New figures from BC finance ministry reveal flood of sales to foreign buyers in week between tax announcement and implementation, then a hard stop in August

Joannah Connolly
REW

The new 15 per cent additional Property Transfer Tax on sales of Metro Vancouver homes by foreign nationals has caused those buyers to hold off  purchasing homes in the region, new data from the BC government shows.

Sales of Metro Vancouver homes to foreign nationals plummeted dramatically when comparing the seven-week period from June 10 and August 1 with the four-week period from August 2 (the first day of the new foreign buyer tax) to August 31, say statistics released by the BC Ministry of Finance September 22.

The figures for home sales to foreign buyers (identified as non-Canadian citizens or permanent residents, who may be living locally or overseas) in the whole of Metro Vancouver fell by 97 per cent from 1,974 transactions June 10-August 1 (13 per cent of all sales), to 60 between August 2 and 31 (less than one per cent of all sales).

The ministry pointed out that despite these immediate figures, it was too soon to assess the real impact of the tax, particularly there was a huge rush of sales to foreign nationals in the week leading up to the August 2 introduction of the new tax, which was anomalous. Furthermore, the periods being compared are not the same in terms of number of days, but these were the only data available as of September 22.

By individual city, the sales numbers were as follows:

• Vancouver: the number of sales to foreign nationals dropped from 508 in the seven-week period June 10-August 1, to 14 between August 2 and 31. The total value of those transactions dropped from $733 million to $11 million.
• Burnaby: sales to foreign nationals fell, in the same periods, from 262 to 5. The total value of those transactions dropped from $221 million to $2.1 million.
• Richmond: sales to foreign nationals fell from 310 to 10. The total value of those transactions dropped from $335 million to $6.4 million.
• Surrey: sales to foreign nationals fell from 318 to 10. The total value of those transactions dropped from $312 million to $6.7 million.

The full PDF report can be found on the BC Government website here.

© 2016 Real Estate Weekly

Big outlooks on offer at Cascade at the Pier

Simon Briault
The Vancouver Sun

Cascade at the Pier

Project location: Cascade West (175 Victory Ship Way) and Cascade East (185 Victory Ship Way)

Project size: 201 homes, 1,2, 2 plus den, 3, 3 plus den, 625 to 3,050 square feet, $629,900 to $6,000,000

Developer: Pinnacle International                                    

Architect: IBI Group Architects

Interior designer: False Creek Design

Sales centre: VIP Lounge, Pinnacle Hotel at the Pier, 138 Victory Ship Way, North Vancouver

Hours: 12pm to 5pm every day except Friday

Telephone: 604.984.0906

Website: www.cascadeatthepier.ca

Occupancy: fall 2018

In 1995 the City of North Vancouver partnered with the owners of the recently closed Wallace Shipyards and dry dock site at the bottom of Lonsdale to undertake a land use study.

The idea was to come up with a comprehensive plan to transform what had been a key industrial area since 1906 into a thriving new community. They completed the study in 1997 and, by 2001, a community plan. Pinnacle International purchased the development rights to the site later that same year.

Fast forward 15 years and the area has been completely revitalized – there has been a total of 1.25 million square feet of commercial, public amenity and residential development. There is extensive public waterfront access with a performance stage, a thriving summer night market, and plentiful commercial spaces used by shops, restaurants and services. Pinnacle International built the 105-room Pinnacle Hotel and eight apartment buildings.

The company’s last two residential buildings in this master-planned community, collectively called Cascade at the Pier, will be located right on the water. They will offer views of downtown Vancouver, Stanley Park and the Lions Gate bridge. Sales of the apartments have been brisk.

“You’re not going to find waterfront property anywhere in the city with views like this,” said Jo-Anne Duchscher, Cascade at the Pier’s sales manager. “It’s an extremely rare thing. The buildings are front and centre to the best part of downtown – the cruise ship dock and the five sales. At night it’s obviously all lit up, so you’ll always have an exceptional view at any time of day.”

