Affordable housing has been a huge issue in Metro Vancouver,increasingly in Vancouver, Burnaby and Richmond as the debate over whether or not to tax absentee and/or foreign investors driving the market, continues.
The province, had this to say recently as to why they would not be imposing such a tax: http://www.cbc.ca/news/canada/british-columbia/bc-real-estate-tax-housing-prices-1.3409587
Premier Christy Clark has said housing affordability will be ‘front and centre’ as the government prepares to deliver its budget next month, but she has also shot down speculation and luxury taxes on foreign investors as fixes for rising prices.
To me,as a British Columbian fully invested in my families future in the province,it just doesn’t make sense. Are the Forces of NO, striking families- and successful singles and couples in British Columbia, once again?
My answer? Yes, I believe they are.
But why? Why would the province put foreign or absentee owners -whose only interest may be parking funds in a hot real estate market rather than building community-over people actively involved in our local and provincial economies?
The province of British Columbia recently issued the 1st sovereign Panda Bond in China and it has been making news in financial papers around the world: http://www.ecns.cn/cns-wire/2016/01-22/196811.shtml
ECNS) — The Canadian province of British Columbia issued a panda bond on January 21, the first by a foreign country in China’s interbank bond market.
BC Finance Minister Michael de Jong, Ambassador of Canada to China Guy Saint-Jacques, and representatives of the BC Finance Ministry, Bank of China and HSBC briefed the media in Beijing on Friday.
The three-year-term bond, priced at 2.95 percent, raised 3 billion yuan, or about 665 million Canadian Dollars.
It was twice-oversubscribed by domestic investors in China, including policy banks, commercial banks, fund managers and brokerage firms. Proceeds were immediately reinvested in an offshore RMB-denominated investment with Singapore’s United Overseas Bank. Net income on the RMB investment will be used to support and expand the province’s trade and investment offices in China.
“The coupon rate is set below 3 percent, not because nobody wants to buy it. There’s strong appetite for AAA-rated bonds,” de Jong said, adding that the oversubscription owes much to lead underwriters.
BC got approval from the People’s Bank of China to issue panda bonds worth 6 billion yuan ($938 million) for terms of up to 10 years on November 27.
“It could have taken years,” de Jong said. “We’re very pleased to see the level of cooperation by the NAFMI (National Association of Financial Market Institutional Investors) and our lead underwriters.”
BC was the first foreign government to sell a “dim sum” bond of 2.5 billion yuan in 2013 and 3 billion yuan in 2014.
A dim sum bond is issued outside of China but denominated in Chinese renminbi, while a panda bond is a renminbi-denominated bond from a non-Chinese issuer sold within mainland China.
The move allows the use of RMB in bilateral trade and more efficient investment for Canadian financial institutions.
“It shows our support for the internationalization of RMB,” Saint-Jacques said. “RMB use could save 5 to 6 percent of transaction fees.”
Accordingly, bilateral trade in 2015 amounted to 86 billion Canadian dollars.
In 2015, Canada became the first country in the Americas to become an offshore clearing and trading centre for the RMB.
Saint-Jacques said Canada hopes to further advance political and economic ties with China.
“Our Prime Minister Justin Trudeau is likely to attend the G20 summit in Hangzhou in September, and we hope high-level Chinese leaders could visit Canada in 2016,” he said.
And who did the BC government hire to be the lead underwriters on this deal?
HONG KONG, Jan 4 (IFR) – British Columbia has hired Bank of China and HSBC Bank (China) as joint lead underwriters for a potential maiden offering of Panda bonds.
The offering is for up to 3 billion renminbi ($460 million) with a maximum tenor of five years.
The Canadian province registered with Chinese regulators in late November to issue Panda bonds of up to Rmb6bn in the domestic interbank market.
HSBC.( China branch)
And the Bank of China:
Both banks have been plagued in one form or another, by investigations into bribery,fraud and missing funds. Don’t trust me, ask your financial advisor!
I just want you to sit, and think a moment, about the possibility that the reason that Premier Clark and the BC Liberal MLAs don’t want to tax foreign investment is…
… that they are relying on it. You issue the first sovereign bond in China, and you clearly need it to be a success. Your LNG Prosperity Fund you promised isn’t working out for you and you need some help,yesterday.
Are you going to send a message to foreign investors who may buy those bonds, that BC is not interested in your investment?
I think not.
Not when the: “Net income on the RMB investment will be used to support and expand the Province’s trade and investment offices in China” ttp://advantagebc.ca/blog/b-c-enters-worlds-third-largest-capital-market-with-panda-bond-issue/
BC families first? With no effort to increase value added exports instead of raw logs etc. to keep BC workers, working? And no effort to make it easier to own your own home, in your hometown, in Metro Vancouver?
Ha.
And who exactly is buying these bonds? Because it seems to provide a prime vehicle for money laundering or buying BC real estate.
