CMHC to look at foreign ownership of Canadian real estate

Data indicating how much of Canada’s real estate is being snatched up by foreign buyers is scant, but the country’s national housing agency is working to change that.

In a briefing note dated May 15, 2015, obtained by The Canadian Press through an Access to Information request, Canada Mortgage and Housing Corp., says it will be hosting “bi-lateral meetings” and roundtables with industry stakeholders to fill a number of data gaps, including the share of new and existing homes owned by foreigners.

The initiative will go beyond the limited data the agency currently gathers, including a survey of property managers indicating how many condo units are owned by people whose permanent residence is outside of Canada.

“Currently there is no perfect source of information on the level of foreign investment in the housing market,” chief economist Bob Dugan said in a statement to The Canadian Press.

“CMHC has undertaken steps to address this data gap. As a result, we know a lot more about it today than we did a year ago and are continuing our program of work to determine the level of foreign investment in Canadian residential real estate.”

The contentious issue has been in the spotlight recently, especially in Vancouver, where some have blamed demand from offshore buyers for the city’s soaring home prices.

In August, Conservative Leader Stephen Harper waded into the debate, saying that if re-elected, the Tories would gather data on foreign ownership of Canadian homes — and would even consider implementing taxes and other rules to govern the practice.

However, the briefing note prepared for Pierre Poilievre, the minister responsible for CMHC, suggested that work was already underway at CMHC.

“For high priority data gaps that it cannot address on its own, CMHC has started to engage in discussions with other data providers and organizations,” the document reads.

“Although this work is at an early stage, CMHC will keep you informed regarding progress.”

Other gaps that CMHC intends to address include the total volume of mortgages issued and outstanding and mortgage data broken out by lender type, characteristics of borrowers, property type and geographic location.

In another briefing note, the agency said it is keeping a close eye on the rise of unregulated mortgage lenders such as mortgage finance corporations, mortgage investment corporations and individuals.

“The exact number of unregulated lenders in Canada is not known since this includes private individuals and a multitude of small private firms,” the note, dated May 26, 2015 and also obtained under the Access to Information Act, reads.

“CMHC and its government partners continue to closely monitor developments in unregulated mortgage lending.”

From the Toronto Star

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What!? Vancouver could implement a speculation tax on real estate?!

Vancouver Mayor Gregor Robertson is calling for a new tax on real estate speculators to cool the city’s white-hot real estate market. 

Debate has been raging over the impact of foreign investment on Metro Vancouver house prices. Robertson says speculators are to blame, forcing young people and the middle class out of the city. He says he’s asked Premier Christy Clark to impose a speculation tax to increase affordability.

“We definitely need taxation tools that discourage speculation on real estate,” said Robertson in a statement. “It’s clear that rampant speculation on real estate is driving up prices in Vancouver. Vancouver needs the B.C. government to take action on creating a speculation tax and recognize that we need a fair and level playing field to make housing more affordable for residents in Vancouver, and throughout the province.”

Prominent developer Bob Rennie of Rennie Marketing Systems was the first to propose the idea at Friday’s Urban Development Institute’s luncheon.

“So if you buy in a presale today…you pay your deposit today and you complete in two-and-a-half to three years, there’s often a higher value at completion and at completion if you sell within three months, six months, nine months, 12 months. Perhaps we should tax that profit because it’s interfered with affordability,” he explains to Global News.

However, Tsur Sommerville of UBC’s Centre for Urban Economics and Real Estate says flipping condos may not be what’s driving up the Vancouver real estate market.

“I don’t see what the evidence is that all of the sudden we’re in a raft of quick flips on housing. So taxing something that’s probably not the problem — quick sales and turnarounds — seems to me kind of silly in terms of trying to address the affordability problem,” he tells Global News. “What we’re seeing is really large price increases in the single family product, but that’s the product where there’s not more supply, there’s less supply of that.”

The province has not ruled out the idea of a speculation tax, but says changes must be weighed carefully and not destroy the equity owners have in their homes.

“By trying to move foreign buyers out of the market, housing prices overall will drop,” said Clark in the legislature earlier this month. “That’s good for first-time home buyers but not for anybody who is depending on the equity in their home to maybe get a loan or use that to finance some other projects.”

The Ministry of Finance issued the following statement to Global News with respect to a proposed speculation tax.

The Province recognizes that home ownership in British Columbia can be challenging for some people.

• Governments need to be careful that any tax would have the desired effect, without undermining the equity that people may have built up in their homes.
• Programs designed to relieve some of these challenges are targeted toward those who need it most, while ensuring that municipalities continue to receive the full benefit of assessed property tax.
• If you purchase a home for the first time, the First Time Home Buyers’ Program reduces or eliminates the amount of property transfer tax BC residents pay when they purchase their first homes. The threshold for the first-time home buyers program was increased to $475,000 from $425,000 in last year’s budget. This exemption can save first-time buyers up to $7,500 when purchasing their first home. A partial exemption continues and now applies to homes valued between $475,000 and $500,000.
• In preparation of each year’s provincial budget, the Minister of Finance reviews all taxes and considers whether changes are appropriate within the context of a balanced budget and other spending priorities.

Robertson says Ottawa also needs to step in.

“Limiting speculation is an important action for the B.C. government but we absolutely need the federal government involved in affordable housing,” said Robertson. “Their complete absence in supporting low- and middle-income housing is making it extremely difficult for people, especially young people, to live and work in Vancouver.”

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From Globalnews.ca 

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