VANCOUVER, British Columbia (AP) — Foreign nationals buying Vancouver real estate will pay an additional property transfer tax of 15 percent under legislation proposed by the British Columbia government.
Finance Minister Mike de Jong said Monday the tax is aimed at addressing high real estate prices and low vacancy rates.
Premier Christy Clark said the change would make regional home ownership more accessible to British Columbians.
The Vancouver region is bounded on one side by mountains, the Pacific Ocean on the other. That leaves little room for real estate to grow – except in price.
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The government said the additional tax would apply to foreign buyers registering the purchase of residential homes in Metro Vancouver.
De Jong said the additional tax on a $2-million home (US$1.5 million) would amount to $300,000 Canadian (US $227,000).
Vancouver Mayor Gregor Robertson said he’s been calling on the province for over a year to take bold action.
“People who use housing solely as a means to make money – rather than living and working in Vancouver – should be taxed as such,” Robertson said in a statement.
Housing data indicates foreign nationals spent more than $1 billion on British Columbia property between June 10 and July 14.
De Jong previously said a tax would send the wrong message to Asia-Pacific investors.
But Vancouver’s housing market has been the hottest in the country for the past few years.
Asian investment in the market picked up prior to the UK handover of Hong Kong to China but has heated up again recently.
The debate over who has been driving housing prices has been rife with accusations of racism against Chinese buyers.
University of British Columbia real estate economist Tom Davidoff said the change will make it harder to buy homes for U.S. citizens going to Canada on work permits.
He said people would have to wait to be permanent residents to avoid the tax.
“That’s a major problem,” he said.
Davidoff said the change was “meaningful” in tackling Asian money flooding Vancouver real estate, but Vancouver investments may still remain attractive.