The BC government pulled a surprise legislation to discourage foreign buyers from buying a property in Metro Vancouver, a harebrained attempt that could leave taxpayers footing the bill for a massive class-action lawsuit that is bound to happen.
Mylene Villanueva Lim, a mortgage professional at Dominion Lending Centres, said, “It is not so much the imposition of the foreign buyer tax (that is not the topic here) as it is the underhanded way it was brought in. It is the retroactive implementation of the legislation for contracts that have already been entered into in good faith, before the new tax was announced.”
She elaborated, “On a micro level, let us talk about the average Joe, not the multi-millionaire who could very well afford the 15 percent tax imposition, but the one who has been working among us, toiling and saving to own a home in time for his permanent residency status to be granted in the next week or so.”
“After a careful review of his finances and meeting all the conditions to his property purchase, Joe decided to go into a firm and binding contract to buy a home for $600,000. Then out of the blue, he finds himself needing to pay an extra $90,000. If poor Joe couldn’t close the deal as soon as possible (he has all of eight days from announcement date), he better come up with the extra $90,000 to be able to go ahead with his purchase or he defaults.
Lim explained that Joe’s seller, Jane, could bring him to court for breach of contract, or at the very least, he loses his deposit. Lim likewise asked, “What about if Jane had gone into a binding purchase contract, relying on Joe’s purchase of her property? She also faces a lawsuit and stands to lose her deposit.”
Lim strongly disagrees with the BC government study arbitrarily asking an extra 15 percent tax from unsuspecting buyers. She said these buyers were duped into thinking that the BC government can be depended on to honour binding agreements. “In other words, the BC government’s word is not worth the paper it is printed on,” Lim denounced.
The mortgage specialist added that on a macro level, the 15 percent foreign buyer tax would not solve the housing affordability in BC. According to Finance Minister Mike de Jong, foreign buyers only constitute approximately six percent of current transactions. The remaining 94 percent of buyers are fellow Canadians in BC or moving to BC for better opportunities.
“This has caused the escalation of real estate prices. The law of supply and demand, in our case, the supply cannot meet the demand. Our gov’t cannot temporarily assuage the resentment and anger of BC residents by using the mere six percent of buyers as scapegoats. They need to address the housing shortage so that the average Joe wouldn’t have to pay through his nose to afford a home in BC,” Lim said.
This is the crux of the housing shortage.
(Mylene Lim 604 783 9097 email@example.com www.BestOptionMortgages.ca)