Justin Trudeau, Prime Minister of Canada, has proposed plans for a two-year ban on certain foreigners buying homes in Canada. This comes as the Welsh government has provided for councils to charge a second home council tax premium of up to 300%.
Both of these measures are a direct result of housing affordability crises. In Canada, 2021 saw house prices rise 26% with the average price hitting C$713,500 (£435,000), and have since risen further to C$817,000 (£495,000) – more than nine times average Canadian household income.
Second home ownership in Wales has long been a contentious issue, with people feeling that demand for second homes prices locals out of the area and diminishes Welsh culture – there were 24,873 registered second homes in Wales as of the start of last year. The idea of allowing for 300% council tax premiums aims to address this and hopes to raise money to build more affordable housing for Welsh residents.
The move – made by a Labour-Plaid Cymru cooperation agreement – has not gone down universally well. Jonathan Martin of the Home Owners of Wales Group said it was “morally indefensible”. Speaking to BBC Radio Wales Breakfast, he continued:
“Where do they think we’re going to get this 300% from? I can’t afford it, that’s for sure, and I’m quite sure a lot of other people can’t afford it. It’s just astounding.”
Martin suggested the tax rise will not be accepted lying down. He said:
“I think the biggest threat to the Welsh government will be that we’ve been advised it’s absolutely unlawful.
So I don’t know where we go from that but we’ll have to have a big discussion as a group. We’re financially able to take on the Welsh government if they forced this through without further acquiescence with us.”
Climate Change Minister Julie James said that protecting local Welsh residents was “the morally right thing to do”. Speaking to BBC Radio Wales Breakfast in response to Martin’s comments, she said:
“This is somebody who’s fortunate enough to be rich enough to own a second home, who objects to making a contribution to the community in which he wants to come and holiday.”
One such local resident is Cath Clarke, owner of a caravan near Abersoch. She supports the government’s move:
“If people have second homes the community is going to die. It needs locals. If people really like it here so much then they should move here.
I think it’s really good that there’s so many caravan sites, because people can come and holiday there.
I really do disagree most strongly with second homes. It’s an incredibly selfish way of going about things.”
It was also reported in March that the Welsh Government is considering new planning legislation and policy as part of its “three-pronged approach” to managing second home ownership and short-term holiday lets.
The impact made by foreign owners is not as strong in Canada. Ben Myers, president of advisory firm Bullpenn Research & Consulting in Toronto, says foreigners accounted for just 1% of purchases in 2020 compared with 9% in 2015. He said:
“I don’t think [the two-year ban] is going to have a huge impact.
It’s a fairly low number and let’s face it, the people that really want to buy … are going to find alternative ways to do it.”
Mr Trudeau has also reportedly considered “banning certain bidding processes that favour investors, who by some measures have accounted for about one in five homes purchased in Canada since 2014”, according to the BBC.
