B.C. government, with accounts flush from property tax earnings, cool on petition calling for real estate market intervention

Spokesman for B.C. finance minister downplays tax loophole issue

A new petition urging B.C. politicians to limit offshore investment and exploitation of tax loopholes in Vancouver real estate is getting a cool reception from Victoria as provincial coffers overflow with property transfer tax revenues in a red-hot housing market.

The new petition urges politicians to intervene to make housing affordable for “the next generation” and claims “foreign ownership” in Lower Mainland real estate “is destroying our cities” and “the hopes and dreams of countless families.”

It is the latest of several online petitions circulated in B.C. as home prices continue to skyrocket in the Vancouver area. Metro Vancouver home sales set an all-time record in 2015, the region’s real estate board said Tuesday, with the benchmark price for detached properties surging 24.3 per cent year-over-year in December to $1.248 million.

While the real estate industry and B.C. government have claimed the impact of offshore investment on B.C. home prices is minimal, many residents and analysts believe the driving force in price gains has been a flood of money connected to Mainland China.

Jurisdictions with real estate investment markets similar to Vancouver’s, such as some Australia cities and Hong Kong, track and attempt to limit foreign ownership of homes. But Canada does not even collect data on offshore buying.

Vancouver Mayor Gregor Robertson on Tuesday acknowledged — apparently for the first time — concerns about foreign investment, citing “stark and alarming” proof that Lower Mainland housing is “divorced from local incomes.”

Reacting to stunning rises in B.C. Assessment figures this week, Robertson issued a statement reiterating his government’s call for a speculation and luxury home tax to cool Vancouver’s market.

He cited “runaway price growth” across Metro Vancouver and a $2.5-million average price for detached homes in Vancouver.

While Robertson had previously slammed a recent study showing the increasing dominance of Mainland China-linked buyers in Vancouver, on Tuesday he stated: “We also need far better tracking of data on international investment and absentee ownership from both the federal and provincial governments.”

The new B.C. petition says foreign investors are increasingly using Vancouver homes to store wealth “in lieu of banks,” and “many of these offshore investors are taking advantage of loopholes to reduce or eliminate taxes paid on the sale of these houses, thereby denying the Canadian taxpayers any benefit from their purchase.”

The petition asks for legislators to immediately collect data on foreign ownership of homes and catalogue how many of these homes are vacant, and to “limit purchases of homes by non-Canadian residents for income tax purposes.”

B.C.’s government has generally voiced disapproval of action to limit foreign ownership, but as public pressure increased last year B.C. Finance Minister Mike de Jong said Victoria is considering tweaking the property tax code to help new home buyers get into the market.

Spokesman Jamie Edwardson said de Jong was not available for an interview Tuesday. Speaking to petitioner demands, Edwardson said the province is still looking at ways to help first-time home buyers, but “any measure considered would need to have the desired effect without undermining the equity that British Columbians have built up in their homes, and without discouraging foreign investment in B.C.’s economy.”

Several months ago, de Jong had seemed to acknowledge an unfair playing field in B.C.’s housing market, reportedly telling the Globe and Mail that he planned to close a property transfer tax loophole that allows some wealthy foreign investors to dodge taxes.

Studies at that time had suggested that buyers believed to be transferring or borrowing against funds from Mainland China increasingly dominate Vancouver’s single-family home market and that significant portions of these buyers could be avoiding provincial and federal taxes by the ways that they represent their occupations and ownership.

“Canadians, the vast majority of whom pay the taxes they owe, want to know that everyone is doing the same,” de Jong was quoted telling reporters in Victoria at the time.

On Tuesday, however, Edwardson distanced de Jong from those comments and suggested the minister had not promised specifically to act on the property transfer tax “loophole” issue.

Pundits have noted that B.C.’s budget surplus this year was largely supported by a massive increase in Victoria’s property transfer tax take, which is projected to be $1.1 billion for the fiscal year — an amount fuelled by Metro Vancouver’s housing market.

That could explain Victoria’s reluctance to look at foreign ownership.