Gabrielle Loren and her husband bought the three-bedroom, three-bathroom penthouse on the west side of the west building (Cascade West). She and her husband have two children, one in grade 12 and the other at university. Loren explained they were looking for somewhere that would give them peace and quiet, but also enough space for their kids as well as some community life around them to enjoy themselves.

“We’re going from a big house in West Vancouver with a big lot and all the upkeep that involves to an 1,800 square foot condo,” Loren said. “But it’s got about 2,400 square feet of outdoor living space so we’re pretty happy. We’ve got the rooftop deck from the penthouse as well as the patio right off the apartment.”

“I gotta say that the City of North Vancouver has really stepped up to the plate to provide a community where people can downsize to and one that allows for the type of living that our generation is now looking for,” Loren added. “The location is incredible. It’s got tons of restaurants. The best thing I make for dinner is reservations so that was very appealing to me. It’s also super close to transit, which will get us to the airport in quick time via a walk to the Seabus and a ride on the Canada Line. The idea of downsizing is that we’ll free up some money to be able to do some travelling when we retire.”

Grace Kwok, the sales and marketing director for the project, agreed that downsizers are a big part of the residential market these days. Cascade at the Pier is certainly proving popular with this demographic.

“But it’s not just downsizers,” said Kwok. “We have all kinds of people buying here. We have upgraders too – people who are living in a smaller one bedroom and want some more space. Our smallest one-bedrooms are more than 600 square feet, which is much larger than the average you would find in the downtown core.”

Cascade East and Cascade West will rise nine and 10-storeys respectively. They will have a total of 201 units with between one and three bedrooms in sizes ranging from 625 to 3050 square feet. All of them feature outdoor space and provide access to a sea walkway joining the two buildings.

Apartments feature hardwood flooring, Italian Scavolini kitchens and Bosch appliance packages. Bathrooms have separate showers and tubs, a feature in many of Pinnacle International’s residential developments. All units have ceilings of at least nine feet (main floor units and penthouses have ten foot ceilings).

The only individual expense for residents of Cascade at the Pier will be electricity. Everything else will be covered by the maintenance fees – hot water, air conditioning, gas for the cooktop and the use of all the amenities at the hotel. These include an indoor, five-lane, 80-foot lap pool, as well as a steam room, a sauna, a Jacuzzi, a whirlpool and a fully equipped gym. Homeowners get special VIP privileges.

“The views are just incredible and in fact the strata fees are extremely reasonable because you’re not paying for amenities in the building,” said Loren. “But as residents we get to use the facilities at the hotel as part of our maintenance fees. You can’t get a better deal.”

The sales centre at the Pinnacle Hotel is open from 12-5pm every day except Friday and completion of the development is scheduled for fall 2018.

© 2016 Postmedia Network Inc.

UBC-AREA DEVELOPMENT: Neutral interiors provide backdrop to Virtuoso?s surroundings

Mary Frances Hill
The Province

Virtuoso

What: 106 one- to three-bedroom homes

Where: 3581 Ross Drive, Vancouver

Residence sizes and prices: 775 — 1,591 sq. ft., from the mid-$700,000 range

Developer and builder: Adera Development Corporation

Sales centre: 118 – 6033 Gray Avenue, Vancouver

Hours: noon —  5 p.m., daily

Out-of-the ordinary style in otherwise ordinary rooms can create extraordinary interiors, as designer Lisa Hansen shows in the display space at Virtuoso, Adera’s new community in the UBC area.

At Virtuoso’s display homes, every space includes a conversation piece to attract the visitor’s gaze, against a backdrop of neutral furnishings.
Hansen, the principal at Area 3 Design, embraces the idea of décor as artwork in everything from a huge vase on a dining table and a futuristic cone-shaped light pendant, to dynamic asymmetry in décor and millwork in a bedroom.

That unique pendant light is one of the first things that will capture homebuyers’ attentions. “We believe the dining pendant is very much like a piece of art and can be an expression of the client and define the space,” she says.

