summer is showing that foreign nationals invested more than $1 billion into B.C. property between June 10 and July 14, more than 86% of it in the Lower Mainland,” said Finance Minister Michael de Jong. “While investment from outside Canada is only one factor driving price increases, it represents an additional source of pressure on a market struggling to build enough new homes to keep up. This additional tax on foreign purchases will help manage foreign demand while new homes are built to meet local needs.”
Second, the government is creating a new Housing Priority Initiatives Fund for provincial housing and rental programs, which will be announced in the near future. The fund will receive an initial investment of $75 million. It will receive a portion of revenues from the property transfer tax, including revenues from the new additional tax on foreign buyers.
Third, the Province is amending the Real Estate Services Act to substantially implement the key recommendations of the independent advisory group report, and to end self-regulation of the real estate industry. Government has accepted all the recommendations in the report. These changes will increase significantly the superintendent of real estate’s authority and oversight.
The power to make the rules that apply to the conduct of licensees will rest with the new superintendent of real estate instead of with council. The new superintendent will also have the authority to direct and oversee council operations, including requiring council to investigate a particular matter, issue a notice of a disciplinary hearing, and provide reports on the operations and activities of council to the superintendent. As well, the chair, vice-chair and all other members of the council will be appointed by government.
“We need to ensure that when people are ready to make such an important investment, the proper protections and oversight are in place,” said de Jong. “Consumers must be confident their interests are held above all else.”
Fourth, amendments to the Vancouver Charter provide the legislative authority for the city to implement and administer a tax on vacant homes. The City of Vancouver will design the framework of the vacancy tax, including details like the tax rate, when it will apply and any necessary exemptions.
“The issue of housing supply and affordability is impacting British Columbians and the livability of our Province, especially the Metro Vancouver region,” said Minister Peter Fassbender. “The City of Vancouver has identified the need for a vacancy tax in order to meet rental supply issues. We are taking action by introducing legislation today that enables them to do this work.”
The Province is working on additional measures to address the complex causes of rising housing prices in Metro Vancouver, as well as other regions of the province. This work focuses on ensuring the dream of home ownership remains within the reach of the middle class, increasing housing supply, smart transit expansion, supporting first-time home buyers, strengthening consumer protection and increasing rental supply.
End of news release
REBGV statement on the announcement of 15 per cent foreign buyer tax
Today, the provincial government announced it will implement a 15 per cent foreign buyer tax on all residential transactions effective August 2, 2016. The tax will be added to the Property Transfer Tax and will apply to all residential properties purchased by foreign nationals or foreign-controlled corporations.
Housing affordability concerns all of us who live in the region. Implementing a new real estate tax, however, with just eight days’ notice and no consultation with the professionals who serve home buyers and sellers every day needlessly injects uncertainty into the market
Government has had a long time to take action on the affordability issue, yet they decide to bring this new tax in over a long weekend, with no notice, and no time to prepare. It would have been prudent to seek consultation from the people most knowledgeable about the impact.
To minimize short-term volatility in the market, we’re calling on government to exempt real estate transactions that are in the process of closing from this new tax.
End of statement
Read more on this topic in the links below:
From Business in Vancouver:
Industry critical of new B.C. tax on foreigners buying homes, Glen Korstrom, published July 25, 2016
From The Vancouver Sun:
Condo ‘presales’ could be left in chaos by new B.C. tax, industry warns, Rob Shaw, Susan Lazaruk, published July 26, 2016
B.C. premier rules out changes or presale exemptions to foreign buyer tax, Rob Shaw, published July 28, 2016