As the provincial government attempts to tackle foreign speculation on Metro Vancouver’s residential real estate market with a new tax, there still exists a need to end such purchases of local farmland, according to Dr. Kent Mullinix, director of the Kwantlen Polytechnic University Institute for Sustainable Food Systems.
“I believe 100 per cent that this precious asset should not be owned outside the country,” said Mullinix, who for years has been sounding the alarm that farms are being bought up by corporate entities, both local and foreign.
“We just need to eliminate foreign ownership of agricultural land, period,” said Mullinix.
Additionally, Mullinix thinks property taxes ought to be higher and there should be covenants to ensure owners of farmland are actually farmers, with a farming plan.
To be able to farm land viably, a recent Vancity report states prices should be no more than $80,000 per acre.
Last year Mullinix estimated the average asking price of an acre of farmland in the Agricultural Land Reserve was $300,000 in Metro Vancouver. Presently, in east Richmond, at Sidaway and Blundell roads, realtor Layla Yang has 20 acres of ALR land listed for $11 million.
As a result, Mullinix estimates some 44,000 acres of farmable land is not in production in Metro Vancouver — a region with some of the best soil and growing conditions in North America.
He and the institute, with assistance from local municipalities, intend to research the impact foreign speculation has had on farming in Metro Vancouver, however he’s still waiting on data from the provincial government.
“If they don’t have it, the work will indicate a huge gap in information that the province, and the rest of us, need and should have,” said Mullinix.
On Monday B.C. Finance Minister Mike de Jong introduced a new bill to tax foreign purchasers of Metro Vancouver residential properties, at a rate of 15 per cent. The tax will be enforced by verifying a buyer’s social insurance number on property transfer forms. That revenue will be earmarked for housing-related projects.
According to government data released Tuesday, from June 10 to July 14, foreigners accounted for about one in 10 home purchases, or $885 million worth of property in the region (10 per cent of the value of all transactions). Nearly one in five homes in Richmond (18.2 per cent) were bought by foreigners, who spent $132 million in Richmond (19.1 per cent of the value). Foreigners spent about five per cent more on their transactions than did residents and Canadian citizens on Lulu Island.
“Richmond comes in as the highest” percentage, said de Jong.
On Monday de Jong said, “While investment from outside Canada is only one factor driving price increases, it represents an additional source of pressure on a market struggling to build enough new homes to keep up. This additional tax on foreign purchases will help manage foreign demand while new homes are built to meet local needs.”
Economist Tom Davidoff, director of the UBC Centre for Urban Economics and Real Estate, called the tax a “bold” step, but questioned whether it would result in a correction of more than 15 per cent, at most, considering there’s a fixed supply of housing.
Davidoff and other leading local economists have called for the province to institute an extra annual property tax based on income, instead of nationality. Declared income would serve as a tax credit and retired Canadians would be exempt.
He said his tax would discourage foreign speculation while incentivizing income earners to live in the city — something many believe is not happening, thus contributing to unaffordability.
Investigative journalist Ian Young of the South China Morning Post stated a similar tax is in place in Hong Kong. He said, via Twitter, that it would do little to curb foreign money from entering the Vancouver market, as that can be done by low-earning investor immigrants from Quebec.
NDP MLA David Eby said, via Twitter, the new tax would be “easy to evade” by setting up exempted Canadian shell companies to purchase real estate, for example.
Davidoff has previously said outside money transfers to existing low-earning residents, such as friends, family members or students is another loophole.
Meanwhile, Eby and the NDP have also called on the government for a task force on money laundering.
The Real Estate Board of Greater Vancouver said Monday the tax “needlessly injects uncertainty into the market,” and the province didn’t properly consult the industry.