Hansen knows that buyers visit for the community itself, so the interiors play on the coveted UBC location by way of their own simplicity.

“We wanted to create a clean modern interior that created a neutral backdrop, to not compete with the surroundings.”

Where Hansen doesn’t want the design to distract from the beauty of the surrounding neigbourhood, she still adds some reflections of the outside world.

Area 3 Design graces one bedroom with a long headboard made of natural wood, which spans the wall. Hansen adds touches of green on the surrounding textures such as pillows and the throw, paired with bedding in brown hues—all natural colours found in this community bordering Pacific Spirit park—but with a subtlety so that it doesn’t scream ‘west coast.’

Indeed, a mutual taste for decorating with subtlety and restraint defines the working relationship between Area 3 Designs and Adera Development, Hansen says.

“Adera loves this west coast influence. By only adding theses colours in small accents, it is very neutral yet welcoming.”

In another bedroom, three varied shades of brown envelop the visitor with warmth; a long bench is a standout piece lining the wall under a large window, meeting a tall plush panel in the corner of the room. The combination creates an interesting angle that defines the entire space. It’s a conversation piece in itself.
“We like to play with asymmetrical pieces to create the unexpected and create interest,” Hansen says of this unique design. “Millwork is another great way to utilize every square inch and visually create the illusion of a larger space.”

In one kitchen, cabinets are narrow and tall, unlike the standard cabinetry seen in most developments. Hansen says the narrowness and height of this custom cabinetry emphasizes the sense of elegance she wants to create.
“By bringing the cabinets up to the ceiling you create a sense of luxury and enlarge the space by elongating the cabinetry.”

© 2016 Postmedia Network Inc.

Joanne Lee-Young
The Province

Prices for proposed Westbank Corp. condos in Horseshoe Bay are dropping by more than 25 per cent on average at the same time as the Vancouver-based developer adopts a “locals first” policy that will initially sell only to buyers who live, work or own businesses in West Vancouver. 

Earlier this week, the company got initial rezoning approval from the District of West Vancouver for its plans to build an upscale condo project in Horseshoe Bay on land long-held by the family that runs Sewell’s Marina.

Westbank and the Sewells had pulled back their development application in July after local residents, business owners and councillors complained the initial prices presented by Westbank to potential buyers — both locally and overseas, in particular in Hong Kong — were too high at about $1,200 a square foot.

On June 14, at an event in Horseshoe Bay, about 1,000 people were given handouts listing starting prices for “a 584-square foot one-bedroom unit at $700,900; a 1,746-square foot three-bedroom unit at $2.189 million and for penthouses between 2,500- to 3,500-square feet ‘available on request.’” In Hong Kong, on June 11 and 12, Westbank held an open house and ran articles in major English and Chinese-language publications with prices mentioned in the same $1,200 a square foot range.

The company this week presented district council with prices in the $875 a square foot range, with some units going for less, some for more. It means a price list that is about 27 per cent lower.

“Our aim is for these units to be sold to people who live here and not as investments or for flipping purposes. The response (from Westbank and the Sewells) has been positive and a lot of headway was made,” said West Vancouver councillor Mary-Ann Booth, who earlier said council is “looking for a local price list that is for a local market, not a global one.”

According to Booth, the project’s 159 condo one-, two- and three-bedroom units will now be sold first to “West Van residents, workers or business operators,” for the first 30 days of sales.

This circle will then be expanded in the following 60 days to include similar buyers from the Lower Mainland.

“The idea is to not market overseas until we exhaust the local market,” said Booth. “My job isn’t putting money into the pockets of developers. It is meeting the needs of the community and the concerns it has over the housing affordability crisis.”

Booth said she has “been spreading word (of Westbank’s locals first arrangement) to other West Van developers. We are going to be looking for the same terms from them, too.” 

She said that “marketing to offshore investors is one thing. If people want to move from other places in the world to make a life here, that’s a different story.”

