Housing tax not as painful in Maple Ridge | Maple Ridge News

Currently, the real estate industry is in the middle of its usual summer slowdown. - Phil Melnychuk/THE NEWS

Currently, the real estate industry is in the middle of its usual summer slowdown. — Image Credit: Phil Melnychuk/THE NEWS

Slapping another 15-per-cent sales tax on homes to foreign buyers could cool the red-hot real estate market in higher priced areas of Richmond or Vancouver, but it might take longer to learn of any effect in Maple Ridge and Pitt Meadows.

The announcement by the B.C. government last week saw a rush to complete deals by the Aug. 2 deadline, but Tom Garvey, managing broker with Macdonald Realty, says it will be at least a month before the full effect of the tax is known in Maple Ridge.

“There’s not a huge amount of foreign buyers who are coming out to Maple Ridge,” said Garvey, who said he hasn’t noticed any effect so far in the local market.

But it’s early yet and time will tell.

“Let’s see what happens over the next two to four weeks.”

[Read more…]

B.C. Real Estate In ‘Absolute Mayhem’ Amid Talk Of Sales Collapse|The Huffington Post Canada

Greater Vancouver’s real estate market is in the throes of chaos as buyers, sellers and industry insiders try to adapt to a new tax on foreign buyers that went into effect on Tuesday.

Though a recent poll showed nine out of 10 British Columbians back a tax on foreign buyers of residential real estate, many industry insiders and entrepreneurs are lining up against it, saying it risks destabilizing the housing market and Vancouver’s economy.

The tax has even taken on shades of a political controversy, as a prominent Vancouver real estate marketer and provincial Liberal fundraising chief denies he knew in advance the tax was coming.

B.C. Real Estate In Absolute Mayhem Amid Talk Of Sales Collapse

Vancouver realtor Steve Saretsky told Global News his analysis of MLS data found that detached home sales collapsed by 75 per cent in the few weeks after the provincial government announced it was introducing a 15-per-cent sales tax on foreign buyers of residential real estate in Greater Vancouver.

Saretsky described the market as being in “absolute mayhem.” But other realtors told media it is too soon to tell what the precise impact will be on the housing market.

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Foreign Buyers Tax: Realtors begin to report sales deals collapse | Vancouver Sun

Realtors and lawyers desperate to get in under the deadline filed a record-setting 15,000 property transfer applications on Thursday and Friday, the last business days before B.C.’s punishing new 15-per-cent tax on foreign property buyers went into effect.

More than 9,200 transactions were filed on Friday, breaking the June 30 record of more than 8,400 in a single day, according to the B.C. Land Title and Survey Authority. It also reported over 5,800 transactions on Thursday, representing nearly as many deals registered at month’s end in April.

The demand was so heavy that it crashed the land titles office’s electronic filing service on both days, the authority said.

Now, as a new dawn breaks in Metro Vancouver’s real estate market, realty companies and real estate boards are reporting the first anecdotes of deals falling through as foreign buyers forfeited deposits on binding deals rather than pay the new tax. And they report evidence of local buyers withdrawing offers in expectation that the market will soften.

Elton Ash, executive vice-president of Re/Max Western Region, said it is too early to accurately quantify how many deals fell apart, but he’s heard from realtors in some of the company’s 30 Metro Vancouver offices of cases where foreign buyers who couldn’t rearrange previously negotiated closing dates have already walked away.

“Our expectation is that there will be a percentage of transactions collapse due to the buyer basically defaulting on the contract,” Ash said.

He and other realty experts say it may take up to two or three months to gauge the full effect of the new tax.

Jonathan Cooper, vice-president of operations at MacDonald Realty, expects many cases to go to court because deposits are held in trust by realtors and usually can’t be released without a court order.

“I think the next chapters in this story are going to be written by lawyers,” Cooper said. “There are going to be cases for sellers trying to get the deposit out of trust and maybe suing the buyer for specific performance trying to get them to complete, and/or for damages if they are not able to find a buyer at a similar price point.”

[Read more…]

‘Fundamental Issue in Vancouver Market Is Supply’ | Bloomberg TV Canada

Jonathan Cooper, Vice President, Operations at Macdonald Real Estate Group joins Bloomberg TV Canada’s Rudyard Griffiths to discuss the impact of the 15 percent property tax for non-Canadian citizens and non-permanent residents in Metro Vancouver.

 

About Macdonald Real Estate Group
Based in Vancouver, Canada, Macdonald Real Estate Group (MREG) has an annual sales volume of over $7 billion and over $2 billion in assets under management. With more than 20 offices and nearly 1,000 staff and REALTORS®, MREG offers a full range of real estate services, including residential and commercial brokerage, property and strata management, project marketing, and the MREG Canadian Real Estate Investment Centre in Shanghai, China. Macdonald Realty is the residential division of Macdonald Real Estate Group. For more information, visit www.macrealty.com.

