How Does Foreign Buyer Property Transfer Tax Policy Affect Vancouver Real Estate | Mortgage View

Hey guys. It’s Gary Wong with again. Today, here I am with my guest and friend
Bai Jiang. He is a local real estate investor as well
as a mortgage broker. And the founder of the largest lore mainland
Real Estate investor-focused meet-up group called
Earning Passive Income through Real Estate. Today, we’re going to talk about how the
property transfer tax policy changes in the past couple of weeks has affected the Vancouver
real Estate market. So I’m going to talking about the real estate
aspect in terms of people have been asking me, ‘how is it affecting
the market?’ ‘Is it making Vancouver much more affordable?’ No, unfortunately, it’s not making it much
more affordable. Some people have may be the misconception
that the market was going to be cheaper by 15 or
20% or 30%. And then people thought there was a correction. The media headlines started blasting out there. But in my perspective, the market is slower
because it’s not spring—it’s definitely summer. Summer is definitely historically a slower
time of the year. Having the implementation of the policy
Has definitely further slowed down the market. Has it slowed down another 15%? I don’t really think so. Have we seen indications of slow down? Yes we have. Especially in the first week or two of implementation,
there was a lot of frenzy, a lot of hesitation. They’re going to tank the market. And a lot of people we’re hesitant to buy
or sell. But then as time went by, people have their
lives to live. People need to upsize, downsize. People get divorced and then they need to
sell. People die and then they have to sell the
house and estates and all that stuff. So like Bai mentioned earlier, demand and
supply– There’s just not enough supply out there. So with the increase in policy–
Actually, our company has talked about it in the news saying that
some of the developers that we have connections with
have hesitated to buy land to develop multifamily. In that sense it’s actually hindering developers–
some developers from developing land and creating supply. So is it actually hurting local buyers? Somewhat. For example a foreign buyer–
We have actual cases where a foreign buyer has purchased a local home owners home
Deposit and confirm sale. And then the local home owner then goes out
and buys their home. But then the foreign buyer finds about this
policy and decides to walk on the deal. The local home owner then has to– might have
to default on their purchase. And then they might get stuck with 2 properties–
2 mortgages. There’s lot of things going on. Nothing’s set in stone right now. There are a lot of negotiations back and forth. But there are lawsuits coming from some individuals. And the interesting thing is on the news they’ve
talked about this policy has violated NAFTA (North American Free Trade agreement) affecting
the Americans and the Mexicans. Well, the interesting thing is
that under the North American Free Trade Agreement, the Americans and the Mexicans can actually
pay the 15% tax and then file to the tribunal. And then they can get that 15% reimbursed
to them through the federal government. If they pay the 15% to the provincial government
but they get reimbursed by the federal government, it’s only a matter of time before the federal
government comes in and steps in and says ‘no, no more.’ Some people say, ‘has there been no effect?’ No, that’s not true as well. There’s may be a couple of percent in terms
of pricing. I had a case where I was supposed to get 3
offers on my listing but I ended up getting 1 listing. But in the end I still sold the property. And I sold it for– pretty much within market
value. Not as high as we anticipated but still within
a few percent– 1%-2%. So I don’t really see a long term effect
– damage. I do feel that it is a mistake to make it
retroactive. It is a bit unjust as many people have said
out there where it’s just pulling the carpet under someone’s feet. No warning. It does discourage or hinder foreign companies
and foreign investors from wanting to invest in British Columbia. Because policies like these if they keep getting
implemented without notice and– It would discourage foreign investment, definitely. What do you think Bai? I agree with you– with your points. It leaves a very bad taste in the mouths of
the foreign investors. And they’re knowing what the implemented–
once they make the purchase. If you look at the transactions that were
leading up to August 2nd, the land title’s office has had a record
high on Thursday and Friday before the long weekend
in terms of numbers of closings that took place. Their systems were heavily overloaded based
on just the need to try and save 15%. I heard notaries and lawyers were charging
$10,000 just to— It wasn’t necessarily benefitting the public
in terms of foreign realty. Maybe they gave some lawyers some early bonuses. Technically, when you look at some of that
15%– From a mortgage perspective,
when you look at that 15% that closing clause needs to have a history. So if somebody needed to come up with $300,000–
all of a sudden like to close right away. And that history was not known as proof then
technically, it hasn’t met all the lenders’ conditions. So I don’t know to what extent
the lenders’ went back and re-verified everything. Especially, on a tight timeline to get everything
done and closed off. Yea. Definitely. So if you have any further questions for me or Bai. Please feel free to contact us. Our contact information is down below. Once again, thanks for watching. Subscribe. Comment below. Until next time. God bless you! Thanks guys for watching my video. Please subscribe and share with your friends. Email me if you have any questions. Thank you.

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