If Victoria implements a tax on foreign buyers, should Saanich follow suit to harmonize rules?
That is one of the looming question as political leaders in the Capital Regional continue to debate potential remedies to high and rising real estate prices.
Victoria city council last week considered but postponed any immediate action on the file.
Victoria councillors Ben Isitt and Jeremy Loveday tabled a motion that asked Victoria city council to lobby the provincial government through the CRD to extend a 15 per cent transfer tax on foreign buyers to the region.
During the last meeting of Victoria city council, Isitt and Loveday agreed to postpone consideration of the issue for at least three months during which the city will monitor the regional real estate market.
Saanich councillors monitoring these developments seem skeptical of the issue.
Coun. Leif Wergeland opposes such a measure. “I do not believe the numbers of foreign buyers in the [CRD] should be a concern,” he said.
Fees and new building code requirements for new homes should be a bigger concern, he added. “The less government involves itself in the marketplace the better for all.”
Wergeland said regional resistance to densification in the face of a shrinking developable land supplies bears responsibility for “strong” selling prices.
“There is no longer such a thing as a starter home in our region,” he said. “Homes for many young families will be rental apartments and home ownership for many will be only a dream.”
Coun. Fred Haynes said he was glad the provincial government addressed the problem of rising market value.
“However, I am not sure the data they’ve collected for the last six months for the Lower Mainland really demonstrates that the foreign buyers tax made it easier for young people to buy a home of their own,” he said, adding that tax has had unintended consequences, discriminating against skilled foreign workers.
“What we really need though is more supply. Local governments can help increase supply by providing more density and new designated residential zoning along major traffic corridors among other measures. I believe we need a focus on mechanisms to increase the supply of a wide range of new housing that is affordable for young working people plus seniors seeking to downsize.”
Coun. Susan Brice also opposes a foreign buyers tax, but does not categorically discount the idea. “I think we need to monitor what is happening in the market, but at this time I do not think the foreign buyer impact on Saanich housing justifies the imposition of a tax,” she said.
Coun. Dean Murdock also counsels caution in noting Victoria’s decision to postpone the issue to gather more information.
“I look forward to the [City of Victoria’s] findings and understanding the next steps that they may determine to be appropriate,” he said.
Coun. Colin Plant struck a similar note, saying he is not “completely convinced” that the Greater Victoria area including Saanich needs a foreign buyers tax. Sales numbers from the Greater Victoria Real Estate Board demonstrate that the number of foreign buyers in the region remains “significantly and statistically low.” Plant, however, does leave open the possibility of future changes.
“That being said, I am not comfortable at all with foreign speculative investment in our housing market and would certainly support an empty house tax if the province were to grant us that taxing authority,” he said.
Coun. Vicki Sanders agreed. “I do have a concern about buildings being left vacant and becoming derelict,” she said. “That now becomes a liability for a neighbourhood. I believe there should be a penalty/tax in that situation.”
That said, the issue of a foreign buyers tax is nuanced. “I don’t know if this is truly black and white,” she said. “If properties are being marketed to foreign buyers as an investment rather than for living and leaving them vacant, I have a concern. If they are purchasing them for their use when visiting or family/friends, I think that is another issue.”
The provincial government introduced the tax last August to combat rising home prices in Metro Vancouver.
Since the introduction of the tax, voices concerned about negative spill-over effects in the form of rising prices in the Capital Region have become more prominent in light of recent statistics that show an uptick in the number of foreign buyers. Outgoing Greater Victoria Real Estate Board president Mike Nugent simultaneously acknowledged this development but also downplayed it in a published statement.
“While October data shows an increase in foreign buyers into the Capital Regional District compared to previous months, their 6.3 per cent of property transfers indicate that these buyers are one factor in the marketplace,” it read. “A much larger factor affecting affordability and availability right now is the lack of inventory. An effective method to address housing affordability issues could be through efforts to increase the supply of housing, either through adjustments to zoning or density.”
While hardly definitive proof, Victoria’s decision to postpone action for now appears to strengthen the argument that foreign buyers are – at least not yet – a factor.
The Saanich News also reached out to Saanich Mayor Richard Atwell and councillors Judy Brownoff and Vic Derman for comment, but did not receive responses by deadline.