Andrew Weaver, leader of the B.C. Green Party, wants to see foreign ownership of residential properties in B.C. banned. His reasoning is straightforward: “We should clamp down and say: ‘Look, real estate is not a commodity for offshore speculation — it’s for a place for people to live.’ ”
Weaver cited the example of New Zealand, which has recently introduced legislation to impose such a ban.
The idea has attractions. Accommodation is already priced through the roof in Vancouver, and Victoria is not far behind. There is a public interest in keeping costs down.
Premier John Horgan, however, has said he disagrees with such a policy: “New Zealand is a small set of islands in the South Pacific. B.C. is the gateway to Canada, and I don’t believe we should be curbing people coming here.”
Certainly, there are practical issues to deal with if such a measure were adopted. For instance, how are we to attract foreign investors if they face barriers to home ownership?
And is there really sufficient evidence of offshore speculation to justify taking this step?
The Canada Mortgage and Housing Corporation published figures last month showing that only 4.8 per cent of houses in Metro Vancouver were foreign-owned. The numbers for condominiums are higher — about 20 per cent are owned by non-residents.
Yet we must be cautious about statistics such as these. A court case in Vancouver has thrown light on schemes used to get around immigration and tax regulations.
Two Chinese families are involved in a dispute over ownership of three multimillion-dollar houses they purchased in Vancouver. Documents filed by the families show they attempted to evade various residency requirements by pretending to live here when they did not.
They also evaded capital gains taxes by putting the residences in the names of children or spouses who were alleged to occupy the homes but might not have.
One family avoided China’s restrictions on how much money can be moved out of that country by registering currency transfers under the names of their employees.
And the families filed immigration papers in Prince Edward Island and Manitoba, while never intending to move there.
Lawyers familiar with the case believe manoeuvres such as these are commonplace, throwing doubt on just how accurate CMHC’s numbers are.
Part of the problem has been that, until recently, the real-estate profession was self-regulated. There have been instances where real estate agents either colluded with offshore buyers to evade provincial rules, or failed to ensure those rules were properly followed.
That situation ended in September 2016, when the provincial government appointed a superintendent of real estate, Michael Noseworthy, to take over regulation.
Yet while this was an important step forward, it bore some aspects of closing the barn door after the horse had escaped. The failure or inability of the industry to police itself effectively had been known for years.
The issue is not as clear-cut as Weaver would have it: There would be significant obstacles to implementing the ban he proposes.
But neither is it as straightforward as Horgan suggests: We cannot accept that because B.C. is a gateway to Canada, our hands must be tied.
For the present, it makes sense to give the new real-estate superintendent time to clamp down on illicit behaviour. If he succeeds, that might be the end of the matter.
But when large sums of money are at stake, loopholes are usually found. The provincial government has to employ a much firmer hand.
For in one respect, Weaver is right. We should not allow the residential sector in B.C. to become a target for offshore speculation.
