Prior to announcing the foreign-buyer’s tax last August, the provincial government did not consult with Delta-based Tsawwassen First Nation (TFN) about its exclusive exemption from the 15% tax on home sales to foreign nationals in Metro Vancouver.
However, TFN chief administrative officer Tom McCarthy, who is overseeing one of the largest residential developments in B.C., said that was the right call.
“Because they were so concerned – and rightly so – about confidentiality with respect to the foreign home buyer’s tax, they chose not to chat with us in advance.”
But McCarthy said the provincial government called TFN immediately after the legislation had been tabled in the house to explain the reasoning.
TFN land would be exempt from the tax, but the band would be given the option to “opt in” if it wanted to under the Property Transfer Tax Act, which McCarthy said is unlikely.
In an email response, the Ministry of Finance said the province excluded Tsawwassen lands “from the area where the tax originally applies to allow time to talk to the Tsawwassen First Nation and evaluate the influence of foreign buyers on Tsawwassen lands.”
TFN has several real estate projects already completed and others in progress, including building and selling more than 1,800 homes.
The band is developing 137 acres of residential land split into 296 condos and 194 houses plus an 18-hole golf course.
It is also selling Tsawwassen Shores, a 270-acre master-plan community of single- and multi-family homes being marketed by Aquilini Development and Construction Inc. (Townhomes start at around $599,900.)
The exemption from the foreign buyer’s tax for the properties for sale is featured prominently on the front page of the Tsawwassen Shores website. But McCarthy said foreign buyers might be averse to buying on Tsawwassen land because it’s all leasehold property, not fee-simple.
Jean Yuen, a lawyer for Boughton Law Corp. who specializes in aboriginal law and First Nations economic development, agreed. She said the typical foreign buyer might never warm to the idea of leasing property.
“My experience with prospective foreign buyers, at least those from China, is that they are looking to buy property outright,” said Yuen. “Foreign buyers may be averse to leaseholds because they appear more complicated legally, and there is a defined end date to leaseholds, even if it’s an end date that is 99 years away.”
Andrey Pavlov, a Simon Fraser University Beedie School of Business professor who specializes in real estate finance, said TFN should never have been exempt from the tax in the first place.
“Generally exempting anyone from a particular tax is a direct subsidy to them, so that would help them,” he said.
“If we need to subsidize First Nations for any reason, we should just write them a cheque. I’m very much interested in helping people, but help the people directly.”