New homes are built in a housing construction development in the west end of Ottawa on Thursday, May 6, 2021. NDP Leader Jagmeet Singh is pledging a hefty foreign home buyers’ tax and “massive” investment in housing to chill a white-hot real estate market.THE CANADIAN PRESS/Sean Kilpatrick

New homes are built in a housing construction development in the west end of Ottawa on Thursday, May 6, 2021. NDP Leader Jagmeet Singh is pledging a hefty foreign home buyers’ tax and “massive” investment in housing to chill a white-hot real estate market.THE CANADIAN PRESS/Sean Kilpatrick

NDP promises foreign buyers’ tax, half a million new homes to cool housing market

Market watchers say a countrywide tax on non-resident homebuyers amounts to a ham-fisted approach

NDP Leader Jagmeet Singh is pledging a hefty foreign home buyers’ tax and “massive” investment in housing to chill a boiling-hot real estate market.

Unveiled today at a virtual news conference, Singh’s election campaign-style promise would impose a 20 per cent levy on purchases by non-residents and pour $14 billion into housing construction, with the end goal of 500,000 new units over four years along with widespread job creation.

The main goal is to boost supply anddrive down increasingly unaffordable rental and home prices that have rippled beyond Toronto and Vancouver into outlying towns and cities from Nova Scotia to British Columbia’s Fraser Valley.

“Let’s massively invest in housing as a way to create jobs locally in communities and as a way to ensure people have a place to call home,” Singh said, accusing the Liberals of ignoring a long-standing crisis.

“We know that people are treating Canada like a stock market when it comes to housing and just plopping their money into the housing market, hoping it will continue to grow.”

The dual pledges to tax and invest seekto outshine last month’s federal budget by the Liberals, who plan to spend $2.4 billion over five years on affordable housing and follow through on a promiseto tax non-residents who own vacant homes in Canada at one per cent of the assessed value.

The announcement could hold particular appeal for young voters — a key demographic in any NDP campaign — who feel priced out of the market.

In B.C., a 15 per cent foreign buyers’ tax imposed in Metro Vancouver in 2016 — since raised to 20 per cent and expanded to other communities — had a short-term cooling effect, but prices have been on a stratospheric rise since 2019, spiking in recent months.

“It did not have a very big impact on the market,” said Don Kottick, CEO of Sotheby’s International Realty Canada.

“Governments really have to address the supply side. Residential construction really hasn’t kept pace with the population for decades now.”

Market watchers also say a countrywide tax on non-resident homebuyers amounts to a ham-fisted approach to real estate, which comes down to local conditions, and could have unintended consequences in internationaltourist spots such as Banff and Mont-Tremblant.

Heftier personal savings, house-obsessed millennials and historically low interest rates during the COVID-19 pandemic have conspired to send residential prices soaring amid a dire shortage of units.

READ MORE: Forecast calls for B.C. home sales to ‘explode,’ then drop off

The average home-sale price in Canada rose 32 per cent year over year in March to a record $717,000, with sales activity up by more than three-quarters, according to the Canadian Real Estate Association.

An analysis this week by TD Economics suggested the Liberals’ one per cent foreign owners’ tax is “unlikely to significantly dent current activity” in the market because foreign demand has already cooled in B.C. and Ontario. What is driving the current frenzy in sales and prices is driven to a large extent by domestic buyers, the analysis said.

Singh sought to address another market pressure point, calling for a crackdown on money laundering in real estate. Black-market profits funnelled through land purchases have been “directly attributed to driving up the cost of housing,” he noted.

The Liberal government set its sights on money laundering and market transparency last month.

In a little-noticed line item, the budget allotted $2.1 million over two years for the Industry Department to implement a beneficial ownership registry by 2025.

With some of the weakest money-laundering laws among liberal democracies, Canada currently offers anonymity to investors and money launderers by allowing the real, or “beneficial,” owner to go undisclosed, similar to the Seychelles or British Virgin Islands.

This week, the Liberals moved ahead with another measure, one first unveiled years ago, to ease mortgage costs for more first-time homebuyers by having the government take an equity stake in homes in some of the country’s hottest markets.

The original program saw federal funds pick up five per cent of a mortgage on existing homes for households that earn under $120,000 a year, on a mortgage of no more than $480,000.

The value increased up to 10 per cent for new homes to spur construction and expand supply that the federal government has long seen as a way to cool rising prices.

But starting this week, the program expanded for applicants in Toronto, Vancouver and Victoria, setting the income cutoff at $150,000 and the mortgage limit of $675,000.

The Canada Mortgage and Housing Corporation estimates that should allow first-time buyers in large urban centres to afford homes of up to $722,000, up from the $505,000 in other areas of the country.

There isn’t any interest on the money, but a buyer would have to repay the incentive in full when they sell their house or after 25 years of living in the home.

James Laird, co-founder of the website Ratehub.ca, said a household with $150,000 of income, and with the minimum down payment, can currently qualify for a home valued at $770,000.

