A letter to the government
eMemo #3842 - July 28, 2016

By now, you have likely heard about the BC Government's recently announced plan to introduce an additional 15 per cent tax to foreign investors purchasing within the Metro Vancouver region.

This initiative is an ill-considered response from the Government intended to deter foreign investment into our region. We believe that, in order for this tax to be effective in accomplishing its intended goal, there must be changes made before its implementation on August 2.

To inform Minister de Jong of our concerns, CEO Rob Philipp and I have sent a letter detailing what changes we believe should be made for the benefit of the public and our membership. Please see below for the letter in full.

As well, we are continuing to work with BCREA and our Brokers to gather data and information that will demonstrate the negative consequences that will occur if this tax is introduced as-is.

Lastly, thank you to those who have provided feedback and perspective on this tax, as it has been critical in informing our opposition to the methods in which it has been handled so far.

Charles Wiebe
President

---

July 28, 2016

The Honourable Mike de Jong
Minister of Finance & House Leader
Room 153, Parliament Buildings
Victoria, BC V8V 1X4

Dear Minister de Jong,

We write this letter to you on several fronts: as the Minister of Finance, an MLA in our region, a resident of the Lower Mainland, and as a personal friend, someone we share a positive history with.

Both you and the Liberal government are known as being clear thinkers, who do what is right, and support free enterprise. You are also known to engage with industry stakeholders. As a result, BC continues to enjoy one of the best, diverse and stable economies in North America.

We know that the government is concerned about housing affordability, as we all are. You have recently announced many upcoming changes intended for our industry, including acceptance of the recommendations made by the IAG report, the end of self-regulation, as well as the additional 15 per cent Property Transfer Tax (PTT) on the purchase of residential real estate in the Lower Mainland by foreign buyers.

The intent of this letter is to share with you our concerns about the 15 per cent addition to the PTT. We do not believe that it will address the affordability issue surrounding our housing market. In fact, in many cases, the tax will have a negative effect on the housing market.

This tax will hurt Fraser Valley communities trying to recruit professionals into their areas, drive some individuals to look for loopholes and negatively impact the Canadian consumers you are trying to support.

There has already been backlash from many citizens, as the implementation of the new tax did not include "grandfathering" for real estate transactions that were signed and expected to be completed after August 2, the date when the tax is expected to come into effect.

We are seeing dozens of situations where deals are collapsing, which has deeper consequences in addition to deterring a buyer from outside the country. Consider the local seller who has proceeded with a deal involving a foreign buyer, turning down other offers and putting the work in, now being left out to dry after their arranged buyer backs out due to the tax. This impacts their next home purchase, and those buyers and sellers along the line.

These impacts are contrary to the clarity and fairness that the BC Liberals are known for.

We strongly encourage you to consider the following:

1. If you must proceed with implementation of this new tax, allow the real estate transactions that are currently in the works to proceed as they were originally arranged. Let the new tax begin on new deals signed as of August 2, 2016. This will eliminate the confusion and distress the tax has generated and stop the domino effects that are happening now and affecting home buyers and sellers, including mostly Canadian citizens.
   
   
2. Have the new tax apply only to foreign buyers who will not be working in the province. Let's not discourage a newcomer from looking to our province to work and contribute to our communities. Consider that, if a skilled professional is looking to buy a townhouse in Langley for $500,000, they will be paying an additional $75,000 over and above the purchase price and closing costs with the introduction of the new tax. This is not affordable housing for most new workers wanting to move into our area, where home prices are already higher than in most communities across Canada. We still need skilled and professional workers to come to our region and we feel the new tax will make our communities less attractive to them.
   
   
3. Consult with our industry before making changes. We have deep knowledge and can offer balanced, objective perspectives that take into account all aspects of an issue. While our industry will no longer maintain self-regulation, we are still invested in its direction and are committed to working with government, the Superintendent and Council to improve our profession on terms that are positive for the public.
   
   
4. Give the IAG recommendations time to be implemented, as we believe that they will positively affect confidence in the market and serve consumers well. We are greatly encouraged by your decision to accept and move forward with many of the IAG Report's recommendations. This is an example of positive change.

We would be happy to meet with you in person or by telephone at your convenience to discuss any aspect of our letter.

Please take the time to seriously consider our thoughts on the proposed tax. We look forward to continuing to partner with government as we move forward.

Warm regards,

Charles Wiebe
President

Rob Philipp
CEO