Westbank’s marketing executive, Michael Braun, told council the company will be training salespeople to establish relationships with buyers as a way of gauging their commitment to living in the condos instead of holding them for speculative reasons, said Booth.

“They will be looking for signs. There are only 159 units (in the Horseshoe Bay development). It’s not huge … They can pick and choose (buyers).”

Word of the locals first campaign emerged in early July before the province’s surprise decision to slap a 15 per cent tax on residential purchases by non-Canadian buyers in Metro Vancouver. More recently, the City of Vancouver has been trying to figure out how to identify and tax so-called empty homes.

“We are being way more proactive,” said Booth. “I actually do hold this up as a model for other jurisdictions. It makes sense when we are trying to crack the nut of affordability. You have to deal with the demand side. You can pump out all the supply, but if people are buying not to live in the units and we are not selling to those who need it the most for housing. …”

Asked about the $1,200 a square foot price, Megan Sewell said that “was months ago. The new price range reflects the current environment.”

She declined to elaborate except to say “we are focused on the community of Horseshoe Bay. This is a very personal project for us. We are invested in the community. We have been here for 85 years and four generations.”

“The locals first initiative is not related to price or about that,” said Westbank’s Braun in an email. “The initiative was developed in conjunction with the District of West Vancouver to build community in Horseshoe Bay, which was the original goal of the Sewell family that owns the land.

“The initiative is about providing first access to West Vancouver residents and those who work there, at the request of the District, and making all purchasers regardless of whether or not they live or work in West Vancouver, sign a declaration stating they or a family member intend to live in the home being purchased and be part of the Horseshoe Bay community and are not intending on flipping the home. Local first is about access and building community not price per square foot.

“The affordability discussion of Horseshoe Bay with West Vancouver council is around the fact that it is adding to the very limited supply of multi-family units in West Vancouver and the project is less expensive than the other new multi-family projects currently being marketed in West Vancouver,” said Braun.

He said “West Vancouver has 29 per cent multi-family housing compared to 60 per cent in Vancouver.”

Braun said there has been no price change. “We have not issued a price … for the project, nor could we have, as a disclosure statement has yet to be filed.” 

Council has to give the project final approval, expected on Oct. 3, before the company can file the disclosure statement required by the province’s Real Estate Development Marketing Act. Only then do prices become official.

© 2016 Postmedia Network Inc.

An almost total collapse in foreign buyers since August

Rob Shaw
The Province

The number of foreign buyers purchasing real estate in British Columbia dramatically dropped after the government instituted a 15 per cent foreign buyer tax on Aug. 2, new figures show.

The Ministry of Finance figures show an almost total collapse in the foreign buyer real estate purchases in Metro Vancouver, from 1,974 sales valued at $2.3 billion during June 10-Aug.1, to only 60 sales worth $46.9 million.

The data suggests an almost 97 per cent drop in the number of foreign buyers in Metro Vancouver after the tax came into effect. 

The time periods are not directly comparable in terms of the number of days, but were the only figures provided by the government on Thursday.

There was also a Lower Mainland breakdown for the same periods of June 10-Aug.1 versus Aug. 2-31:

The Finance Ministry cautioned that it was too soon to gauge the true impact of the tax, because the land title registry showed a massive rush to close real estate deals before the new tax deadline.

On July 29, the government said more than $850 million in residential property deals involving foreigners were recorded, which was equal to more than 55 per cent of all sales in Metro Vancouver that day and almost 40 per cent of the total amount of foreign deals since June 10.

The government said its auditors are now reviewing the deals to see if they were structured to avoid taxes.

© 2016 Postmedia Network Inc.

Ephraim Vecina
Mortgage Broker News

A foreign buyers’ tax similar to that implemented by the British Columbia government would prove fatal to the Toronto housing market, a renowned real estate lawyer cautioned.
 
“So much of [Toronto’s real estate] is owned by foreign owners, and we welcome their investments,” Toronto-based law practitioner Bob Aaron told CBC News.
 
