Chinese immigrants
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Housing Crisis in Vancouver – Solutions and barriers
Clubs, Politics, Vancouver
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Dr. Hamdy El-Rayes, MBA, Ph.D.,

Author of The New Era: Returning the U.S. to Democracy & Prosperity

The City of Vancouver is going through one of the most critical times in its history but our politicians are unaware to the danger of maintaining the status quo. It could create economic and social problems leading to racial conflicts between the visible Chinese immigrants and the rest of the population. You can feel the resentment of Vancouverites when you talk to them privately about these issues.

What started this problem is the pace of flow of wealthy Chinese “immigrants” and investors into Vancouver at a rate beyond the capacity of the city to digest. Vancouverites were overwhelmed with the rapid change in Vancouver landscape, the number of visible Chinese taking over their neighborhood, the escalation of real estate prices to unprecedented rate reaching 30% in 2015 alone. While Chinese investors/immigrants are speculating on housing properties like a penny stock and keeping them vacant, working people are unable to have a home. The situation has deteriorated where young workers who have lost the hope of owning a home in the Vancouver area are now being priced out of the city’s rental market. Property owners are forcing them to bid among each other to pay the highest rent possible. Other property owners use loopholes in the current regulations, such as reno-viction to get rid of old tenants and replace them with new tenants for the sake of huge rent hikes.

To make the situation even worse, the City Council allows Airbnb to take some of the rental property out of the long-term rental market that amounts to more than 6400 units in 2015. Now with the rental vacancy rate reaching less than 0.6%, working Vancouverites cannot find an affordable, decent rental place to live in and would have to commute for hours to get to work. This laisse faire policy would drive businesses out of Vancouver and turn Vancouver from a vibrant city into a ghost city used by Chinese money launderers to park their money and take advantage of our generous public services. However, politicians at all levels would maintain the status quo until the tsunami of economic troubles and racial conflicts hit Vancouver.

Politicians looking after their own self-interest to keep the status quo have exacerbated housing crisis in Vancouver. It benefits the political parties as they get more election funding donations (legal bribe) from developers and wealthy Chinese, the government collects more taxes from real estate sale activities. In the short term, it looks good to them, but when the share of real estate in BC reaches 80% of GDP, it is a sign of great danger because this bonanza cannot last forever. The bigger the bubble gets, the worse the economic consequences when the bubble bursts. In addition, nobody is willing to address the elephant in the room—the risk of racial conflict is looming and has to be curtailed by not allowing more Chinese wealthy investors until the current housing crisis is resolved. When Vancouverites lose their dream of home ownership because of the open door of immigration for wealthy Chinese, the consequences would be dire. However, politicians are not visionaries. They do not act until the problem becomes too difficult to resolve. They do not realize that the danger of alienating the millenniums in our own country is a dangerous precedent.

The wealthy Chinese investors/immigrants have no interest in enriching the Canadian economy. The majority of them are interested in getting FREE education for their children, FREE health care for their aging parents, social services for their families, and at the end, be rewarded with the Canadian passport for future material gains. They enjoy the services the governments offer, but do not intend to pay their fair share of taxes because most of their wealth is away from the reach of the Canadian Revenue Agency. Although Canadian residents and citizens are supposed to report their global income, wealthy Chinese immigrants do not report it on their income tax, knowing that our government would not hold them accountable. Because of reporting low income on their tax return, they can take advantage of all the services we offer to low-income families and seniors. This means that their children and their parents who live here get all these benefits which they are not entitled to because they are supposed to be wealthy. Their elderly burden our medical services and their children use our educational services free and working Canadians have to pay the bills. And after three years, they are rewarded with Canadian citizenship. It is interesting to hear them calling the mandatory residency years in Canada as jail time, but it is worth it because the Canadian passport enables them to purchase properties and do business freely in Hong Kong.

In the USA, you have to present your tax returns with your application for citizenship. Canada does not require that. So wealthy Chinese immigrants do not have to show they paid their fair share of taxes to deserve the privilege of having Canadian citizenship. They may report income less the cost of utilities for their mansion, but the CRA never questions that. If CRA audits those wealthy Chinese immigrants, it will find that the majority of them evade paying taxes. If we request those wealthy Chinese immigrants to report their global income during their mandatory stay in Canada to be eligible for Canadian citizenship, they will leave Canada like mice deserting a sinking ship. They would not bother to buy real estate here in Canada and would take they laundered money elsewhere. This would be very good for our economy because this kind of unscrupulous people are not good to have as Canadian citizens. I remember a wealthy Chinese immigrant managed to run a fraudulent operation to deceive Immigration Canada, made $10 m in 5 years, but during that time, he was collecting welfare. He got a sentence of few years in jail. The judge described him as a thief who robbed the bank and took the donation box (welfare money) on his way out. Canada can do without this kind of people. Canada is better off without those “wealthy Chinese” because they harm the reputation of hard working Chinese-Canadians who contribute to our economy and help build a future for their families and their country. Unfortunately, they could be painted with the same brush as happened in several incidents in Vancouver.

