British Columbia Imposes Citizenship Disclosure for Home Buyersby and
`It's time to start collecting again,' finance minister says
Enthusiasm for investment is not diminished, minister adds
British Columbia will require home buyers to disclose their citizenship to help the government monitor foreign ownership and address a housing boom that has made Vancouver one of the least affordable cities in the world.
Proposed changes to the property transfer tax will enable the government to collect information on property buyers, including their citizenship status and whether they hold the property as bare trustees. Bare trusts are typically used for real-estate assets and pass taxes and benefits directly to the beneficiary.
“We think it’s time to start collecting again,” Finance Minister Michael de Jong said in a briefing in Victoria. “At least we’ll be in a position to aggregate the information and provide data for the public discussion.”
The measures are meant to provide more transparency in the country’s hottest real-estate market. Prices in Vancouver are the highest in Canada, topping C$1.3 million ($940 million) for a detached home in January, a 28 percent rise over the prior year, according to that city’s real estate board, with sales up 32 percent in that period.
More transparency is not meant to slow investment from abroad, de Jong said. The province will continue to spend taxpayer money to promote the province as an investment destination.
“We encourage people to come to B.C. to invest,” he said. “I don’t want to leave the impression in any way, shape or form that our enthusiasm for that has been diminished.”
Vancouver has been seen as a hotbed of foreign investment, especially by Chinese buyers, with flipping of homes and offshore demand bidding up prices. The nation’s housing agency has made data collection of foreign investors a priority amid the risk of capital flight and a home price correction.
“Foreign-ownership tracking is imperative,” Cameron Muir, chief economist at the British Columbia Real Estate Association, said in a briefing. “Having data you can rely on is help for any future policy.”
The only comprehensive public data so far show that condo buyers whose permanent residences are outside Canada comprise about 5.4 percent of Vancouver buyers and 5.8 percent in Toronto. Citizenship disclosure in British Columbia was required with land transfers until 1998.
De Jong added the government is not interested in reducing the value of people’s homes, their major asset.
Fitch Ratings Ltd., the International Monetary Fund and federal Finance Minister Bill Morneau have said the city’s housing market is overheat while the Globe and Mail has reported that tax evasion and high-pressure selling tactics are seeping into the market.
Last year, the federal government imposed measures to tame runaway prices including raising the minimum down payment on mortgages. The Office of the Superintendent of Financial Institutions, the nation’s financial services regulator, said it was seeking to make banks hold more capital to back mortgages depending on local housing conditions and incomes.
British Columbia will also exempt the property transfer tax for new houses built for less than C$750,000 to encourage construction of affordable homes. The government will spend C$355 million over five years to support building of 2,000 housing units.