News Local

Vancouver foreign buyer sales collapse

By Rosemary Newton

POSTMEDIA NETWORK

POSTMEDIA NETWORK

New provincial data suggest the 15% foreign buyer tax introduced in August has led to a dramatic decrease in sales involving foreign nationals.

The additional property transfer tax for foreign purchases took effect Aug. 2. Data released Thursday show that from June 10 to Aug. 1, the period prior to the tax, there were 1,974 transactions involving foreign nationals in Metro Vancouver, but from Aug. 2 to 31, there were just 60 transactions involving foreign nationals, totalling $46.9 million and accounting for less than 1% of total transactions in that period.

On July 29, the last business day that sales could be registered before the tax took effect, there were more than $850 million in residential property transactions involving foreign nationals in Metro Vancouver. That’s more than 55% of all transactions registered that day.

BC NDP housing critic and MLA David Eby said this influx of transactions in the final days before the tax came into effect indicate the influence of international money on the market.

But he said the assumption that the tax has been successful needs to be looked at with skepticism.

“It could be that people are just better at avoiding this tax than they were in the days when it was announced when deals were already inked.”

The data may just account for a portion of the international money coming in, he said.

“There is lots of international money coming in through permanent residents, and citizens,” he said. “This data doesn’t include the buying and selling of pre-sale condominiums.”

He said the gold standard to measure the tax’s effectiveness is to connect real estate transaction data with income tax data.

In a release, the Ministry of Finance said auditors are reviewing transactions to determine if any were structured to avoid tax.

Eby said he is skeptical of that claim, due to what he says has been a chronic shortage of auditors.

According to the Ministry of Finance, eight audit and compliance staff have been hired or are in the process of being hired. 

Poll

Are foreign buyers just finding a way around the new tax?