The BC government’s announcement on Monday (July 25) of a new 15% foreign buyer’s tax will impact not only overseas purchasers of residential real estate, but Canadian citizens as well.

“The provincial government really should have looked downstream to see all the different groups that would be impacted by this retroactive tax. I’m just not sure this was thoroughly thought out,” Royal LePage West agent Adil Dinani told MoneySense.

“The real concern is the implementation of this tax,” Dinani stated. “Usually there’s a policy effective date, like with the last mortgage amortization or down payment changes, but this time there was no consultation. Just an imposed policy.”

The levy will be applied to all BC homes sold during and after August 2, 2016.

Mere days after the announcement, the effects of the steep tax have already made themselves felt among agents in Vancouver, where the benchmark price has breached the $1.5-million mark in June. Foreign nationals have purchased over $1 billion worth of properties in BC between June 10 and July 14 this year.

“Being on the frontline, we’ve already seen fall-out,” Dinani said on Tuesday (July 26). “I’ve had calls in the last 24 hours from agents representing foreign buyers who are backing out of deals because of this new tax.”

Toronto Royal LePage agent Cailey Heaps Estrin agreed with this grim view, adding that the imposition of the tax will get in the way of what she called an “open and fair market.”

“I just don’t see how it will help, considering how much our nation’s housing market helps the economy,” Estrin said. “There’s not a financial market in the world that doesn’t slow down. Eventually the Vancouver and Toronto market will slow down, so I’m not sure if this tax will create the desired effect.”

Real Estate Board of Greater Vancouver president Dan Morrison argued that the government acted hastily, without even considering the domino effect downstream.

“Implementing a new real estate tax with just eight days’ notice and no consultation with the professionals who serve home buyers and sellers needlessly injects uncertainty into the market,” Morrison said.

The Domino Effect of BC’s New Foreign Buyer’s Tax by Ephraim Vecina | Canadian Real Estate Wealth