*** I first raised concerns in 2013 over the first dim sum bonds https://www.google.ca/amp/s/lailayuile.com/2013/11/08/bc-government-dim-sum-bonds-a-success-in-hong-kong-but-give-indigestion-to-many-here-in-british-columbia/amp/
**update** David Eby finally caught up to this in July 2016…https://www.google.ca/amp/s/globalnews.ca/news/2798386/concerns-raised-over-panada-bonds-issued-by-b-c-government/amp/
*** And…..after concerns over Panda Bonds…now the ndp is jumping back into the fray and issuing more bonds ( facepalm)
** good read and report here on how taxpayers money is at risk after proceeds were reinvested in foreign markets http://www.andrewjohns.ca/blog/pandabondsscheme
Westcoast Views with Laila Yuile 
Quote from Van Sun article above:
“(Premier) Clark turned down the plan, saying using taxes to drive down prices could hurt current homeowners by reducing their equity.”
Um, yeah, that’s the idea isn’t it, to drive down the prices, because the prices are way too high.
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What do you think of them reinvesting the $proceeds in a Singapore Bank?
Why do I not feel brimming with confidence about this?
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Time and time again I hear the issue of foreign/absentee ownership of property coming up at the homes I have visited in Coquitlam in the lead up to the by-election Feb. 2nd. The Liberal “Plan, What Plan” approach appears to be going over like a lead balloon.
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Setting a tax on absentee-owners/empty-properties is not going to stop investment – where else are they going to buy? Portugal?
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The fact that the media and govt are finally talking about a “possible” foreign ownership problem in Vancouver and the Lower Mainland speaks volumes.
Gee whiz, the clamouring from voters and ordinary folk getting too hard to ignore?
Good luck getting the truth out of these people
The media which sold its soul to Remax years ago and the government…. which has no soul.
All of these self serving entities( the politicians, banks, real estate cartel, media) dont dare bite the hand that feeds them. They do so at their peril.
All while the 800lb foreign ownership gorrilla in the room is begining to move.
We wont talk about “ninja loans, zero money down, using your line of credit to qualify for a downpayment, 30 year mortgages, the lowest interest rates in history, having only one way to go,
Lets look at some facts.
Canadians are at their most indebted since records have been kept.
http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=5&cad=rja&uact=8&ved=0ahUKEwi9zJ2f_NbKAhVO42MKHSWlCcUQFgg1MAQ&url=http%3A%2F%2Fwww.theglobeandmail.com%2Freport-on-business%2Feconomy%2Fcanadas-household-debt-burden-hits-record-in-third-quarter%2Farticle27742769%2F&usg=AFQjCNFEk-vSmWrW9mVNZsJuJWJidj9vJQ&sig2=2lXXhpJCbwx9Y3lV6ZBSVQ&bvm=bv.113034660,d.cGc
Everywhere else in Canada with the exception of Toronto has had a real estate meltdown in the past year……….. Calgary being the most recent victim.
http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwj75OnT_NbKAhUM72MKHTLBAVUQFggbMAA&url=http%3A%2F%2Fwww.canadianbusiness.com%2Feconomy%2Fthe-housing-bubble-has-already-popped-in-some-parts-of-canada%2F&usg=AFQjCNGvsHWGO4tBJeFesxc3aNInrOtO3w&sig2=Twve_EDWUE6ibNA9SKdrqg&bvm=bv.113034660,d.cGc
So we now have a deficit spending govt floating bonds in a country they have fetted for trade agreements and investment. No surprise there. One can only hope the renminbi falls lower than the Canadian dollar over the next 10 years (and dont think the BC financial “wizards” havent considered that)
Do I expect that self same govt to “pull the pin” on foreign ownership and send the entire ponzi of ridiculously priced homes to come tumbling down?
Causing all those self same home “owners” with $1 million dollar mortages and massive lines of credit borrowed against those self same houses to declare bankruptcy?
In the final year leading up to an election?
What politician has the testicular fortitude to be the doomsayer responsible for that?
Hell even Justin Trudeau and the Bank of Canada lowered interest rates against all expectations of just about every economist on the planet after the US raised theirs in Dec.
The lowest interest rates in Canadian history…. pouring gas on an already unsustainable real estate frenzy.
Dangerous , foolish and inevitably disasterous.
It’s a good time to be renting.
Stay tuned. 2016 isnt going to be boring.
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I share everyone’s feelings but agree that they cannot tax a person for NOT living in their house. Well, not more than those who do, anyway. This is a capitalist system. It is corrupt and favours the rich but it is the system everyone seems to want. This is one of the costs associated with it. We all believe in a system that enslaves the majority to debt and servitude. And 1% manage to succeed in it until another top 1% wants in. In future, that 1% will all be foreigners simply because of currency devaluation and the natural appeal of BC. Old BC’ers don’t count. Money does. The market does not respect your imagined birthright. Get ready to move to Hope, Princeton and Spuzzum. And know this: you were and are willing players at a game stacked more against you than the ones in Vegas.
