Bill 28, the Miscellaneous Statutes (Housing Priority Initiatives) Amendment Act, 2016, came into force on August 2, 2016. The law was introduced after calls urging the British Columbia provincial government to intervene in the housing market and curb foreign investment that was seen as a major contributor to the rapid rise in home prices.
Contents
- History
- Aftermath
- Vacancy tax
- Foreign buyers tax
- Real Estate Services Act
- Housing Priority Initiatives special account
- References
The Act has four parts:
History
Vancouver's housing crisis goes back decades. In the late 1970s a book was written by economist Gordon Soules on the subject. At the time Vancouver's ratio of real-estate prices to local earnings was about 3 to 1. Soules interviewed Art Phillips, Bill Vander Zalm and Mike Harcourt for the book and all agreed that immigrants were driving up home prices and that the lax immigration to Canada rules should be tightened. Mike Harcourt also blamed Canadians from other provinces for the problem. Bill Vander Zalm blamed speculators.
In 2016 Vancouver's housing was the third most unafforadable in the English-speaking world, with a ratio of real-estate prices to local earnings of 13 to one.
Vancouver locals have been complaining for a long time about foreigners purchasing homes and displacing residents who find housing has become unaffordable, and may end up being homeless. There was also a concern expressed that housing purchased by foreigners stays vacant. So, on Aug 2, 2016, the British Columbia government introduced Bill 28.
The Act was introduced as a surprise move by the Liberal provincial government. It was announced and went through a first reading on July 25, 2016 without advance notice. It went through second reading a day later, and a final reading by July 29, 2016. It became law on August 2, 2016. The amendments relating to the Property Transfer Tax Act became effective August 2, 2016, while the other legislative amendments have come into effect on the date of royal assent or by regulation of the Lieutenant Governor in Council.
Aftermath
According to Business News Network, Vancouver area sales dropped nearly 40 percent in October 2016 after the foreign buyers tax was introduced. Questions of whether the BC government was taking sides against the older homeowners in favour of younger buyers were raised According to the G&M, a recent poll determined that a third of boomer homeowner are planning to sell their homes and move to other parts of British Columbia in the next 5 years.
According to The Province, In 2016 Vancouver residential prices moved up 18 per cent overall, according to the Real Estate Board of Greater Vancouver, but cooled off just before the province imposed a 15 per cent foreign buyers tax in August. Towards the end of the year falling sales, and in some cases prices, dominated the housing market.
According to The Province, two Victoria, British Columbia city councillors, Ben Isitt and Jeremy Loveday, want the foreign buyers tax also applied in the capital region. In addition, they want local municipalities to be be given the authority to impose a tax on vacant properties.
Vacancy tax
The charter was amended to enable the City of Vancouver to impose a municipal vacancy tax on vacant residential property.
The number of homes sitting vacant in Vancouver is perceived as a problem. A city report pegged the number at 10,800 vacant homes and condos in Vancouver. The thought is that if properties are rented instead of sitting vacant, housing affordability would improve. A proposal by Vancouver's mayor, Gregor Robertson , to tax vacant homes required a change to Vancouver's charter.Robertson is hoping to increase the number of available rental units by encouraging homeowners to put vacant homes up for rent.
Foreign-buyers tax
A new 15% tax is added to the Property Transfer Tax when a purchaser, who is not a Canadian citizen or permanent resident, purchases residential real estate property in Metro Vancouver. The tax is expected to add a large cost to foreign buyers of homes in Vancouver and increase tax revenue for the provincial government.
Government figures showed that foreigners, mainly Chinese, have purchased $1 billion worth of real estate in British Columbia during a five-week period in 2016. When the tax was introduced, Christy Clark the Premier of British Columbia said: "There is evidence now that suggests that very wealthy foreign buyers have raised the price, the overall price of housing for people in British Columbia". Foreign buyers were blamed by Tom Davidoff of the University of British Columbia (UBC) for large increases in real estate prices experienced in Vanvouver. According to David Ley, also of UBC, taxing foreigners has slowed down rapid real estate appreciation in other countries.
Real Estate Services Act
The Real Estate Services Act was amended to end self-regulation of the real estate industry in British Columbia.
Housing Priority Initiatives special account
The Housing Priority Initiatives special account was created to hold the new tax revenues created by this law to fund initiatives in respect of homes rentals, access, and support programs. On September 14, 2016 The Province reported that the housing affordability plan will launch with almost half a billion dollars from windfall real estate taxes. The fund will be used to increase housing supply in the Lower Mainland
On 16 September 2016, Michael de Jong, Minister of Finance for British Columbia announced that the government will spend $500 million on housing affordability, while also canceling the planned increase in MSP premiums and possibly increase Welfare rates.