Vancouver rent-to-own property programme ‘could pose risks for Chinese buyers’
Questions over how the scheme fits with the provincial government’s 15 per cent property transfer tax on foreign owners mean it could be less beneficial for investors, analysts say
A rent-to-own scheme launched by a local property developer in the Canadian city of North Vancouver may not be as beneficial for Chinese investors as it seems because of uncertainty over its tax status, according to the head of a China-based international property portal.
The programme by Apex Western Homes offers buyers a lease contract on a home and the option to buy the property within five years. After paying a 5 per cent down payment, the buyer then pays a monthly rent, which includes a payment towards the loan principal and interest.
“The provincial government has gone out of its way to say that it intends to crack down on programmes of this nature,” said Carrie Law, CEO of Juwai.com, an international property website that caters mainly to affluent Chinese investors. “Chinese buyers of Canadian property should above all avoid unnecessary risks, and this programme looks risky.”
The uncertainty surrounding the scheme stems from how it fits with British Columbia’s introduction of an additional 15 per cent tax on property transfers in the Vancouver area for foreign buyers, a measure introduced as part of efforts to curb the province’s red-hot housing market, particularly in Vancouver, the province’s largest city.
Strong demand from Chinese buyers has been part of the reason for the rise in property prices. The city is the third most popular in Canada for Chinese buyers after Toronto and Montreal, and saw
a 3 per cent increase in the number of enquiries by Chinese investors in the first half of 2017 compared with last year, according to Juwai.