The formula for limiting foreign investment may already exist, but is it too late for Vancouver and Toronto?
A commission exists that oversees and regulates foreign investment within Prince Edward Island. Its formula for curbing foreign investment could work in other foreign-influenced markets – with some tweaks – according to one industry veteran.
“The way we have it here was established a long time ago. It was because the foreign [ownership] started to get drastic,” Greg Lipton, a real estate agent with Blue Ocean Real Estate in PEI, told MortgageBrokerNews.ca. “There were a lot of Americans buying homes along the waterfront. The Island Regulatory Appeals Commission was put in to deal with foreign ownership and possibly deter it a bit.”
In 1975, the PEI government amended its Real Property Act to restrict purchase of land by non-residents.
The Island Regulatory Appeals Commission (IRAC) oversees the Lands Protection Act, which includes application requirements for non-residents who wish to purchase property in the province.
“A non-resident person or corporation, or a resident corporation must make application if the person or corporation will have an aggregate land holding in excess of 5 acres, or having shore frontage in excess of 165 feet,” the IRAC site says.
Those requirements have helped minimize the influence of foreign ownership in the province and dampened price inflation, according to Lipton.
So could it work in some of Canada’s hotter real estate markets?
“I think Vancouver is a different kettle of fish because you’ve already got such a major influx (of foreign investment) that trying to rein that in ... may be a little too late,” Lipton said. “You’ve got an awful lot of people that are buying up homes all over the place. However, it could work. You’d have to take the example here and tweak it a little bit.”
Those tweaks could include requiring applications for additional homes, or for homes in certain areas.
Still, there are many who argue against the need to oversee foreign ownership, believing it's an essential driver of Canada's housing market.