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Here is the problem, at what point does Christy realize that people just can’t afford to live in Vancouver and flock to other Canadian cities? An example is our family. My husband is very good at what he does, however in BC his wages are suppressed quite a bit. He has been offered a 3 year contract in Toronto where the wages are significantly higher in his job. So though Toronto’s housing is much like ours we can at least afford to live there. My kids are all in the same boat. My son has the money for a downpayment on his own condo, but he looked at us and said he doesn’t want to buy in Vancouver and is looking at moving as well. If people still want to have someone to be a retail clerk, cook, taxi driver, garbage man etc, then something has to give. Either BC has to take great steps to lower the cost of living in BC or wages have to take a steep climb
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As bad as CC is in every respect applicable to her political role, she is not responsible for this. I despise her but she’s exempt from this problem. It is a much bigger issue than what a premier can solve. Canada is for sale and the foreigners are buying it. News flash: they’ve been buying our resources for decades but out of sight, out of mind. You can SEE your neighborhood is NOW being bought and you are shocked? Duh!
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My amigo has a $3 million home/pools etc on the ocean in Puerto Vallarta and property taxes are $1000/year! Yes, one thousand dollars. He would quite happily pay ten times that, because he can. Where is the logic? This probably has nothing to do with the situation in BC, but I’m seriously considering moving down here and ‘summering’ in a campground in BC during the summer!
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You would NOT be the first. Plenty ex-pats around the 3rd world. But Mexico is even MORE corrupt. Real answer: camp there in winter and CAMP here in summer. Don’t own property. Remain a moving target. Change name and hair colouring. Learn more languages. Watch Jason Bourne.
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Idea: Rather than selling bonds to the Chinese investors, why don’t the BC Liberals buy Vancouver property and ride the bubble? Corrupt and destructive, of course… but if it helps us get to Debt Free BC, who cares? Right, Christy?
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A tax on homes, which are not occupied and owned by non Canadians, might not solve the problem. However, the money raised could be used to build affordable housing for Canadians. We could increase the transfer tax for non residents, so that we might put a few dollars into the provincial treasury. its not like we’re swimming in money, according to the photo op queen. We’re so broke according to the B.C. Lieberals we can’t afford to increase disability and welfare rates. We have the highest rate of child poverty in Canada, and the province says it doesn’t have the money to change that. Well if you add a few taxes on non residents, at least we might have a chance to help the children of B.C.
We could do what India did. Not a citizens, you don’t own land. Easy and cheap. Would Christy and her B.C. Lieberals do that? of course not, Developers, realestate companies, companies related to the building industry are making a killing. who donates to the B.C. Lieberals, the afore mentioned group. Is Christy doing to do anything to make them unhappy? Not in this life time. they pay for her re-election and the people of this province are too dumb to figure out she is in business to make her “friends and insiders” rich, not make life better for those living in B.C.
The article in last week’s Province is pretty clear there could be a problem with money laundering in our realestate industry. Is anything going to be investigated? NO. Anything going to be done? NO.
Next city to face the problem, Victoria. They are coming in droves to Victoria to purchase “investment” properties. Multiple offers, cash, and no conditions. Expect Victoria to be in the same position as Vancouver within 5 years and we can all look ourselves in the mirror when we find we don’t own our own cities. We voted for the B.C. Lieberals.
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The comments from our premier are truly Palinesque! Premier, it’s not a lack of data that prevents your government or the newly elected federal government to exercise your constitutionally provided taxation authorities; it’s a lack of political will! RELEASE THE HOUNDS!!!!
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Panda Express.?
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Just an excerpt:
But now, many in China — including those in the newly enlarged middle class — are rushing to get their money out of the country. Some companies have also become more nervous. (Not Christy and Co) Money, money, money is all they see, matters not about those “BC/Canadian” citizens. Prime Minister Trudeau out to be paying attention too. Trust in China is not good.
In the last 18 months, more than $1 trillion US has left China, according to Singapore-based credit firm Fitch Ratings.
http://www.cbc.ca/news/world/china-zombie-economy-layoffs-petricic-1.3473002
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From the looks of it, Petrowest was feeling the same pinch of drastically reduced earnings that many oil-patch companies have been. Lenders get excited when earnings fall below a certain level and you have debt or credit commitments.The Site C contract likely saved their butts but keep in mind the many outstanding court cases still in play with Site C, any of which could put a screeching halt to it. That’s the foolhardiness of awarding contracts when there are court cases still in play.
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[…] As well, I made mention of the Panda Bonds issued by the BC government in China earlier this year- here is the link to an earlier post on that for listeners/readers who were not aware: https://lailayuile.com/2016/01/31/and-why-exactly-is-the-bc-government-not-interested-in-taxing-abse… […]
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