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Vancouver makes about-face on taxing foreign home buyers

Vancouver makes about-face on taxing foreign home buyers

Are there still any foreign buyers left though?

chinese new year 2017 vancouver
Chinese New Year Parade 2017 in Chinatown, Vancouver. Zhenwang Wang/Shutterstock

Canada will be walking back its curbs on foreigners purchasing Vancouver homes as demand for them continues to cool down.

Refunds are now in the offing for those that have been affected by the 15-percent tax on foreign home buyers since its enactment in August. “Now that the additional tax has effectively cut back the excessive demand we were seeing last year, we are in a position to make the adjustments necessary to help ensure we can keep attracting highly skilled workers,” the British Columbia Ministry of Finance stated on Wednesday.

Foreigners with work permits will also be exempted “as soon as possible” from the onerous rule, British Columbia Premier Christy Clark announced at the city’s Lunar New Year parade on Sunday.

A need for more high-skilled foreign workers justified the proposed amendments to the tax. “We want the best and brightest to be able to come to British Columbia,” Clark said. “We’re going to lift the foreign owners tax on people who have work permits, who are paying taxes and living in British Columbia, as a way to encourage them to come.”

More: Seattle is the new Vancouver for Chinese buyers

New Democratic Party (NDP) housing critic David Eby attributed the forthcoming changes to pressure from academic groups and technology companies. “The major tech firms, the major employers in the Lower Mainland like SFU and UBC, were all saying the same thing: ‘This hurts our ability to recruit the skilled workers we need. We’re already having a problem with high housing prices, and now this tax makes it even worse.’”

For some, the changes have come a little too late. Nic Benner, a business analyst from the US now living in British Columbia, lost CAD25,000 in downpayment on a Vancouver home after the August announcement, as he was unable to afford the extra levy.

“Unfortunately, the province did not act in time to keep me from losing my property,” Benner said.

Foreign sales of Vancouver homes priced above CAD3 million (USD2.3 million) sank by a staggering 91 percent between July and November, according to recent data available from the Ministry of Finance. This means that foreign buyers only snapped up eight luxury properties in the Canadian metropolis in November, compared with almost 100 in July.

The decline in Vancouver home sales to foreigners could be chalked up to cooling measures in both Canada and China. Outbound investment flows from China, the most dependable source of foreign buyers for the Canadian city, have been decelerating due to a series of crackdowns by Beijing on capital flight over the past year. Only USD41 billion in outbound capital flows left China in December.

Read next: Vancouver home sales fall — should the new tax on foreign buyers take credit?

Source: Property Report