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.
The Act has four parts: Vacancy tax: Amendments to the Vancouver Charter to enable the City of Vancouver to impose a municipal vacancy tax on vacant residential property Foreign-buyers tax: Amendments to the Property Transfer Tax Act, imposing an additional property transfer tax of 20% on all residential property purchased by foreign buyers Amendments to the Real Estate Services Act discontinuing industry self-regulation of the real estate industry Creating a new Housing Priority Initiatives special account to fund initiatives in respect to housing, rental, access, and support programs with the new tax revenues resulting from this law.
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 unaffordable 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 . [Bloomberg News] reported that Chinese international property portal [Juwai.com] saw Chinese buying inquiries in Vancouver drop by at least 25%. Questions of whether the BC government was taking sides against the older homeowners in favour of younger buyers were raised. According to The Globe and Mail, a 2016 poll determined that a third of boomer homeowners were planning to sell their homes and move to other parts of British Columbia within the next 5 years while only 16% of millennial residents would consider moving.
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 city councillors, Ben Isitt and Jeremy Loveday, wanted the foreign buyers tax also applied in the capital region. In addition, they wanted local municipalities to be given the authority to impose a tax on vacant properties.
In 2018, the Foreign Buyer's Tax was extended to the Fraser Valley, Capital, Nanaimo, and Central Okanagan Regional Districts, at 20%.