Abstract
This article seeks to collate and compare the various restrictions on accessing residential property. These restrictions include those targeted at ownership, such as additional taxes for non-nationals or even outright bans on foreign ownership, as well as limits on who can use the property such as rights to rent or prohibition on vacation rentals. The article argues that these restrictions can tell us something about property law more broadly. In particular, these restrictions invoke a communal claim to otherwise private property. The article argues that the restrictions can be divided into those which target who can be owners and those which target the use of the property. The article concludes that the latter are to be preferred as the former are often discriminatory while doing do little to guarantee that residential property be used as residential property.
Keywords
Introduction
In recent years several common-law jurisdictions have introduced new restrictions over who may access their residential property sector. 1 These restrictions are often targeted against specific groups such as foreign nationals, tourists or investors. The limits imposed vary from prohibiting or restricting ownership to restrictions on who can live in the property itself. Two broad similarities are that these restrictions are partially justified as being a response to a crisis in housing, and that they often rely on citizenship or some other membership marker in granting or withholding access. In effect, these restrictions suggest that membership in particular communities matters for a person's ability to access residential property in specific jurisdictions. In so doing the restrictions run counter to the assumption that the right to own is absolute, 2 and/or they undermine an owner's discretion over using their property.
By collating and comparing the legal restrictions this article argues that the legal restrictions illustrate an important aspect of how property works. The justifications behind the limits are not rooted in balancing individual rights, but invoke a communal claim to property which is otherwise private. This communal claim can manifest in ways which are discriminatory and which are implicitly grounded in racial or ethnic membership. 3 However, the communal claim can also manifest in ways which emphasise how property is to be used rather than who can own it. This emphasis on use tacitly reflects the necessity of property for human life, in that we all need somewhere to live. As laudable as such recognition is, many current legal restrictions do not go far enough in recognising the necessity of property. At best, some restrictions offer a critique of those uses which seek to maximise the economic value of property over its use as a long-term residence. 4 While other restrictions are discriminatory and also fail to ensure that residential property is available to those who need it. In fact, many restrictions often end up emphasising and reinforcing a two-tier society of owners and renters. The distinction between owners and renters echoes the differences between citizens and non-citizens. Yet these two statuses interact so that in some instances non-citizen ownership reflects the temporary nature of the individual's right to be present, while in other instances citizens who rent find themselves subject to immigration checks. 5
The article begins with a brief background to the restrictions before moving on to examine the nature of the restrictions themselves. The focus is on the restrictions seen in Canada, the United States, Australia, New Zealand, and the United Kingdom. As will be seen, some of the legal restrictions emphasise citizenship or legal residency, while others are centred on an ongoing physical presence in specific jurisdictions. That is, the legal restrictions differ on whether they target property ownership or being resident in the property. As such, the second part examines restrictions on ownership, while the third explores restrictions on residents. Part four explores what these responses to the housing crisis tell us about property and argues that restricting use is to be preferred over imposing restrictions on who can be an owner.
The background to restrictions on residential property
Although many places around the world are seeing housing affordability issues, it is worth noting that each location will have factors specific to itself. 6 Furthermore, in some places concerns about housing supply, affordability, and quality are longstanding. For example, Briggs argues that San Francisco has had a housing crisis for the past century, 7 while references to a ‘housing shortage’ in the UK have been seen since the 1970s. 8 Similarly some Canadian cities have a history of housing crises, even if these crises are more cyclical than constant. 9 As such this section cannot hope to offer an exhaustive account of each housing crisis in each jurisdiction. Instead, it seeks to highlight commonalities. The most accurate take on concerns about housing might be that for some sections of the population housing has always been in short supply, 10 and that housing is always likely to be in short supply somewhere. The enhanced visibility and attention to the current situation might be because pressures on housing have spread further than normal and are showing no signs of easing.
The longevity of housing problems is not, however, the explanation which gets the most traction in the media. As far as the popular press is concerned the root cause of the crisis, particularly the increase in prices, can be blamed on investors, especially foreign investors, who, or so the story goes, buy properties as an investment and leave them empty. 11 Empirical work from Australia has suggested that this is an unfair characterisation, as are the accusations of fraud and underhandedness which typically run alongside the concerns about foreign investors. 12 At times, and as exemplified by the UK, criticism of foreign investors runs alongside a broader anti-immigrant backlash where the targets are those arriving to work just as much or even more than those who simply buy property. Regardless of jurisdiction, the backlash is leaky and those who are, in fact, citizens can find themselves being blamed. 13 One exception here is San Francisco, where rising costs are blamed on the influx of highly-paid tech workers in Silicon Valley. Given that these tech workers are often construed as “newcomers” there is an overlap with the sense that the problem is caused by “outsiders” of one sort or another.
