The federal foreign buyer ban has been operating since January, 2023, but foreign buying in British Columbia spiked in dollar value this year, according to new data analysis.
Using property transfer tax data provided by the B.C. government, Simon Fraser University associate professor Andy Yan showed that residential purchases categorized as “foreign involvement transactions” had a total dollar value of nearly $664 million from January to September, 2020. In that same period this year, 834 foreign involvement residential transactions added up to nearly $824-million. The dollar value of foreign residential transactions in 2023 was $744.5-million. The total number of foreign transactions, including commercial, increased from 1,018 in 2023 to 1,020 in 2024.
Foreign purchases are transactions that involve at least one non-resident of Canada.
The overwhelming majority of transactions are for properties under $1 million, which could be an indication that they are presales that took a couple of years to close and become final.
B.C.’s foreign buyer tax revenues ranged from $51 million in 2020 to a high of $71 million in 2021, to $24 million in 2024.
There are likely a few reasons why foreign transactions continue, Prof. Yan said, adding that people shouldn’t confuse foreign buyers with immigrants. Foreign buyers are non-residents of Canada, said Prof. Yan, who is director of SFU’s City Program. However, in the past, Canada exacerbated the issue when it had a long-standing immigration program that basically traded real estate investment for citizenship, he said.
“What’s clear is that the foreign buyer ban was marketed as bullet-proof Kevlar, when in fact it’s more like cheese cloth,” he said. “It shows you the complexity of the globalization of residential real estate in British Columbia. The debate should be what gets built, and for whom. Foreign buying could have a role, but what kind of role? We know that real estate in Canada may not always appreciate, but it’s a safe haven for people who are willing to pay for it.”
Prof. Yan said it’s important to note that not all foreign money is accounted for in the data. That’s because foreign money enters from outside the country, such as through an untaxed worldwide earner who sends money to the spouse or child who has Canadian citizenship and whose name is on the land title of a property.
“The issue is that foreign capital is parked into residential properties in B.C. and may be distorting prices,” he said.
The issue of foreign money driving up land prices in B.C. was a big controversy a short decade ago. The conversation around foreign money was stymied by a refusal to merely acknowledge that it played a role. Prior to finally introducing a foreign buyer tax, then-premier Christy Clark said there was no evidence of foreign purchases driving up prices. The government didn’t release any data, so Prof. Yan scraped together the information at hand, which involved 172 purchases on Vancouver’s expensive west side over a six-month period, starting in August, 2014. In his case study, he found that two-thirds of purchases at University of B.C. and Point Grey were by people with non-Anglicized Chinese names, an indication they were likely recent immigrants relying on global sources of wealth. The most common occupation on title was homemaker and most purchases were for more than $2 million. And importantly, 82 per cent of the purchases were made with a mortgage, which showed the key role those Canadian lenders had played in the transactions.
Today, few people would argue that offshore buyers play a role in B.C.’s housing market. In fact, some members of the real estate industry are calling for an end to the ban, so we can bring foreign money back in greater numbers and stimulate the housing market again.
Tony Letvinchuk, managing director for Macdonald Commercial, argues that foreign money is necessary and the federal ban works against the delivery of housing.
“We are sending messages to offshore buyers with the foreign buyer ban and … other policies … that we are not interested in foreign investment into the country that is needed,” said Mr. Letvinchuk.
“The foreign investor buyer is essentially a financing vehicle, because these units, to get off the ground, these larger projects need to have a certain level of presale. The presale requirement is now more intense. These are projects over 100, 200, 300 units that need to presell, in order to fund the construction loan. And not only that, but they also must hit pricing levels to make the project work.”
Prof. Yan argues that foreign demand should be controlled, and transparency around it should continue. Before the policies were introduced to curb foreign demand, he took flak for daring to say that foreign capital was playing a role in Vancouver’s housing market and local lending, even though most realtors were openly acknowledging the trend.
In the era of “denialism” and “virtue camouflaging” there was a lot of time wasted when policies could have been introduced to ensure foreign buyers were at least paying their fair share of taxes, he said.
“Intentional ignorance is a poor policy instrument in determining how global capital fits or doesn’t into our housing system, and whom we are building for, and whom we’re not building for,” he said.
Retired real estate lawyer Ron Usher said that without question, the foreign buyer ban has had a major impact, which is revealed mostly in the steep decline of luxury property purchases. The ban has also “got to be killing” large-scale projects that were aimed at the foreign buyer market, he said.
He points out that the foreign buyer ban has a lot of exemptions, so foreign money was never completely banned. And he believes some transactions that show up in Prof. Yan’s analysis are likely presale purchases made years ago that completed in the last couple of years.
But he wonders too if B.C. transactions are slipping through the federal policy. He questions the sophistication of data sharing between the province and federal government, and if the feds conduct audits on transactions that should be flagged. To test the system, he tried filling out a B.C. property transfer tax form and entered details that are illegal within the context of the federal ban. However, he didn’t get an error message. He didn’t even have to include a social insurance number, or an individual tax number, which would enable the federal government to track land ownership for tax purposes, and prevent fraud. “Millions, if not billions of dollars have been left on the table as we struggle to collect proper taxes from non-residents,” said Mr. Usher, who recently retired as general counsel for the Society of Notaries Public of B.C. “We’re not going to ban non-residents from buying property. But if non-resident Bob bought a Point Grey house for $2 million and is selling it for $5 million, I want CRA to know right away. … As it is, it’s very complicated to find out if somebody is a non-resident or that they’re telling you the truth of it.
“It should be noted that CRA has been carrying out a much higher number of audits in recent years.”
Mortgage brokers, lawyers and notaries don’t have a direct way to validate a SIN number or ensure if the people involved in a transaction are residents of Canada.
“We make up all these rules and they are well intended, but … cross checking it is extremely difficult, if not impossible,” Mr. Usher said.
