British Columbia’s tax imposed on homeowners or foreigners to counter the purchase of apartments for purely speculative purposes without renting them is bearing fruit, concludes a study. In these times of housing crisis in Quebec, Carlos Leitão, Liberal MP and former Minister of Finance, therefore pleads for Quebec to imitate this approach.
Posted at 5:00 a.m.
In recent days, researchers Tsur Somerville and Jake Wetzel unveiled a study that found that the British Columbia tax, launched in 2018, caused 20,000 condominium units to return to the long-term rental market in the city. Greater Vancouver region, a region particularly affected in the country by real estate speculation and the housing shortage.
Levied in five regions of British Columbia, the tax is 0.5% for Canadian citizens or permanent residents and 2% for foreign owners when an apartment is left vacant for more than six months. If Airbnbs are not directly targeted, they are also affected. Revenues contribute to the surplus to fund affordable housing projects where the tax is collected.
Slots should be slots, not vaults.
Selina Robinson, Minister of Finance of British Columbia
In a telephone interview on Monday, Liberal MP Carlos Leitão explains that the study co-signed by Tsur Somerville – a researcher from British Columbia whose work he follows and whose credibility he boasts – is important. “When we were in government, we asked ourselves the question. [Une telle taxe] does it really work or does it bring a lot of hassle for little results? A serious study now comes to say that it works. »
A good idea for Quebec? Reached by telephone, the researcher Tsur Somerville goes there cautiously, not having an intimate knowledge of the reality here. But such a tax has a certain effect, he says, when there is a housing crisis and a high rate of apartments left vacant.
That investors are so sensitive to a simple tax may be surprising, right? Not that much, he replies. “Rich people don’t like taxes and don’t like writing checks!” “, he says, laughing.
But Mr. Somerville points out that the owners of homes left vacant (for all sorts of reasons, he points out) are neither necessarily super-rich nor necessarily foreigners.
He adds that the pandemic may have affected the magnitude of the results, but that the tax is certainly a good tool. Because 20,000 homes put back on the market, that makes a huge difference for many people who are desperately looking for one, “even if, in proportion, it remains little” given the extent of the housing crisis in his province.
Not only merits
The tax has its merits, according to some of its critics. For Nanaimo Mayor Leonard Krog, it only shifts the problem of real estate speculation since it is not seen across the province. Liberal MP Kevin Falcon also has his reservations, saying the ruling New Democratic Party (NDP) is betting a lot on taxing speculators, but not enough on policies to increase housing construction.
He also argued that the NDP made the wrong diagnosis by believing that the speculation was largely driven by Chinese investors, when they represent only a tiny fraction of those who buy homes and then leave them vacant.
Ontario nevertheless specifically targeted foreign investors. In 2017, this province created a speculation tax for non-residents, effective on the purchase of residential accommodation by a foreign company or by someone who is not a Canadian citizen or resident.
For Carlos Leitão, the experience of British Columbia must be seriously studied in the context of our “chronic situation of housing shortage”. “In the case of Quebec, should it be imposed on the island of Montreal? In the metropolitan area? »
That remains to be seen, he says, and it would be just one of several measures to be put in place. Because if the idea is to limit short-term rental of the Airbnb type, he emphasizes (like Professor Somerville) that this tax alone cannot be enough and that other measures must also be implemented.
In the office of Eric Girard, Minister of Finance, it is indicated that a tax to discourage real estate speculation is not envisaged because “the presence of foreign buyers on the real estate market remains weak”, representing “0.6% of real estate transactions carried out in Quebec”, in June 2022.
Rent payment assistance and measures aimed at adding housing are considered more appropriate.