Foreign Ownership...Is It an issue or not ?
2015-05-14 | 16:38:08
There has been a great deal of scrutiny as of late on whether or not foreign buyers are having an effect on the rising price of real estate in Vancouver. Some of that attention was a result of a recent online petition which has seen in excess of 20,000 signatures gathered. The real problem is that no one knows how many properties are actually owned by foreign residents because no one keeps those figures. Foreign residents are required to disclose at the time of sale if they are a non-resident and the purchaser's Lawyer or Notary must withold 25% of the sale price as required by CRA (Canada Revenue Agency). In August of last year CMHC (Canada Mortgage and Housing Corporation) indicated that they had no idea how many foreign buyers there are of Canadian real estate (click here for article). Four months later CMHC announces that the number of foreign condominium owners in downtown Vancouver is 5.8% and only 2.3% in Metro Vancouver (Source: The Vancouver Sun).
Now this is interesting given that at the beginning of this month (May 2015) Westbank Corporation, the company developing a 59 story tower at the north end of the Granville Street Bridge announced that it had virtually sold out its units with 35% of the sales going to foreign residents (full story here). So who is right ? Or does no one really know. I suspect that the latter is the case and I would even go further to suggest that the powers to be don't really want to know.
When Premier Clark addressed a recent online survey (which had been signed by in excess of 20,000 people) asking for the Premier and civic leaders to take steps to control foreign ownership of housing (find the petition here), the response from the Premier was that the province is not going to put a tax on foreign residents buying property in BC as it would have a negative effect on existing property owners (source: Huffpost British Columbia). The petition did not ask for a tax, simply that the Government do something as has been done in other jurisdiction such as Australia. I would suggest, as this item does from CBC News, that the real answer that the Premier should be giving is that we don't really know if this is a problem or not with the number of foreign buyers in the marketplace, but we will find out.
Would this be a difficult thing to do? Not at all. Each time a property changes hands in BC the transfer of the property must be recorded with the Land Title Office and most of those transfer registrations today happen online. When a property is sold by a non-resident the seller's lawyer or notary must withhold 25% of the sales proceeds to satisfy a requirement of CRA in regards to foreign owners. The owner is required to state whether they are residents of Canada or not. Then ,I ask, how difficult would it be to make the same requirement necessary when purchasing a property, ie " Are you a Canadian resident ?". A simple question on the Title registration document. This would allow the Province to have an accurate data base of the number of foreign buyers and would cost little if nothing to assemble the information. So why are they not doing it? Could it be that they want the foreign investment so the last thing they want is the information that might require them to take a serious look at this problem? England, Hong Kong, China, Australia and Singapore are just a few of the countries who have moved to protect their real estate from foreign absentee ownership. Do they know something we don't?