“It’s important to our economy to have foreigners investing here. If we cut off the supply it’s going to say Canada is no longer open for business, we’re closed for business, we don’t want your money; that’s going to reverberate throughout the economy,” he added.
 
“The perception of the tax, rather than the tax itself caused a slump in the market and if we had a slump in the market the default rate in mortgages across the board would be horrible.”
 
Various market analysts have previously sounded the alarm on the possibility of greater investor influx into Toronto and other Canadian cities in the wake of B.C.’s new tax.
 
August sales in Vancouver declined by 26 per cent on a year-over-year basis, despite the city’s home price growth of 31.4 per cent (up to $933,100) in the same period.
 
However, on Tuesday (September 20), Mayor John Tory stated that the conditions that triggered foreigner-driven price increases in Vancouver do not necessarily exist in Toronto at the moment.
 
“I know there’s a problem with affordability … and as yet, there’s no one that’s reached any conclusions or given me any advice that there’s an identifiable problem that we can attach a solution to,” Tory said.
 
“We are watching it very closely and the main thing that I’m focused on … is increasing the supply of affordable housing. That, I think, is the single thing that I know we can do.”
 
Tory confirmed that further details on the city’s housing strategy would become available to the public at the Affordable Housing Summit in Toronto on September 30.

Copyright © 2016 Key Media Pty Ltd

The foreign buyers tax has resulted in a massive decline in foreign purchases

REP

VICTORIA _ Property purchase data released today by British Columbia’s Finance Ministry indicates a stampede by prospective foreign buyers to avoid paying a 15 per cent tax in the days before the Aug. 2 deadline.

But the numbers also reveal the sudden rush slowed to a trickle after the deadline.

A ministry statement says that on July 29, the last business day before property transactions could be registered before the new tax took effect, 55 per cent of all residential property deals in Metro Vancouver involved foreign nationals.

The statement says more than $850 million in property transactions involving foreign nationals were registered at the land titles office on July 29.

Government statistics show declines in real estate transactions involving foreign nationals since the introduction of the foreign buyers tax.

The figures indicate 1,974 property deals in Metro Vancouver involved foreign buyers from June 10 to Aug. 1, but that number dips to just 60 property transactions involving foreign buyers from Aug. 2 to 31.

Copyright © 2016 Key Media Pty Ltd

Foreign homebuyer launches lawsuit

? TIFFANY CRAWFORD AND STEPHANIE IP
The Province

The B.C. government faces a class-action lawsuit over its tax on foreign homebuyers.

The suit has been filed in B.C. Supreme Court on behalf of non-Canadians who pay an extra 15 per cent of the value of a home under the new Property Transfer Tax Act.

If the lawsuit is certified by the court and succeeds, the province could be forced to repay millions of dollars.

Jing Li, a 29-year-old from China who lives in Burnaby, is leading the suit. She moved to Canada in 2013 to complete a master’s degree in public administration at the University of Saskatchewan. After completing her degree, she moved to Burnaby but never became a permanent resident of Canada.

On July 13, Li signed a contract to buy property in Langley for $587,895, according to the court documents. Li was required to pay a non-refundable deposit of $55,990 on July 20, just before the tax came into effect in August. She now argues that because of the tax she has to pay an additional $83,850.

The suit claims many other foreign buyers entered into contracts to purchase homes before the tax was announced or came into force, but their transactions did not close until after Aug. 2.

Her lawyer, Luciana Brasil, argues the additional tax discriminates against foreign buyers because of their status as foreign nationals.

“The beauty of a class action is that people out there who are similarly situated as my client will benefit from this,” she said, noting her client was willing to “bear the flag for the whole class.”

Brasil also says it goes against more than 30 international treaties whereby Canada is committed to treat foreign nationals just as favourably as citizens of this country, including citizens of the U.S., Mexico, China, Hong Kong, the Philippines, Mexico, Poland and Russia.

Brasil said the lawsuit seeks to overturn the legislation and demands repayment of any tax added to the purchase price of a home because of the buyer’s nationality.

