Valérie Plante’s party, Projet Montréal, is proposing a series of tax measures to counter real estate speculation in the metropolis which pushes prices up, but these receive a mixed reception from the experts consulted by The duty.
In its electoral platform, the party in power since 2017 in Montreal persists in its request to Quebec for authorization to impose a tax on foreign real estate investments. Steps have already been taken by the City with the Legault government in this regard in recent years, but the file remains unresolved.
“It is time for our work to be successful and for us to give ourselves a set of tools so that Montreal remains an affordable metropolis”, insists on To have to Projet Montréal’s candidate in the Vieux-Rosemont district, Dominique Ollivier, when contacted on Wednesday.
A limited effect
In recent years, the number of foreign buyers in the Montreal real estate market has increased significantly, swelling in particular by 21% between 2017 and 2018, according to a report by the firm JLR Solutions foncières dating from 2019. Among the foreign buyers, the Chinese are those whose number has increased the most in the metropolis in recent years.
However, the impacts of foreign buyers on the Montreal real estate market remain low, proportionally. These represented 3.4% of total buyers on the island in 2018, according to this firm. This proportion has been rather stable in recent years and remains lower than it was in Toronto and Vancouver a few years ago, before they implemented taxes of 15 to 20%. on foreign investments in real estate made in their territory.
“Foreign capital is much more important in Vancouver and Toronto, which means that with this measure, we are not attacking much in Montreal”, drops the To have to Professor at the School of Urban Planning and Landscape Architecture at the University of Montreal Jean-Philippe Meloche.
The latter also fears that such a tax, even if it targets real estate investors, has the effect of harming newcomers who do not have a permanent status in Quebec and wish to live there.
“Yes, there are foreigners who buy in Montreal, but most of it is because they want to live here and be part of the community. It takes them housing, ”he recalls.
Ms. Ollivier believes, however, that such a tax could be implemented without harming foreigners who come to Montreal to settle or work there. “I think we can very well modulate [cette mesure fiscale] for immigrants who come to settle here, if we link it with a residency obligation, for example, ”she argues.
The vice-president and general manager of Royal LePage in Quebec, Dominic St-Pierre, believes that the presence of foreign buyers – which is particularly felt in the condominium market – has reached a worrying threshold in Montreal in recent years. years. However, he rather proposes the establishment of a tax on vacant properties, rather than on foreign investors, in order to fight more effectively against real estate speculation in the metropolis.
Prevent rapid resales
Projet Montréal also wishes to discourage the rapid resale of properties in Montreal for speculative purposes, what are commonly called real estate “flips”. Last year, the number of properties that were bought and sold quickly in the greater Montreal area was higher than ever, according to a report by the Canada Mortgage and Housing Corporation (CMHC) released in July. A situation which contributes to pushing the value of properties upwards.
“What we would like is to impose a minimum period of ownership of real estate which is at least two years, to discourage flips real estate, ”explains Ms. Ollivier. Properties that would be sold within a shorter period of time would be subject to a 10 to 15% tax at the time of resale, she said. A file that will however have to be discussed with Quebec at first glance, she adds.
While acknowledging that the rapid rise in prices in the real estate market “attracts speculators” to Montreal, Dominic St-Pierre is concerned that such a measure, if it comes into effect, will harm bona fide homeowners. They, they point out, may be forced to move soon after acquiring a new property, when the unexpected arises.
“We would find it a shame to penalize someone who changes ownership [peu de temps après l’avoir acquise] because he changes jobs or divorces, for example, ”points out Mr. St-Pierre. On this point, Ms. Ollivier says that exemptions from this possible tax could apply to “specific cases”.