Harper Late to the Game With Vague Promises On Foreign Money Problem

Here’s a summary of Harper’s speech today.

BACKGROUNDER

THE ISSUE
For many Canadians, owning a home is their most important investment and the achievement of a key life goal.

Our homes are the focus of our daily life. They are the place where we raise our children and relax with friends and family. But budgets are tight, and buying a home can be especially difficult in some parts of the country.

That’s why the Harper government believes in helping Canadian families purchase and invest in their first home. We’ve taken steps including:

Establishing the First-Time Home Buyers’ Tax Credit – a $5,000 tax credit to help with the costs associated with purchasing a home such as legal fees, and land transfer taxes[1]
Increasing the Home Buyers’ Plan from $20,000 to $25,000 to help
first-time home buyers make their down payment.
Establishing and expanding the Tax-Free Savings Account so Canadians can save and invest their money tax-free.

THE PLAN
Prime Minister Stephen Harper today announced two improvements to help aspiring homeowners purchase their first home. These announcements build on Prime Minister Harper’s commitment to introduce a permanent Home Renovation Tax Credit, to help homeowners maintain and increase the value of their residences.

Home Buyer’s Plan
The Home Buyer’s Plan allows aspiring homeowners to make tax-free withdrawals from their Registered Retirement Savings Plans to finance the purchase or new construction of their first home.

This program has become an important method of financing for first-time homeowners. Since its start, 2.7 million Canadians have used the program responsibly to purchase their first homes.

In 2009, the Harper Government increased the allowable withdrawal from $20,000 to $25,000 – the first increase since the program was established a generation earlier in 1992.[2]

A re-elected Harper Government will raise this limit once again – from $25,000 to $35,000[3]. Increasing the limit will cost an additional $30M starting in 2017-18.

With this increase in the allowable withdrawal, the Harper Government will continue to help families achieve the pride and stability of home ownership.

Speculative Foreign Capital
Affordability of housing is a significant issue for first-time home buyers in some areas of Canada.

Real estate commentators have suggested that speculative foreign buyers are a significant factor in driving homes out of the price range of average families, especially in Vancouver and Toronto.

Some estimate that as many as 15 percent of condos in Vancouver sit empty year round – perhaps owned by real estate speculators who only benefit when the price of homes rise.[4] Residents and aspiring home owners in cities like Vancouver and Toronto have regularly expressed frustration with foreign buyers who buy up available homes, and leave them vacant.

Anecdotal evidence from real estate agents, local residents and home buyers suggests that foreign buyers may play a role in driving up housing costs in certain regions by reducing the availability of homes for sale or engaging in expensive bidding wars.

If, in fact, these speculators are driving the cost of housing to unaffordable levels, that is something the government can, and should, find a way to address. However, in Canada, we do not currently collect the data we need to know the scope of the issue.[5]

That’s why the Prime Minister Stephen Harper will commit to collecting data on foreign buyer activity in Canada’s housing market, particularly in Vancouver and Toronto, at an incremental cost of $500,000 starting in 2016-17. And, as necessary, we will take concrete action in coordination with provinces to curb foreign speculation in Canada’s residential real estate market.

Canada’s peers around the globe have grappled with this same issue, with many jurisdictions taking steps to ensure that foreign investment in housing results in a sector that is sustainable and affordable for local residents.

Countries like the United Kingdom and New Zealand have chosen to address foreign speculation in real estate through tax tools, specific to their national context. In the United Kingdom, these tools have been deployed at the national and municipal level.

Other countries, like Australia, have put in place regulations that limit the ability of foreign buyers to purchase existing homes for investment purposes, but permit foreign investment that results in the construction of new homes. Foreign individuals residing temporarily in Australia may purchase an existing home, provided that they live it while in the country and sell it when they leave.

At the centre of the Australian model is the principle that foreign investment in residential real estate should increase Australia’s housing stock.

This same principle is at the heart of our commitment. Prime Minister Stephen Harper is committed to ensuring that foreign investment in housing supports the availability and affordability of homes for Canadians.

THE CHOICE
The practical, serious solutions introduced by the Prime Minister to help aspiring homeowners contrast against the ineffective and expensive schemes proposed by his opponents.

Justin has promised yet another vague, meaningless “national strategy” that will create work for bureaucrats in Ottawa but will do nothing for families. He just doesn’t understand the issue.

Mulcair and the NDP have promised expensive benefits for developers and investors that he can’t afford and that won’t help middle class families.

“Vancouverites looking to get into the real estate market might be disappointed. Mulcair steered clear of promising any help to first time home buyers. He also said the NDP won’t wade into the debate over foreign ownership in B.C. “No, that’s not part of my plan.” (News Talk 980 CKNW, June 7, 2015)
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