[URBAN NOTE] "How the rest of the world limits foreign home buyers"

[rfmcdonald]

At MacLean's, Aaron Hutchins describes how different jurisdictions around the world--and Prince Edward Island--regulate foreign home ownership.

As house prices in red hot markets like Toronto and Vancouver soar, squeezing out first-time buyers, many have blamed the influx of foreign home buyers for driving up prices. To that end the government of British Columbia, in its 2016 budget, included a promise to track foreign home ownership by requiring all those who buy a home in the province to disclose their citizenship. While the goal is to determine the impact foreign investment has on home prices, the government stopped short of saying what, if anything, it would do with the information.

So what are some options? Here are nine ways other countries and regions (plus one province) have tried to manage foreign investment in local real estate markets.

Mexico: Foreigners can purchase property in the country’s interior region, but are unable to directly buy inside Mexico’s “restricted zones”—a prime area encompassing 100 km from the country’s borders or 50 km from the coastline. However, there are ways to work around the regulations with the fideicomiso, which is essentially a trusteeship in which a Mexican bank holds the deed to the property for the buyer. (A constitutional amendment to ease these restrictions passed the government’s lower house in 2013, but has yet to pass in the Senate.)

Hong Kong: Non-permanent residents and foreign companies should expect an added 15 per cent surcharge on home purchases.

Switzerland: The Swiss government imposes annual quotas for how many homes can be sold to foreign non-residents in the country’s various cantons. Some regions have their own additional restrictions, which could include limiting the size of the property, requiring foreigners to buy homes that are already foreign-owned or setting the bar for non-Swiss at one property per family.

Guernsey: An island located between Britain and France, Guernsey has a two-tier housing market: the local market and the open market. While there are no controls on who can buy in either, only qualified residents can live in local-market housing (meaning foreigners can buy those homes but can’t live in them). If non-qualified residents want to own and live in a home, they must buy one of the 1,597 private dwellings on the open market, which typically are much more expensive. The Open Market Housing Registrar is presently closed, so no new properties are being added to the list.

[. . .]

Prince Edward Island: Yes, P.E.I. is part of Canada, but when it comes to limiting foreign buyers, it shares more in common with other countries. Non-residents—and this applies to Canucks living outside the province too—are limited to five acres of land or 165 feet of shoreline.