One of the western world’s ‘hottest’ city residential markets has introduced a near-instant 15 per cent price surcharge on properties purchased by foreigners - prompting debate on whether it could or should happen in the UK.
The Liberal government in the Canadian province of British Columbia has introduced the surcharge on foreign buyers snapping up residential units in the so-called ‘metro’ area of Vancouver. The legislation, passed this week, sees the tax starting on August 2 - next Tuesday.
Media reports from Canada suggest that new figures show foreigners - chiefly the Chinese - buying more than Can$1 billion worth of property in British Columbia in the five weeks from June 10 to July 14. Some 85 per cent of it was in one relatively small area known as Lower Mainland.
The tax also applies to institutions that purchase residential units, but will not apply to commercial properties. In a bid to avoid some of the ‘smoke and mirrors’ problems seen in Britain and elsewhere, the BC government has given itself the authority to examine the citizenship status of directors and the beneficiaries of corporate profits in deciding whether to add taxes.
Newspapers in the area say the foreign buyers tax was a surprise move by the BC government which had recalled its parliament for what had been anticipated to be a tax on vacant properties.
Vancouver’s concept of a ‘foreign buyer’ surcharge is not unique.
In Asia, Hong Kong launched a 15 per cent surcharge on non-residents in 2012 in a bid to avoid a price bubble caused by, ironically, a surge of mainland Chinese buyers. Singapore has a similar tax regime. Meanwhile overseas buyers in Australia are, in certain cases, restricted to purchasing new-build homes.
In Europe, Denmark’s policy is that non-EU nationals cannot buy a home unless they have lived in the country for five years, are employed there, and the home will be their principal residence.
There are also strict second home controls on overseas buyers. Here in the UK, overseas owners can in some cases have higher capital gains liability when they sell investment properties.
Individual Swiss regions, known as cantons, exercise different levels of control over foreign buyers including - for selected periods - occasional outright bans.