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Canada bans foreign home buyers for two years

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Re: Canada bans foreign home buyers for two years

#31

Post by it_citizen »

eru wrote: post #24

This is really, really stupid. It reeks of economic illiteracy. If you think foreign investor cause harm, just estimate how much harm it is, and tax them accordingly. Why would you ban them? Taxing is almost always more economically efficient than banning. You can even pay out (part of) the tax take to the people you think are harmed. (In general, a land value tax for everyone would be a good idea. But if political r…

I am not super familiar with real estate markets. Has the empty house tax helped in any way?

Even if it is not the best solution, is there any huge downside to that ban?

Re: Canada bans foreign home buyers for two years

#33

Post by cik »

I love Canada - but our government has always been idiotic. The ban is against 'foreign investors'. But the thing is, Canada has a corporate designation called CCPC: Canadian Controlled Private Corporation. Directors of said corporation have to be > 50% resident Canadians.

A corporation can be created for the purchase of this property, with a Canadian controlling, and being the director. This will literally do nothing other than add about $300 to the cost of an existing transaction. Shareholders can pre-execute a sale of shares at the existing value - to be executed later. This is completely legal.

Canada would have to reform the various types of corporate entities. That's simply not going to happen.

Re: Canada bans foreign home buyers for two years

#34

Post by tici_88 »

Foreigners, especially the billionaire type, can and have been setting up shell corporations through which to purchase Canadian real estate. The proposed measure will do nothing to stop this practice.

The measures proposed by the Canadian government are likely just political posturing and indented to "pull the wool over the eyes" of Canadian voters because the housing bubble/crisis has reached epic proportions and everyone is talking about it.

Re: Canada bans foreign home buyers for two years

#35

Post by jakear »

988747 wrote: post #16
smcl wrote: post #9

Earlier quoted context omitted.

It could be that there is a sufficient amount of housing (built or being built), but that it is often not occupied on account of just being an asset in a wealthy person’s portfolio. In this case it could be seen as wasteful to build more, and too much of an oversupply could lead to an economic collapse if it’s on a big enough scale. The other possibility is that they are building more homes, and want them to be purch…

>> being an asset in a wealthy person’s portfolio Why wouldn't that wealthy person rent the property out and get better ROI? Keeping it empty does not make sense to me.

Beats me. But I see it everywhere in my home town. I’m actually vaguely acquainted with the agent responsible for the bulk of it. His specialty is selling homes to absurdly rich Chinese. They typically buy sight unseen, his daughter (friend of mine) arranges for some half livable furnishings to be put in place, and maybe 1 week a year tops they’ll visit.

I believe the people are rich enough that the logistic overhead of even having a property manager rent it out isn’t worth it to them. Better to keep it in pristine condition and flip it however many years down the road.

Re: Canada bans foreign home buyers for two years

#36

Post by [deleted] »

jowsie wrote: post #13
j7ake wrote: post #8

I would have thought that the pandemic and travel restrictions would have effectively “banned foreigners from buying homes” for 2 years. If home prices haven’t fallen during pandemic, then the reason why prices are high is not because of foreigners. The government is trying to point to a scapegoat rather than trying to get to the root cause.

From what I've read before, the issue isn't foreigners buying the homes to live in, it's foreigners using it as a way to move cash out of their own country to hedge against devaluation/government blocks. A lot of the houses don't even end up being rented out, they just sit vacant.

[deleted]

Re: Canada bans foreign home buyers for two years

#37

Post by bawolff »

eru wrote: post #22
iefbr14 wrote: post #4

So why don't they build more homes?

Or why don't they just tax the owning of real estate? No need to ban those 'evil' foreigners, just tax them so they can pay for what the locals want.

BC actually did this (tax empty homes). Did not affect prices.

I suspect the real problem is low supply high demand + domestic speculation, which is why none of the blame the foreigner solutions work

Re: Canada bans foreign home buyers for two years

#38

Post by dmalik »

tici_88 wrote: post #34

Foreigners, especially the billionaire type, can and have been setting up shell corporations through which to purchase Canadian real estate. The proposed measure will do nothing to stop this practice. The measures proposed by the Canadian government are likely just political posturing and indented to "pull the wool over the eyes" of Canadian voters because the housing bubble/crisis has reached epic proportions and ev…

This is correct. The Beaverton has a good satirical article that gave me a chuckle talking about this.

https://www.thebeaverton.com/2022/04/canada-to-ban-foreign-h...

Re: Canada bans foreign home buyers for two years

#39

Post by algesten »

988747 wrote: post #16
smcl wrote: post #9

Earlier quoted context omitted.

It could be that there is a sufficient amount of housing (built or being built), but that it is often not occupied on account of just being an asset in a wealthy person’s portfolio. In this case it could be seen as wasteful to build more, and too much of an oversupply could lead to an economic collapse if it’s on a big enough scale. The other possibility is that they are building more homes, and want them to be purch…

>> being an asset in a wealthy person’s portfolio Why wouldn't that wealthy person rent the property out and get better ROI? Keeping it empty does not make sense to me.

With a 20% market increase in a year, you don't have to rent it. Renting a property out always comes with hassle. Many countries have tenant's rights that kick in after a period of time.

I live in Barcelona, and the rental market is crazy. Technically I should be allowed to sign a contract for 5 years, but because of the rights that kick in after 12 months, there's a ton of landlords that only want to offer 11 month contracts.

Re: Canada bans foreign home buyers for two years

#40

Post by krageon »

eru wrote: post #24

This is really, really stupid. It reeks of economic illiteracy. If you think foreign investor cause harm, just estimate how much harm it is, and tax them accordingly. Why would you ban them? Taxing is almost always more economically efficient than banning. You can even pay out (part of) the tax take to the people you think are harmed. (In general, a land value tax for everyone would be a good idea. But if political r…

It's not about the "economy", it's about people being able to buy a roof over their head. Foreign investors simply don't belong in that space at all.
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