Graduated Residency Requirements for Property Ownership in British Columbia
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The debate on whether foreign capital has impacted BC has been raging for two decades. Most loudly in the last few years when we've seen the largest increases in housing prices.
However, if foreign capital has had little impact on the cost of housing, there should be little push-back on restrictions to foreign RE ownership. If foreign capital has a significant impact on housing costs, then we must take measures to correct the situation.
Prices for residential properties have sky rocketed in British Columbia, while incomes have stagnated: Did your income go up 50%-70% from 2012 to 2018? Well, housing did across the entire Lower Mainland.
While some see their net worth grow, all of use suffer because our communities are in crises. We are hemorrhaging health care professionals, small business owners, teachers, fire, police, corporate employees - and they are not being replaced by people coming here. We are seeing the disintegration of our communities as the very people who should be building our communities are forced away. The very people who pay income taxes which support so many Provincial services. The burden of running the Province becomes heavier as it is spread across fewer income tax paying residents.
Vancouver holds the shameful position of the 3rd most unaffordable city in the world. That's a measure of the ratio between incomes and property values. Sure, we're still cheaper than New York City, San Francisco, Hong Kong. But people who live in those cities have greater opportunities to make big incomes. And - with the very weak Loonie, some of come here for a vacation home or an investment opportunity.
As for locals? Stats Canada revealed that 40% of Gen-X (born between 1965 to 1984) plan to leave the Lower Mainland in the next three years. Not far behind, about 1/3 of both Baby Boomers (1945-1964) and Millenials (1985-2005) are also making "escape plans." The number one reason: cost of housing.
The Median Household Income (also Stats Canada) is around $80,000. A detached house in the Fraser Valley now costs $1M. A townhouse $800K. Not in Vancouver - in Surrey. What chance do young couples have of building families here? Few or none - this is a crises, not a concern.
It is time take measures that countries from Denmark to China, from Vietnam to Switzerland, from New Zealand to Mexico have taken and protect the rights of full-time residents access to affordable housing.
Other countries tie property ownership to residency status or citizenship. The suggestions 1 through 3 below do not require Canadian Citizenship, only residency and only apply to the areas designated as high-demand such as Greater Vancouver, the Capitol Region, Kelowna, etc.
(1) Requirement of 30 months full-time residency to purchase pre-construction units. Our developers keep insisting that we must build our way to affordability. And yet, we see towers of condos built consisting primarily small "luxury" units, not appropriate for the locals most in need of housing: young couples planning families or young families. This requirement should ensure that developers plan for our local need.
(1A) Assignment sales (re-sale of pre-construction contracts) can only be made back to the developer for the original amount plus interest. This should halt the Monopoly game of flipping condo contracts by RE professionals and speculators.
(2) Requirement of 24 months full-time residency to purchase brand new construction: whether strata or detached. This should ensure that speculation builders take into account what the local population needs for housing, rather than building for the part time speculative buyer.
(3) Requirement of 18 months full-time residency to purchase pre-owned property. In order to make it possible for new arrivals to purchase property, it should be allowed that a contract can be entered into before that 18 month period, and a lease created for the time needed, but the final sale cannot complete until the 18 month period of residency has been met.
(4) Critical asset properties should be restricted to Canadian Citizens. Examples: any farm land, medical facilities (including retirement care centers), construction companies, food production companies, transportation companies, etc.
Measures beyond the speculation tax, "empty condo tax," FBT (all of which are being circumvented) are needed to control an out-of-control housing crises. Otherwise the crises of the last few years will simply continue... and we will lose more and more of the people we need to "run" communities.
In Metro Vancouver the detached benchmark 2018/2012: $1,608,000/$967,500; townhouse is $859,500/$470,000; a condo $701,700/$379,700. That's not Vancouver, that's the entire region encompassing Burnaby, Coquitlam, Maple Ridge, New Westminster, North Vancouver, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, South Delta, Squamish, Sunshine Coast, Vancouver, West Vancouver, and Whistler.
In the Fraser Valley, (Abbotsford, Langley, Surrey, N Delta, White Rock), a detached is $1,009,200/$576,600; townhouse $549,900/$318,400; condo $447,500/$205,800.
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