Wealthy foreign investors have taken heat for Vancouver’s out-of-control real estate market, but now researchers suggest they could be part of the solution to the affordability crisis.
A new report from the University of British Columbia’s Centre for Social Innovation and Impact Investing (S3I) sets out a few ways that socially responsible investment funds could create more affordable housing options in Vancouver and across the country.
One is to bring back the much-criticized Immigrant Investor Program, which was cancelled in 2014. That program gave well-off newcomers permanent resident status in exchange for a loan of $800,000 to the Canadian government. The government paid back the loan to immigrants after five years.
That program was often criticized for contributing to skyrocketing real estate prices.
Immigrants to invest in housing
But this time around, the UBC report suggests that the program require wealthy immigrants to invest much more money, and all of it directly into affordable rental housing.
“We know that at least one of the drivers of increases in house prices is immigration,” said S3I director James Tansey.
“If it’s immigration driving it, then immigration should also be able to help solve the problem.”
Under the scheme outlined in the report, each immigrant investor would be required to contribute at least $1.5 million to support construction of affordable housing. If investor immigration returned to B.C. at the same levels seen in 2012, that could bring in about $4 billion in one year.
Immigrant investors are just one possible source of cash outlined in the report, which argues that new taxes and government rental assistance have done little to ease the affordability crisis. Meanwhile, there is very little incentive in Canada for developers or ethically-minded investors to put money into affordable rental stock, it adds.
A recent study out of the University of Toronto, for example, suggested that a developer would need to charge rents of $2,200 per month to generate reasonable returns.
But in B.C., the most a low-income family could afford to pay is about $930 per month, according to the UBC report, and rents in Vancouver’s newest rental buildings exceed that by leaps and bounds.