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FEARS CONFIRMED

Postmedia’s findings seem to confirm the fears of Richmond Mayor Malcolm Brodie.

Last year, Brodie said he expected the new foreign buyer tax to fuel speculation in farmland. On the day the tax was announced in July, Richmond warned the provincial government of its impacts.

“We said, ‘Why aren’t you applying this to all land?’” Brodie said in an interview. “If you are going to have this tax, it should be applied in a way that it doesn’t attract speculation to farmland. They said, ‘We hadn’t thought of it.’”

Speculators can avoid the 15 per cent tax on residential property by purchasing bare farmland and building a house on it, said Brodie. This kind of development has a number of attractions. First, buyers can obtain farm properties for less than residential zoned land. As a bonus, because of controversial zoning rules, buyers can build much larger mansions on farmland than they can on residential lots. They can also take advantage of very low property taxes on farmland that are meant to encourage food production, get a 50 per cent break on school and transportation taxes, and avoid property transfer tax if a constructed home is lived in by a family member for at least a year before it is sold.

“In the last three years, we have seen the number of transactions on farmland going up in terms of speculation,” Brodie said in an interview. “In Richmond, we are seeing a number of smaller farmland lots being bought because these are attractive to speculators. And we are seeing higher prices per acre. So the trend is up, the prices are increasing, and one of the pressures is the foreign buyers tax. People are buying these properties with farming as an afterthought, just to build estates.”