Let’s get real about foreign ownership in Toronto

Foreign ownership in the housing market is a sticky wicket. As Canadians, we pride ourselves on our small-l liberal ideologies — we are loath to discriminate. To do so on the basis of “foreignness” in particular goes against the fundamental beliefs of the immigrant-based population that have always defined our cultural mosaic. Even the fact that, at least back in my nearly-forgotten school days, we call it a “mosaic” instead of the American-preferred “melting pot” is a testament to our eagerness to make nice with everyone.

I think that it’s at least partially a result of our reluctance to come off as bigots that we lack restrictions on foreign homeownership, a problem that is increasingly driving up already unaffordable housing prices in major urban centres in Canada. We’re so reluctant, it extends even to tracking data. We’re among few countries in the world that don’t track data on foreign ownership, and while the lack of data is definitely on the political radar these days, we’re a long way from actually restricting it.

There’s been a rash of stories recently about how foreign, and in particular Chinese, ownership is resulting in multi-million-dollar homes standing empty much of the year in Vancouver, their ownership attributed to housewives and students who quite obviously lack the necessary income to support them.

In November, Andy Yan of Bing Thom Architects did a study of single family homes in several upscale Vancouver neighbourhoods using the non-Anglicized last names of buyers (suggesting that they were not immigrants to Canada), and found that Chinese buyers accounted for more like two-thirds of home sales between summer 2014 and February 2015.

And yet, without accurate research, who’s to know? Some reports, like a recent one from the British Columbia Real Estate Association, say that what little data is available suggests that foreign ownership is far less pervasive than people think, making up about 5% of sales.

In its “Market Implications of Foreign Buyers” report last June, the Association said that more influential drivers of unaffordable housing were the lack of availability of single detached homes and densification policies that favour multi-unit dwellings, factors that are certainly driving up home prices here in Toronto.

In its latest “Housing Market Insights” report released last week, CMHC said that the share of foreign ownership in Toronto was actually higher than that in Vancouver, at 10% in Toronto centre on properties built since 2010 (7% in the Toronto CMA). In Vancouver, foreign buyers owned about 6% of the more recent stock. In both markets, foreign ownership of older properties built before 2010 was at about 2%.

But how much is too much? Is 10% okay? Regardless of percentage, doesn’t it make more sense to tax foreign ownership instead of just continuing to raise development charges that affect everyone?

In Australia, foreign ownership is limited to new builds, and it costs $5,000 just to table an offer on a property of up to $1 million; it goes up $10,000 for every million after that. Foreign investors caught dodging the fee can face jail time and fines in excess of $100,000. Homes bought illegally are forcibly sold by the government.

In Switzerland, the government assigns quotas to each region (canton) limiting the number of properties that can be sold to offshore buyers, and the leaders of those cantons have the freedom to further limit investment. In Mexico, while foreigners can buy properties unrestricted inland, foreign ownership is prohibited closer to shore. In Hong Kong, non-permanent residents are charged a 15% surcharge.

Taxing foreign homebuyers doesn’t make us racists or xenophobes. It makes us citizens and residents interested in the sovereignty of Canada, who want the people who live here full time to be able to afford new homes too.