B.C. turns from foreign buyers to investor immigrants as Vancouver’s affordability crisis continues | Georgia Straight

A whopping 90 percent of Metro Vancouver residents support the region’s new 15-percent tax on foreign buyers of residential real estate. At the same time, only three percent of respondents to the same poll, conducted by the Angus Reid Institute, say the tax goes far enough, and 71 percent describe it as simply a step in the right direction.

While the region waits to see what kind of impact the new tax will have on the market, pundits are debating what additional measures the government should take. That’s turned a lot of attention to the Quebec Immigrant Investor Program (QIIP), a path exclusively for wealthy immigrants that, despite its name, lets newcomers settle in B.C. Those home buyers are counted as locals and therefore are not subject to the region’s new tax on foreign nationals. Some observers argue the QIIP deserves much of the blame for driving up the price of a home in Vancouver.

On July 28, Premier Christy Clark revealed she’s approached her Québécois counterpart and opened discussions on the issue.

 “We’re going to work together on it,” she told Global News. “We’re going to try and support him [Premier Philippe Couillard] in finding ways to make sure their program, their investor program, is for Quebec and for Quebec alone. And that when people come into Quebec, that’s where they stay.”

But eliminating this source of wealthy immigrants might not have as sizable an effect on Vancouver real estate as some have suggested.

[Read more…]

Reality of B.C.’s foreign buyers tax begins to bite as realtors report deals collapsing | Financial Post

Realtors and lawyers desperate to get in under the deadline filed a record-setting 15,000 property transfer applications on Thursday and Friday, the last business days before B.C.’s punishing new 15-per-cent tax on foreign property buyers went into effect.

More than 9,200 transactions were filed on Friday, breaking the 2007-2008 record of more than 8,400 in a single day, according to the B.C. Land Title and Survey Authority. It also reported over 5,800 transactions on Thursday, representing nearly as many deals registered at month’s end in April.

The demand was so heavy that it crashed the land titles office’s electronic filing service on both days, the authority said.

Now, as a new dawn breaks in Metro Vancouver’s real estate market, realty companies and real estate boards are reporting the first anecdotes of deals falling through as foreign buyers forfeited deposits on binding deals rather than pay the new tax. And they report evidence of local buyers withdrawing offers in expectation that the market will soften.

Elton Ash, executive vice-president of Re/Max Western Region, said it is too early to accurately quantify how many deals fell apart, but he’s heard from realtors in some of the company’s 30 Metro Vancouver offices of cases where foreign buyers who couldn’t rearrange previously negotiated closing dates have already walked away.

“Our expectation is that there will be a percentage of transactions collapse due to the buyer basically defaulting on the contract,” Ash said.

He and other realty experts say it may take up to two or three months to gauge the full effect of the new tax.

“I think the next chapters in this story are going to be written by lawyers”

Jonathan Cooper, vice-president of operations at Macdonald Realty, expects many cases to go to court because deposits are held in trust by realtors and usually can’t be released without a court order.

“I think the next chapters in this story are going to be written by lawyers,” Cooper said. “There are going to be cases for sellers trying to get the deposit out of trust and maybe suing the buyer for specific performance trying to get them to complete, and/or for damages if they are not able to find a buyer at a similar price point.”

[Read more…]

Thousands of Metro Vancouver real estate deals caught by tax deadline

‘Last week was pretty hectic,’ realtor said of rush to avoid new tax by midnight cutoff

house-key-turning-in-lock-real-estate-tax-image

For some the last few weeks was a rush to wrap up real estate deals before Aug. 2 tax was imposed on Metro Vancouver property deals. (DeWitt Clinto/Flickr)

Thousands of home buyers and sellers in Metro Vancouver reacted with ‘shock and disbelief,’ madly rushing to beat the Aug. 2 deadline of the new 15 per cent foreign buyer real estate tax.

Realtors estimate 3,000-to-4,000 deals were affected.

“It’s so fast. Just everyone is shocked,” said Jin Liu, a realtor with Remax.

After the legal documents flutter to the floor industry watchers warn there will be challenges to the new tax, seen by many as unfair.

Some say it violates the North American Free Trade Agreement (NAFTA) which prohibits governments from imposing policies that punish foreigners. Top lawyers say the tax is ripe for a constitutional challenge.

The foreign buyer tax, aimed at cooling Vancouver’s torrid housing market, was announced July 25. The aim was to chill speculative investing and preserve affordable homes for people living and working in Canada.

Up to 4,000 deals affected by new tax

Buyers and sellers were caught in the sting of the Aug. 2 tax that has been applied even to deals struck long before it existed.

“We weren’t given notice …. so most likely the deals will collapse. It’s not fair for everyone,” added Liu.

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Opinion: The true cost of the new real estate tax

This week, the B.C. government introduced a new 15-per-cent tax on all non-citizen and non-permanent-resident buyers of residential real estate in Metro Vancouver. Macdonald Realty opened its first office in the Kerrisdale neighbourhood over 70 years ago. Though we now have 20-plus offices and 1,000 staff and agents, the heart of our organization is still in Vancouver.

