B.C.-esque tax in Toronto would be disastrous - lawyer

B.C.-esque tax in Toronto would be disastrous - lawyer

B.C.-esque tax in Toronto would be disastrous - lawyer 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.

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6 Comments
  • Kris Kooblall 2016-09-22 9:20:10 AM
    This is a classic case and example of interest driven lobbying.

    This Toronto-based law practitioner Bob Aaron makes a case on pure emotive reasoning and one can understand why as there personal financial interests here at stake.

    /“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.”/

    This is not factual in any way. There is no corroborative evidence to support this speculation.

    Josh Gordon is assistant professor at the Simon Fraser University School of Public Policy says very clearly:

    "We want foreign “investment”: This isn’t productive “investment,” this is buying houses. There are no productivity gains from residential real estate spending – for all of its foreign “investment,” incomes in Vancouver remain among the lowest in urban Canada."

    Foreign investments in the purchase of residential real estate makes absolutely no sense as homes are not investment tools and the purchase by foreigners are used, in part, for flipping and often times are left vacant.

    This defeats the very purpose of Canadian families purchasing homes to live and work in proximity to their lives.

    What is the purpose of housing; to induce foreign investments?

    Foreign governments are protecting their prime residential real estate via legislation and their internal taxation system and we have ours up for sale to foreigners crowding out Canadian families in the process.

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  • Ron Butler 2016-09-22 11:19:10 AM
    I mainly agree with Kris and I will even propose that in some cases it is actually "trading" in houses. Trading in the same way you would trade stocks in an equity market, buying and selling houses as a momentum trade. I do not believe that particular type of trading adds no real value to our local economy. However those that move here and live here do in fact add to the local economy.

    At the end of the day it is difficult to tease out who belongs in one camp and who is in the other.
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  • Tomas 2016-09-22 1:25:24 PM
    Uh...Kris Kooblall, you know 99% of the readership of this site is mortgage brokers, right?

    Not the forum for pitching an academic tent.

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