The foreign buyer’s tax is a tax implemented on real estate purchases made by foreign investors. Christy Clark’s as a Premier cites the 15% tax on foreign buyers of real estate stands as evidence of her willingness to disrupt developers and fight for the middle class. The tax system received a lot of international reviews including duplication by Ontario’s government. Although the desired effect has not been achieved as various loopholes have been opened and foreign investors still pump money into B.C., rising the housing prices once again, we can all agree it’s a step in the right direction.
“It has done exactly what the citizens and we hoped it would do, and that decelerates the rapid growth in the housing cost of the Lower Mainland,”Christy Clark
On what the foreign buyer’s tax has achieved remains very clear to be the timing especially when other markets are considered. At the time of introducing the foreign buyer’s tax, housing cost in Toronto, Vancouver, and Victoria were all going through the roof. Victoria and Toronto continued to rise steadily while Vancouver stopped.
The foreign buyer tax was a factor at play here, and it felt like buying fell off a cliff. The introduction of the foreign buyer tax did work. After a while, the foreign buyer tax began to work less well for some reasons. The foreign buyer tax served as a targeted tax which was a bit like a game. The international buyers simply moved and popped up in new locations. They pop up included Toronto, which had experienced radical price growth at a time when Vancouver’s prices did change course pretty significantly.
Some argue that foreign buyers affected by the foreign buyer tax would target and find a way around them over time. Some of the proposed ideas include purchases through a corporation, setting up the partnership, delay buying until such period your immigration status permits avoidance of the foreign buyer tax. They are likely to find a way around it. Funded by real estate development, Christy Clark’s government chose to oppose developers by bringing in the foreign buyer tax. Even at that, the same policy was supported by 90% of the people and arguments favoured government involvement.
The foreign buyer tax provided the opportunity to fix the problem, and they were the genuine intention of seeing it work successfully to the next level. The further argument about whether or not citizens with work permits should be let off is a classic instance.
The introduction of these capital controls can lead to more dramatic effect, and foreign buyers are coming into the market would always have to relate to the foreign buyer tax. It may not be tough to tell if these capital controls are working at least in terms of the Vancouver market. We can also paint a bigger picture of how net capital outflows, but in terms of money arriving the Vancouver real estate market.
A significant part of the Vancouver market has always been a foreign influence. But the bulk of such foreign investment in Vancouver comes through immigration or wealthy immigrants. They tend to earn and bring in their money from overseas. The amount of capital coming in yearly is astonishing and small portion landing in Vancouver have had dramatic effects over time.
Nevertheless, Vancouver still plays a significant role amongst these vast global forces, so something like Christy Clark’s foreign buyer tax is definitely amongst the positives in controlling these forces during hard times.