Canada: A new tax to "cool down" the heated housing market in British Columbia
The government of British Columbia has resolved to take action on the rising housing market by dampening the demand from foreign real estate buyers with the introduction of an additional 15-per-cent-tax on properties bought by foreigners. The new tax is added to the "property transfer tax", which Canadian citizens and permanent residents are exempt from when purchasing a home.
The provision was adopted to slow down the sky-rocketing increase in the housing sector, which in Vancouver and other nearby cities has risen at an average of 10 percent per year, all the way to a record-values of 30 percent. As a result, Vancouver is one of the most expensive cities in the world as far as its real estate market is concerned. Foreign ownership, especially by Chinese and other Asian nationals with favourable exchange rates, is considered to be among the factors contributing the most to a rise in housing prices. The additional tax is not the only measure the government has taken to heighten the control over the housing market. The “Real Estate Council”, which is the body that regulates the real estate sector, will have a majority of members from the public sector. Most of them will be representatives of the provincial government, unlike past compositions. The government also announced another measure to balance out supply and demand in the real estate sector - the “vacant homes tax”, a levy on the many properties that in Vancouver are neither lived in nor rented out, and often are a result of foreign investments.