Vancouver's Attempt to Preserve Affordable Housing Causes Waves
Reports of collapsing real estate deals and reactions of "disbelief" among buyers and sellers are the initial results of the new 15 percent tax on foreign real estate investments that went into effect on August 2nd. As Vancouver struggles with a housing market that like many cities has seen housing prices climb beyond normal affordability levels, the tax was seen as a way to preserve affordable housing for full-time residents of the city by reducing "speculative investing" by foreign investors. Yvette Brend of CBC News reports that the impacts of the new tax have been swift.
On a half-million dollar deal the tax represents $80,000 to $90,000, said Jonathan Cooper, vice president at Macdonald Real Estate Group in an interview with CBC's The Early Edition.
He described an immigrating family who recently bought a home on Bowen Island for $750,000 in time for their daughter to attend UBC, only to face an extra $100,000 to pay.
"It was a burden for them. This isn't the kind of family that has an extra $100 thousand dollars just lying around," he said.
Some critics of the tax have complained that deals struck before August 2nd were not grandfathered in under the implementation plan. Others view the tax as a violation of NAFTA, "which prohibits governments from imposing policies that punish foreigners," and promise to challenge the new tax in court.