As housing starts appear to be entering a slump in B.C., developers are calling for a reconsideration of both the federal foreign ownership ban on Canadian housing and the province's foreign buyers' tax.
"While we understand that the ban was implemented to protect housing supply for Canadians, it has unfortunately impacted the construction of new homes, as an unintended consequence," says a July 29 open letter addressed to the prime minister and B.C. premier signed by 25 developers and stakeholders.
The letter cites a 50-per-cent drop in starts in March 2025, compared to March 2024. The numbers were also down in February and May, but were on par in April and increased in June, according to Statistics Canada.
Nevertheless, B.C. Premier David Eby acknowledged the industry is facing a slowdown, and said that while he supports building more homes, the province is not going to get rid of the tax.
"We're not going to do it under the old way of doing things, which is having foreign money, speculation money, coming in to build 500-square-foot shoe boxes that don't support families," he said in an unrelated press conference on Wednesday, July 30.
In 2022, the federal government banned foreigners from buying residential property in Canada. The ban was initially set to expire on Jan. 1, 2025, but was extended for two more years. In B.C., this ban comes on top of a foreign buyers tax, which was introduced in 2016 and placed a 20 per cent tax on residential home purchases by people who are not citizens or permanent residents.
With the ban in place, the tax only affects temporary residents, who can still buy property in B.C..
The developers want Canada to follow Australia's example, which has implemented a system banning foreign purchase of existing housing stock, while still allowing investment in new builds. They argue that new builds need investment to get off the ground, and only when those buildings are closer to completion do home sales shift to owner-occupiers.
"In the absence of foreign investors, fewer projects will meet pre-sale financing thresholds, suppressing supply delivery, which serves no one in a housing crisis as projects will not start," the letter says.
But Eby said he doesn't want more projects like the CURV building in Vancouver, a luxury condo project that is now in receivership because the ultra-expensive units are not selling, while the apartment buildings it is supposed to replace sit vacant.
"It was completely stupid and disconnected from what the local market could support," he said.
Eby added that if allowing foreign investment into B.C. housing construction means more homes for people, that is great, but if it means a building in downtown Vancouver sitting empty, then "forget about it."
With this in mind, if the federal foreign ownership ban is rescinded, Eby does not intend to rethink the tax.
"You buy a property here, you're going to pay a very significant property tax, and we're going to use that money to fund public services," he said. "I don't see a reason to change that. I struggle to understand why we would change that."