As we have seen in the past few years, many of those wealthy Chinese investors/immigrants are just money launderers. They managed to defraud the government of China of billions of dollars or made their money from unscrupulous businesses, smuggled it from China, and put it in a safe country, while depriving hard-working Canadians from a decent place to live in. for this reason, many of them are speculating on the limited inventory of real estate in Vancouver. They turned Vancouver into a stock exchange for real estate speculation and we will end with a burst bubble like any hyped penny stock. Unfortunately, our politicians do not see it this way because it helps them achieve their own short-term objectives.

Politicians benefited from the of real estate bonanza in the form of election campaign funding donations from the developers and wealthy Chinese immigrants. Consequently, they do not want to rock the boat and stop the speculation party. By the time it is over, they will be out of office and somebody else will have to carry on with the losses we endure.

In the last decade, the real estate industry has donated about $12 m to the Liberal Party of BC. In 2014, Bob Rennie invited 50 developers to a luncheon to raise funds for the Vision Party led by Gregor Robertson. The luncheon cost each guest $25,000 (about $1.25 was raised). In the long-term, Canadians will pay for our politicians lack of action to protect us from this catastrophe.

While the Liberal government of Christy Clark is stalling, the NDP is suggesting a 2% tax on the properties bought by foreign investors or wealthy Chinese immigrants who do not pay income taxes in BC. This proposal would not stop wealthy Chinese immigrants/investors from speculating on real estate in BC for two reasons. They want to park their money here in BC at any cost and the loss of 2% in taxes would have no impact on their capital gains. On average, excluding the past 10 years, real estate in Vancouver appreciated by 12% per year. If you cut their capital gain by 2%, they will make 10% of capital gain per year. Would this deter a Chinese investor or wealthy immigrant? Of course not. It is still a good deal considering he could get less than 2% a year on his money in a saving account.

Canadian governments at all levels have to collaborate on solving this problem to help the country avoid economic and social problems, and racial potential racial conflict that could last for many decades to com. The sooner they do, the less the impact the bubble would have on our economy.

  1. Immigration Canada & Quebec Ministry of Immigration

Immigration Canada should end the generous 10-year visa, which allows wealthy Chinese to live in Canada nine month each year. This visa does not serve our economy or Vancouverites because it exacerbates the housing problem in Vancouver. In addition, those wealthy Chinese are inclined to enjoy living here without paying their fair share of taxes.

Quebec should end the wealthy immigration program, which was terminated in the rest of Canada a couple of years ago. Wealthy Chinese immigrants continue to use it as a backdoor to move to Vancouver.

The government of Quebec continued with the business-visa program, which nets for the Quebec government about $50,000 per immigrant family, but the program fails to bring new immigrants to Quebec and the cost to BC and to Canada is too high because those immigrants are not interested in contributing to our economy.

Citizenship application – Wealthy Chinese immigrants should present their tax return on their global income during the mandatory three years residency in Canada as part of their application for citizenship and continue to pay their share of taxes after obtaining their citizenship.

  1. Support of parents and children of wealthy Chinese immigrants – Wealthy Chinese immigrants should be required to support their parents permanently and not to compete with Canadian senior citizens for benefits offered by the government such as low-income housing, transit passes, and other senior benefits. The wealthy immigrants were expected to support their parents and their children—not to depend on government handouts. But when they land in Canada, they cheat the system and take advantage of it.
  2. Ban foreign nationals from buying real estate in residential areas due to shortage of land and housing properties in the lower mainland. This will enable working Vancouverites to find a place to live in Vancouver. Many countries like Switzerland and China have a similar law.
  3. Wealthy immigrants have to pay taxes on their global income before they are allowed to buy real estate in Canada.
  4. Control of rent for new tenants – Currently, after a tenant vacate a rental property, the property owner is free to raise rent as much as he wants. In a city where the vacancy rate is less than 0.6%, the government must has control over the rent for the new tenant not to exceed 5% over the rent paid by the previous tenants. This law will deter property owners from using devious means to get rid of the older tenants.
  5. This law would achieve two goals: cool down the skyrocketing rise in the price of rental properties and maintain rents affordability for working people
  6. A corporation should not own housing properties unless the owners reveal their name. In this way, we will avoid having foreigners buying residential properties by hiding behind a corporate name.
  7. The Corporate Registry of BC should provide name of owners of corporations, which own real estate properties in BC. Under the current law, the Registry would reveal the name of directors, but not the name of owners. It lacks transparency and allows foreign nationals to hide behind a corporate name registered in BC.
  8. The City of Vancouver should ban Airbnb and other bed and breakfast providers in the Lower Mainland to force property owners rent their property to long-term tenants. This will increase the available rental properties by five times to 3%.
  9. If a property owner decides to demolish a low-rise to build a high-rise, old tenants should be entitled to have a rental unit with the same size at the same rate they used to pay in the old building.