Buying an affordable house in Vancouver is often compared to living in the land of unicorns and leprechauns, but B.C’s new legislation may help make this far-away dream a reality once again.

British Columbia Premier Christy Clark announced a one-time 15 per cent tax on Monday, July 25 in Vancouver that would apply to foreign investors who are neither Canadian citizens, nor permanent residents, in an effort to cool the housing market. The new legislation applies to residential real estate in Metro Vancouver, from Bowen Island to Maple Ridge and Langley, and begins on Aug. 2.

With the new foreign tax, a $2 million home in Vancouver would accumulate an additional $300,000 if purchased by a foreign buyer. If a foreign buyer purchased a home for $10 million, this tax would raise to $1.5 million. On the other hand, if a foreign buyer tried to avoid the tax, “anti-avoidance” measures would be put in place that include $100,000 for individuals and $200,000 for corporations that don’t comply to the legislation.

The funds raised by the new tax will be put towards a new housing priority initiatives fund for provincial housing and rental programs that is set to be launched in the near future. This fund will receive an initial investment of $75 million from the government and then begin to accumulate revenues from the tax on foreign buyers.

In order to obtain the necessary information on buyers in Vancouver, Clark also announced the Real Estate Services Act, which officially ends the real estate board’s self-regulation or ability to govern itself. The government’s involvement in the industry will allow them to access information on buyers to see what homes will be charged the foreign tax. Finally, the province will also introduce a vacancy tax that targets empty rental homes of foreign investors to increase the number of available rentals.

There are possible issues with the foreign tax, though the response from B.C home buyers has been overwhelmingly positive. Investors could potentially avoid the tax by getting family members to purchase properties, highlighting a loophole in the legislation that relies on buyers reporting their nationality honestly. The tax may also hurt international recruitment because new immigrants won’t be able to purchase property tax-free until they are permanent residents or Canadian citizens.

Toronto’s housing market has skyrocketed and a foreign tax in Canada’s largest city would cool the hottest housing market in the east as well. Ontario Financial Minister Charles Souza reported he is looking at implementing a similar law in Toronto. Hopefully Toronto will follow Vancouver’s lead and take necessary steps to implement a foreign tax and cool the housing market for local buyers. The outcome of the foreign tax remains to be seen, but any effort to lower housing prices and give people access to homes is a step is a good move.