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

The proposed renovations at the Quesnel and District Arts and Recreation Centre. (CRD Drawing)
LETTER: Vote in favour of the Quesnel pool referendum

A letter to the editor published in the June 2 edition of the Quesnel Cariboo Observer

An advanced polling session at the Quesnel Seniors’ Centre on Monday, June 14 was busy. The regular voting day is set for June 19, at locations across the region. (Cassidy Dankochik Photo - Quesnel Cariboo Observer)
Public will be asked to approve $20 million for Quesnel pool upgrades

A referendum to approve a renovation of the Quesnel Arts and Recreation Centre is set for June 19

A Baker Creek tour from 2019 with a group of students - tours will be much smaller in 2020 due to COVID-19 prevention measures. (Submitted Photo)
Baker Creek Nature Explorers plans for full summer in Quesnel

The day program will run twice a week for two age groups

Environment Canada has issued a thunderstorm watch for the Cariboo north including Quesnel. (Black Press file image)
Environment Canada issues thunderstorm watch for Quesnel

A chance of thundershowers is forcasted to last until Tuesday

The Gold Pan Grannies attended the Quesnel Farmers’ Market where they sold perennials and vegetable plants and fruit trees by donation Saturday, May 29. They were able to raise $1,000 for the Stephen Lewis Foundation’s Grandmothers to Grandmothers Campaign. (Rebecca Dyok photo)
Gold Pan Grannies raise $1,000 for Grandmothers to Grandmothers Campaign

Annual plant sale at Quesnel Farmers’ Market a success

People watch a car burn during a riot following game 7 of the NHL Stanley Cup final in downtown Vancouver, B.C., in this June 15, 2011 photo. THE CANADIAN PRESS/Geoff Howe
10 years ago: Where were you during the 2011 Vancouver Stanley Cup Riots?

Smashed-in storefronts, looting, garbage can fires and overturned cars some of the damage remembered today

(Black Press Media file)
Dirty money: Canadian currency the most germ-filled in the world, survey suggests

Canadian plastic currency was found to contain 209 bacterial cultures

(pixabay file shot)
B.C. ombudsperson labels youth confinement in jail ‘unsafe,’ calls for changes

Review states a maximum of 22 hours for youth, aged 12 from to 17, to be placed in solitary

Eleonore Alamillo-Laberge, 6, reads a book in Ottawa on Monday, June 12, 2017. THE CANADIAN PRESS/Sean Kilpatrick
Parents will need to fight ‘COVID learning slump’ over summer: B.C. literacy experts

Parents who play an active role in educating their children this summer can reverse the slump by nearly 80%, says Janet Mort

The border crossing on Highway 11 in Abbotsford heading south (file)
Western premiers call for clarity, timelines on international travel, reopening rules

Trudeau has called Thursday meeting, premiers say they expect to leave that meeting with a plan

The B.C. government’s vaccine booking website is busy processing second-dose appointments, with more than 76 per cent of adults having received a first dose. THE CANADIAN PRESS/Jonathan Hayward
B.C.’s COVID-19 infections, hospitalizations stable for Tuesday

108 new confirmed cases, 139 in hospital, 39 in intensive care

A worker, at left, tends to a customer at a cosmetics shop amid the COVID-19 pandemic Thursday, May 20, 2021, in Los Angeles. (AP Photo/Marcio Jose Sanchez)
Half of cosmetics sold in Canada, U.S. contain toxic chemicals: study

Researchers found that 56% of foundations and eye products contain high levels of fluorine

White Rock’s Marine Drive has been converted to one-way traffic to allow more patio space for waterfront restaurants. (Peace Arch News)
Province promotes permanent pub patios in B.C. post-pandemic plan

More than 2,000 temporary expansions from COVID-19 rules

Most Read