We understand that the government felt the need to take concrete action to curb speculation and related price inflation. We understand also that the increase in real estate prices over the last few years is a topic of much concern to many Metro Vancouver residents. That said, we do take strong issue with the retroactive nature of this new tax. Specifically, that it applies to all transactions that close after Aug. 2, regardless of when those contracts were entered into. This will have profoundly negative consequences for many Canadian families, who weren’t the intended targets of the tax.

To highlight the consequences, let us give you a few real-life examples.

One of our clients is a new immigrant family in the process of moving to Canada. They have both children registered for school — their daughter will be studying English literature at the University of B.C. in the fall. They have already entered into a firm deal to buy a resale home priced at $765,000 (from a Canadian seller), but since the sale closes after Aug. 2, they are now looking at a sudden $114,750 increase in their cost — on a firm and binding contract. This is neither just nor reasonable.

Op-Ed by Jonathan Cooper

Op-Ed by Jonathan Cooper

Our second example involves a Canadian family who recently listed their home for sale in Surrey. They have a firm deal with an immigrant family for $480,000; however, that deal is now in peril, because the buyer’s cost just went up by $72,000. The sellers, as Canadian citizens, weren’t meant to be the subject of this tax, but now it has placed their financial lives in jeopardy.

The Canadian sellers in both examples point to a broader reality: the knock-on effects of this tax throughout the Vancouver real estate market that could be immensely damaging for many Canadians. Real estate is traditionally a linked economic activity. Once they have a firm deal on their property, many sellers promptly go on to buy their next home. If foreign buyers begin defaulting en masse, we could see a contagion scenario wherein a single default by a foreign buyer will result in many more defaults by Canadian buyers. In addition, the resulting flood of lawsuits from these defaults could overrun the court system. We believe that the government has not anticipated this very likely scenario.

There is a prevailing impression that all foreign buyers are big-moneyed cash buyers. But the reality is that there are many more hardworking, middle-class immigrant families who are stretching themselves in order to get a foothold in the Vancouver market and give their families a better life. It is very reasonable that some of these families will not be able to afford an additional 15-per-cent tax that was neither anticipated nor budgeted for. For many, their only option will be to default on their purchase and lose their deposits.

Furthermore, this tax damages our province’s credibility as a place to do business in the eyes of the world. If our government is willing to drastically and retroactively increase costs in one major sector of the market, a reasonable investor would have to conclude that they might be willing to do so in any sector. Do we want to be known as a place where legally binding contracts can be, without recourse, altered after the fact by the government? And in a country built by immigrants, do we want to be known as a place where we impose severe, retroactive costs on families merely because of their country of origin?

Once again, while we do not necessarily agree that the government’s move to implement a foreign-buyers’ tax is the most effective means of addressing affordability, we do understand the immense public pressure to respond to Vancouver’s escalating house prices. However, the punitive nature of the tax’s implementation will cause immense — and completely unnecessary — damage to Canadian families, with no discernible benefit.

Premier Christy Clark expressed concerns that grandfathering would create a run on the market, but this could easily be avoided by only including contracts that were agreed to before July 25, the date on which the tax was announced. Imposing a 15-per-cent tax while exempting existing contracts will achieve the government’s goals without financially imperiling blameless Canadian sellers. In the strongest possible terms, we urge the government to reconsider their position.

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This op-ed by Jonathan Cooper was published in the Vancouver Sun on Friday, July 29th 2016.  Jonathan Cooper is vice-president of Macdonald Real Estate Group Inc.

One in 10 home sales in Vancouver region went to foreign buyers | The Globe and Mail

B.C. Premier Christy Clark says new data that show foreigners bought one in every 10 homes sold in Metro Vancouver’s superheated market over five weeks forced her government to introduce a new and substantial tax on international buyers, but she says the surprise levy is intended to stop the spike in prices, not devalue the equity built up by existing homeowners.

Foreign buyers in B.C.
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Statistics the province released on Tuesday show buyers who were not Canadian citizens or permanent residents made up 10 per cent of all home sales in Metro Vancouver between June 10 and July 14. Those transactions totalled $885-million. An earlier release of data covering June 10 to 29 and not including end-of-month sales found only 5 per cent of the sales in the region involved foreigners.

The proportion of international buyers was higher in the suburbs of Burnaby and Richmond, with nearly one in five of all homes sold in those cities going to people from countries other than Canada. The rate for Vancouver proper was 11 per cent, and 7 per cent across all of British Columbia.

“There need to be more houses on the market that are available to local people,” Ms. Clark told The Globe and Mail.

Next Tuesday, 22 communities will start levying 15 per cent in additional property transfer taxes on any foreign home buyer without permanent residency in Canada, as well as foreign corporations or Canadian-registered corporations owned or controlled by foreigners.

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