Canada’s national housing agency is starting to use new tools to get a handle on just how much foreign money is flowing into the country’s housing market.
CMHC (Canada Mortgage and Housing Corporation) has been in contact with police agencies that track money laundering and tax authorities in order to beef up its data collection on the impact of foreign buyers.
But what is a foreign buyer anyway? It might include everyone from legitimate dual citizens of Canada and another country who split time between the two, to students who temporarily live in Canada while pursuing an education, only to leave after finishing it. The CMHC says that for its purposes, it uses the definition that British real estate consultancy Knight-Frank came up with: ‘If the property is owned by a person whose permanent residence is outside of Canada”.
Countries around the world have tried an assortment of different approaches to this same problem. Some seem to work, others … not so much.
In Australia, buyers from outside the country are limited to New Construction (link), which includes houses and apartments, and the Foreign Investment Review Board – which yields broad power over money flowing into Australia – acts as a gatekeeper. It costs $5,000 just for the right to make an offer on a place costing up to $1 million, and $10,000 for each subsequent million-dollar leap in purchase price.
In the UK, lawmakers responded with a considerable capital gains tax. As of April 06, 2015, the taxman takes up to 28% at the point of sale on foreign-owned residential property.
The Swiss are serious about strict rules on foreign home buyers. Each year, the government assigns quotas to the country’s 26 cantons, limiting the number of residential properties that can be sold to foreigners.
While Hong Kong is part of China, its housing market stands apart. In fact, it is consistently ranked the most expensive market in the world. Their government has responded with a 15% surcharge on homes purchased by non-permanent residents.
Original Article: http://www.cbc.ca/news/business/cmhc-foreign-housing-1.3479247
http://www.cbc.ca/news/business/real-estate-housing-foreign-buyers-1.3479508
Link: https://clientfirstmortgages.com/new-construction-financing/
Keywords: New Construction / houses / apartments / home buyers / CMHC
