Hours after B.C. announced its tax on foreign buyers this past summer, prominent developers e-mailed Premier Christy Clark and her government saying the policy amounted to a betrayal of Metro Vancouver’s international citizens and could hurt a market already showing signs of cooling.
Correspondence obtained through a Globe and Mail Freedom of Information request also shows the government received hundreds of e-mails from the public after the July 25 announcement. Many people praised the move and urged politicians to do more to limit foreign speculation across British Columbia, while others pleaded for Victoria to exempt existing deals that were caught up in the tax.
Neil Chrystal, president of leading real estate developer Polygon Homes, e-mailed the finance minister’s chief of staff criticizing the government for the decision.
“While I was at first appreciative of the consultation meeting we had last week I feel that our industry has been somewhat blind-sided by the announcement of this new tax, given how extreme it is,” Mr. Chrystal wrote. “I actually find it hard to believe that something so drastic wasn’t discussed further with our industry and that our meeting was a bit of a waste of time, given that the policy was likely already determined.”
The government has said most cabinet members were kept in the dark as a handful of bureaucrats in the Ministry of Finance worked feverishly to craft the rules of the tax. Bob Rennie, the B.C. Liberal Party’s chief fundraiser and the local real estate industry’s best-known marketer, said he had no advance knowledge of the tax, but that he anticipated the government would enact such a policy to quiet public outrage as home ownership became more unaffordable.
In his e-mail, Mr. Chrystal said it was outrageous that the new policy would not exempt deals begun before the tax was announced but were not scheduled to close until after it went into effect.
“The tax of 15 per cent is excessive and a sure fire way to halt sales to foreign buyers in a market that was already [showing] signs of fatigue,” he wrote, which recent government data have since confirmed.
In the seven weeks leading up to the start of the tax, foreign buyers accounted for 13.2 per cent of Metro Vancouver’s total sales, but these buyers made up just 3 per cent across that region in October, according to the B.C. government’s data based on land title registrations. Over that period, the average price of single-family detached homes began to drop in Metro Vancouver from the peak last January at $1.83-million.
Experts cannot say whether this downturn in foreign owners will remain a long-term trend, but immediately after the Premier announced the tax on the morning of July 25, industry insiders were warning it could badly hurt one of the province’s most important economic drivers.
John Stovell, chair of the Urban Development Institute, who was copied on Mr. Chrystal’s e-mail, responded to the government, saying that his trade association for real estate developers agreed with Mr. Chrystal’s arguments.
“This is ill advised in the extreme and your government’s failure to exempt pre-sales is a betrayal to our non residents willing to participate in good faith in our economy in what has been both … legal and arguably encouraged through other government policy,” Mr. Stovell wrote.
A month before the tax was announced, Anne McMullin, president and CEO of UDI, e-mailed the Premier warning that any taxes aimed at curbing demand would not make Metro Vancouver more affordable without the stimulation of more supply. And, she added, increasing taxes might severely undermine the value of people’s homes “perhaps even destabilizing our industry, which represents 25 per cent of British Columbia’s economy,” she wrote.
A day after the tax was announced, she wrote again expressing the UDI’s disappointment with the policy and strongly urged the Premier to allow pre-sale contracts in place as of Aug. 2 to be exempted from paying the levy.
Meanwhile, many members of the public heaped praise on the government for moving ahead with the tax and urged them to go further.
“Nice start on reducing foreign ownership of B.C. residential property – but more is needed!” one respondent wrote, adding that a 500-per-cent tax on any vacant property would be a good next step.
Others wrote angry e-mails that asked the Premier to step in and allow deals involving foreign buyers still pending to be exempted from the levy.
A person living outside the Lower Mainland asked the government to tackle the growing unaffordability of housing in their community.
“Vancouver is a lost cause. It has been sold out to the highest bidders,” the person wrote. “The Real Estate Housing CRISIS is THE most important issue of all and my vote at the upcoming elections will be focused on candidates and parties who present the most effective actions to address this problem.”Report Typo/Error