Foreign buyers tax not the ‘silver bullet’ to fix housing affordability

It's an issue Victoria Mayor Lisa Helps is prepared to receive a flood of emails and public backlash about in the coming months.

It’s an issue Victoria Mayor Lisa Helps is prepared to receive a flood of emails and public backlash about in the coming months.

Earlier this week, council voted to postpone a motion to request a 15 per cent foreign buyers tax be implemented in the Capital Regional District (CRD), similar to the one implemented to cool Vancouver’s hot real estate market last year.

Councillors Ben Isitt and Jeremy Loveday brought forward the motion in response to the housing affordability crisis Victoria is currently facing.

“This provides a level playing field between Metro Vancouver and the Capital Regional District, the most populace districts in the province,” said Isitt. “We are seeing housing and affordable home ownership becoming increasingly out of reach. This (the foreign buyers tax) indicates the province has gone in the right direction.”

However, many councillors expressed a number of concerns with the ability to implement such a tax in the capital region just yet, arguing there isn’t enough data to show how many foreign buyers are actually snatching up properties in Victoria, versus foreign buyers who are purchasing properties in Vancouver, then the former owners take their money and move to Victoria, for example.

“Affordable home ownership is a problem in our city, without question,” said Helps during a meeting Thursday, adding she’s expecting a flood of emails from residents both for and against the tax.

“This is a really difficult one for me, in part, because some members of the public think it’s a good idea to do this tax, certainly members who think housing affordability is a crisis and are going to think it’s the silver bullet that’s going to fix it. It’s not.”

Coun. Marianne Alto’s believes the tax opens the door to protectionism, as it regulates who has the right to come into the community, while Coun. Chris Coleman said the city should look at supporting more developments that address a particular price point.

In August, the provincial government imposed a 15 per cent tax on property purchased in Metro Vancouver by non-Canadian citizens or residents, in an attempt to deal with the spiralling costs of real estate in the city.

According to statistics, the overall amount of foreign buyers purchasing property dropped a few months after the tax was implemented. However, in Victoria, the number of foreign buyers increased, making up 6.3 per cent of transactions in the CRD.

But local realtor Tony Joe said Chinese buyers in Victoria are not the same buyers looking in Vancouver. In a letter to council recently, he said Vancouver remains a trophy city, while buyers coming to Victoria are typically moving here from Vancouver with the primary objective of sending their children to school in Greater Victoria.

“Victoria is preferred since the culture here remains strongly Anglicized as opposed to Vancouver, where their children continue to spend time with other Chinese and speaking their mother tongue,” he said in the letter.

The implementation of a foreign buyers tax was only one part of the motion. The motion also requested the provincial government tax vacant and derelict homes — an idea many councillors spoke in favour of as a way of addressing housing affordability in the city.

“What I do support is the ability to tax the heck out of vacant and derelict properties in Victoria . . . that could be put back into use,” Helps said. “I do think we need to lobby really hard to tax vacant and derelict properties across the region.”