He questioned whether the program was worth using.

“Even if a homeowner could qualify for the same amount, owning a home with the government still does not make any sense,” he said in a statement. “The government gets to enjoy the appreciation of the home, while paying none of the expenses.”

Christopher Reynolds and Jordan Press, The Canadian Press


Like us on Facebook and follow us on Twitter.

HousingJagmeet Singhndp

Just Posted

Joseph Albert Brooks, 94-years-young pf Prince Rupert offers traditional prayers and smudging to the sick. (Photo: K-J Millar/The Northern View)
Heart of our City: Joseph Albert Brooks keeps smudging and praying for others

94-year-old Tsimshian elder just wants some help washing his floors

Land along Prince Rupert’s waterfront, PID 012-247-391, where residents say excessive industrial train noise is stemming from, has been found to be owned by the City of Prince Rupert and is not federal land like first presented, Prince Rupert Environmental Society stated on June 17. (Image: supplied by Land Title and Survey, Govt. of BC.)
Error found on land titles map may assist city with noise control enforcement of industry

Prince Rupert residents had been told there was no municipal jurisdiction to enforce noise bylaws

Department of Oceans and Fisheries has announced as of July 19 chinook salmon is not to be fished in certain areas in BC tidal waters until July. Spring chinook salmon are seen swimming. (Photo courtesy Michael Humling, US Fish & Wildlife Service)
Chinook Salmon limits set to zero in some BC tidal waters

DFO implement restrictions to protect Chinook Salmon

Visitors to a pop-up temporary aquarium in Prince Rupert will have the chance to see marine ecology from July 21 to Aug. 15, like this viewer watching sea anemones at the Ripley’s Aquarium in Toronto. (Photo: K-J Millar/The Northern View)
Prince Rupert pop-up aquarium will bring sea level to eye level in July

A permanent peak to reef ecology centre is in the planning stages by North Coast Ecology Society

Prince Rupert’s Ellen Wright and Graeme Dickens jam out during filming the two Ring System Studio concerts to be broadcast on television during June. (Photo: supplied, H. Cox)
Ring System Studio sounds on television

Two concerts by the Prince Rupert music school will be broadcast in June

Marco Mendicino, Minister of Immigration, Refugees and Citizenship during a press conference in Ottawa on Thursday, May 13, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Canada to welcome 45,000 refugees this year, says immigration minister

Canada plans to increase persons admitted from 23,500 to 45,000 and expedite permanent residency applications

A dose of the Pfizer-BioNTech COVID-19 vaccine is pictured at a vaccination site in Vancouver Thursday, March 11, 2021. THE CANADIAN PRESS/Jonathan Hayward
NACI advice to mix vaccines gets varied reaction from AstraZeneca double-dosers

NACI recommends an mRNA vaccine for all Canadians receiving a second dose of a COVID-19 vaccine

A aerial view shows the debris going into Quesnel Lake caused by a tailings pond breach near the town of Likely, B.C., Tuesday, Aug. 5, 2014. THE CANADIAN PRESS/Jonathan Hayward
Updated tailings code after Mount Polley an improvement: B.C. mines auditor

British Columbia’s chief auditor of mines has found changes to the province’s requirements for tailings storage facilities

A North Vancouver man was arrested Friday and three police officers were injured after a 10-person broke out at English Bay on June 19, 2021. (Youtube/Screen grab)
Man arrested, 3 police injured during 10-person brawl at Vancouver beach

The arrest was captured on video by bystanders, many of whom heckled the officers as they struggled with the handcuffed man

Patrick O’Brien, a 75-year-old fisherman, went missing near Port Angeles Thursday evening. (Courtesy of U.S. Coast Guard)
Search for lost fisherman near Victoria suspended, U.S. Coast Guard says

The 75-year-old man was reported missing Thursday evening

Bruce Springsteen performs at the 13th annual Stand Up For Heroes benefit concert in support of the Bob Woodruff Foundation in New York on Nov. 4, 2019. (Greg Allen/Invision/AP)
Canadians who got AstraZeneca shot can now see ‘Springsteen on Broadway’

B.C. mayor David Screech who received his second AstraZeneca dose last week can now attend the show

New research suggests wolves can be steered away from the endangered caribou herds they prey on by making the man-made trails they use to hunt harder to move along. THE CANADIAN PRESS/Nathan Denette
Culling cutlines, not B.C. wolves, key to preserving caribou herds: researcher

The government has turned to killing hundreds of wolves in an effort to keep caribou around

Gary Abbott (left) and Louis De Jaeger were two of the organizers for the 2014 Spirit of the People Powwow in Chilliwack. Monday, June 21, 2021 is Indigenous Peoples Day. (Jenna Hauck/ Chilliwack Progress file)
Unofficial holidays: Here’s what people are celebrating for the week of June 20 to 26

Indigenous Peoples Day, Take Your Dog to Work Day, Onion Rings Day all coming up this week

Most Read