The civil suit filed Monday also claims that only the federal government has the exclusive power over the conduct and regulation of foreign trade.

The B.C. Ministry of Finance issued an email statement that said it could not speak directly to the notice of claim “as it is currently before the court.”

“Generally, however, all legislation goes through constitutional and legislative analysis, and our view is the changes build on tax policy that has been in place for almost 30 years,” the statement reads. “The Constitution allows provinces to impose taxes within the province to raise revenue for provincial purposes.”

A judge must decide if the class action application can proceed and Brasil says it could take six months to a year to set a date for the lawsuit.

Lawyer Arnon Dachner, who specializes in real estate, isn’t surprised there’s already a suit filed on the foreign home buyers tax, and said it’s possible there will be others who come “out of the woodwork” with other suits. “New laws are always open to challenge and tax laws are no different,” he told Postmedia.

“I think it’s important for each person that is potentially subject to this (foreign home buyers tax) to look at their own circumstances and how those might fit inside or outside of the law, to determine whether they might have a claim.”

© 2016 Postmedia Network Inc

Proposed tax gets council?s support, moves to public consultation stage

MATT ROBINSON
The Vancouver Sun

Stiff fines would await those caught trying to dodge an empty homes tax in Vancouver, city staff told councillors Tuesday.

A $10,000 penalty – the maximum fine the city can issue – is the main tool staff could use to enforce the proposed annual tax on homes that are not being used as principal residences, said Kathleen Llewellyn-Thomas, the city’s general manager of community services. 

“It would be our desire to make the penalties as hard as possible so that somebody would be incented to do the right thing and not declare falsely,” Llewellyn-Thomas said. 

Last week Mayor Gregor Robertson plugged the annual tax on empty homes not as a way to raise cash, but as a way to boost the city’s near-zero rental vacancy rate. 

The empty home tax rate is still being worked out, but it could be between one half to two per cent of a home’s assessed value, according to a recent staff report. Homeowners would be asked to self-declare whether their homes are being used as a principal residence.

Staff and the mayor have stated that the tax would bring in at least $2 million per year. When asked for the math behind that figure, city staff said their calculation assumed the owners of five per cent of the city’s empty homes would opt to pay the tax rather than rent (or try to evade). It relied on a recent study that claimed to have found 10,800 empty homes in the city, a blend of housing types with average property values of $1.9 million for single detached homes and $600,000 for condos, and a tax rate of 0.5 per cent.

Play with the variables and the estimated revenue changes. To give a sense of the range, if the owners of each of those 10,800 empty homes pay the tax rather than rent or evade, and if the tax was set at two per cent, it would be closer to $200 million per year. That figure relies on a similar blend of housing types as that used by the city in its estimate.

Robertson and city staff have stated any revenue earned above costs to administer the tax would go to affordable housing initiatives.

Coun. Heather Deal – who joined other Vision Vancouver and Green Party members in voting to support the tax and begin a fall public consultation process – had this to say to anyone who may be cooking up a tax evasion plan.

“I think that we talk about penalties here, well the benefit is, we’re going to support you in evading this tax. We’re going to support you in getting a renter in your place so you don’t pay this tax. It’s a very simple solution, actually.”

Llewellyn-Thomas said that under the proposed tax regime Vancouver homeowners would not be subject to the tax if they live in their homes full time, rent their homes full time to long-term tenants or spend a few months a year elsewhere.

Vancouver homeowners who would be hit with a tax include those who own property elsewhere and leave their homes empty, own property elsewhere but visit their home a few times a year and primarily use their property for short term rentals.

Certain homeowners who do not reside in their home as a principal residence would be able to declare exemptions, including those demolishing their homes or who only use them during the week. Absent from the list of exemptions were snowbirds who spend only six months a year in Vancouver. Staff plan to ask residents whether the tax should apply to those and other categories of homeowners.

All three Non-Partisan Association councillors have voted against the city’s plan. 

© 2016 Postmedia Network Inc.