B.C. counts on property tax to fund housing

Click to play video: 'B.C. real estate deals in jeopardy following foreign buyer tax announcement?' B.C. real estate deals in jeopardy following foreign buyer tax announcement?
WATCH: Growing worries tonight that the new foreign buyers tax brought in by the Liberal government will kill millions of dollars in real estate deals. John Hua talked to one couple today – Jul 28, 2016

VICTORIA – While buyers and sellers rush to avoid paying a new 15-per-cent property transfer tax in British Columbia, Premier Christy Clark’s Liberal government apparently can’t wait to start building its election platform on a housing foundation.

Hours before the government passed a law Thursday imposing the additional tax on homes bought in Metro Vancouver by foreign nationals, the government was already banking on the returns to fund housing initiatives in the months leading up to next May’s B.C. election.

“If foreign purchases continue at the pace they’ve been at, it’s a sizable amount of money,” said Finance Minister Mike de Jong.

The Liberals’ housing bill passed unanimously Thursday evening with support from the Opposition NDP.

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Housing Minister Rich Coleman and de Jong said the new tax is already being earmarked to fund government housing initiatives already in the works. The ministers said initiatives for renters, low-income earners and first-time buyers are set to roll out in the fall, months before the election that is expected to feature housing as a major battleground.

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But the tax, announced Monday, has lawyers and notaries who transfer real estate for a living working overtime to process property closings by the end of Friday, said Richard Bell of Bell Alliance.

“We have been scrambling to move as many deals as we possibly can to close this week,” he said. “What we’ve done is we’ve simply changed completion dates, but left the possession and the adjustment dates the same.”

He and others in the industry can’t understand why contracts that were already signed weren’t grandfathered by the provincial government, he said.

“It’s crazy,” he said. “It’s boggles the mind quite frankly.”

Bell said at least one of his clients will be paying $150,000 more because he’s buying from an estate and the probate isn’t complete.

He said the legislation may have unintended consequences for those companies who have hired people to work for them who aren’t Canadian.

“They’re young, highly skilled people here on working permits, they don’t have an extra $100,000 lying around,” Bell said.

Joannah Connolly, Editor of the Real Estate Weekly, said the industry is upset the government will not grandfather the tax and exempt people coming to Metro Vancouver from another country for employment.

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Clark said the government is introducing the tax to help British Columbians own homes. She rejected calls from homebuilders and the real estate industry to amend the tax.

De Jong cited Burnaby’s Metrotown area, where housing and commercial developments surround transit routes, as an example of what the province wants to achieve in other neighbourhoods and cities. He said the government’s legislation also includes a $75-million fund to support housing developments.

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B.C.’s Finance Ministry reports residential and commercial real estate sales neared $94 billion last year. During a five week period starting June 10, foreigners spent more than $1 billion on B.C. property, with more than 86 per cent of it in Metro Vancouver, it reported.

Coleman said he expects much of the housing plan to be made public in September.

He said he has had conversations with mayors, including Vancouver’s Gregor Robertson.

“The city’s got 20 sites that they have that they’d like to do some innovative stuff with. So, we’re looking at those sites and we’ll be looking at where we can do affordable rental or a mix of affordable home ownership and rental.”

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