Running alongside the concern over foreign investors there is also a concern around those who buy property and rent it out on Airbnb or other vacation rental platforms. 14 Indeed, there are broader and longer-standing concerns around those who buy property as an investment rather than as a place to live. 15 The blame attributed to these sorts of investors presents the problem in a slightly different way. In the case of Airbnb investors there are still “outsiders” causing problems but in the guise of tourists; while for investor-landlords the question is to what extent tenants can be considered part of the community in which they live. 16 The flip-side of this is that the tenants cannot then afford to buy in the community in which they live. That is both the landlord and the tenant are construed as outsiders, though in different ways, to the locality. 17
Two major contributing factors which often get less media attention are the lack of physical supply and the lack of variation in housing tenure. These two factors are frequently intertwined and the result of longstanding policy decisions, especially the gradual decline of the welfare state from the late 1970s onwards. 18 Put simply, there are increasingly only two options available for individuals seeking housing: the private rental sector, or owner-occupation. There are often long waiting lists for social housing, 19 to say nothing of the eligibility limits on access. Coupled with this decline in alternative types of housing tenure, there is often a lack of supply in the specific cities and regions under the most housing pressure and what supply is coming on the market is almost always going to be at market rate. 20 There are, however, some questions about whether there is a problem of supply. A study from Australia suggests that there is a glut of luxury property in some of Australia's most expensive cities. 21 In turn this suggests that the issue is a lack of affordable housing. Either way, it is clear that many people, across the Western common-law jurisdictions, are finding themselves priced out of the property market. 22 In fact, some of these property markets all but escaped the crash caused by the 2008 financial crisis. 23
A further similarity, across the western common-law jurisdictions, is the emphasis on owner-occupation. 24 In most of these countries becoming an owner carries with it certain tax breaks and there are typically other initiatives to encourage people to buy, such as help for first-time buyers. In turn these jurisdictions often assume that people will own their own home and so other policies, such as the calculation of old-age pensions, rest on the assumption that a person will have limited housing costs. 25 The point being that home ownership seems like a choice but, in reality, it is an expectation with penalties for those who do not or cannot comply. 26
Restricting owners of property
Restricting ownership of property to specific groups is hardly an innovation of the present day. Historically, Catholics and aliens, among others, faced limitations in owning property under the Anglo-common law. 27 While most jurisdictions have repealed such limits some US states have maintained prohibitions on aliens owning real property. 28 Given the diversity of approaches seen in the US, my focus in this section is on other jurisdictions and on those restrictions which seek to discourage specific classes of people from accessing ownership. These restrictions are not an essential feature of the common law of property and, as this section sets out, their recent incarnations differ significantly in the details. Given the differences and to aid analysis, this section is sub-divided to examine prohibitions on accessing ownership versus additional taxes on accessing ownership.
Prohibitions on foreign ownership
In terms of limits on foreign ownership of property Australia is an outlier both in terms of its nature and its longevity. While most of the other restrictions examined in this article are relatively recent, Australia has long restricted, with a few exceptions, foreign ownership of property. 29 Recent amendments to the rules have tightened the law surrounding foreign-ownership and fit with the international trend towards more restricted residential property markets. 30 Though Australia's restrictions apply equally to commercial and residential property my focus is on residential property.
In Australia anyone who is not an Australian citizen, a New Zealand citizen, or an Australian permanent resident needs the approval of the Foreign Investment Review Board (FIRB) to buy property. 31 The FIRB will normally grant permission to applicants to buy vacant land for development, or new dwellings which have never been occupied or previously sold. In terms of new developments of apartments and houses, the number of foreign buyers is capped at 50% of the development. 32 Two additional exceptions are those persons buying property as a joint tenant with their spouse who is exempt from FIRB permission; and foreign nationals who have a visas allowing them to reside in Australia for the next twelve months – such persons may be allowed to buy a second-hand dwelling provided they actually live in it. In the last situation, the property must be sold when the person leaves Australia, when their visa expires, or when the property ceases to be their principal place of residence. 33 Foreign buyers are also subject to higher stamp duty, stricter mortgage rules, a higher down payment, and can be penalised if the property is left vacant (though this rule is decided at a city-level rather than nationally). 34
In 2015, the Australian federal government introduced application fees for FIRB approvals which are on a sliding scale depending on the property value. At the time of writing, the fees start at AUS$2000 if the value is less than AUS$75,000, and then increase to AUS$6350 for values up to AUS$1 million, doubling for every additional AUS$1 million. The top of the scale catches those investments of AUS$5 million or more, in which case the fee starts at AUS$58,000 and goes up to a maximum of AUS$503,000. 35
New Zealand recently introduced a similar set of restrictions on foreign ownership. 36 The key difference is that the ban applies to all types of property within New Zealand, even new-build. One exception is in new apartment developments where foreign investors may be allowed to buy up to 60% of the units. 37 Existing foreign owners will not be affected and the ban does not affect those with residency status, or those from Australia or Singapore due to free trade agreements. 38 Whether the ban on foreign ownership will stop the speculation in some of New Zealand's most expensive markets is open to question. 39
Additional taxes on certain categories of owners
By way of contrast, the Canadian provinces of British Columbia and Ontario have not banned foreign ownership but have introduced additional taxes for foreign buyers. The additional taxes are not applied uniformly throughout the two provinces, instead they apply only in specified areas. In BC those areas include much of the lower mainland and Vancouver Island, including Vancouver and its surrounding suburbs (with the exception of lands belonging to the Tsawwassen First Nation), and Victoria. 40 In Ontario, the area where the extra tax is due is described as the “Greater Golden Horseshoe” region and includes the City of Toronto. It stretches from the shores of Lake Ontario in the south, to the shores of Georgian Bay in the north and encompasses vast swathes of “cottage country”, so-called because of the number of summer houses. 41
The additional tax due in BC is only in respect of the residential aspect of the property. Meaning that for mixed commercial-residential developments, the tax will be pro-rated. Furthermore, the extra tax does not have to be paid by someone who is confirmed as a BC Provincial Nominee. A BC Provincial Nominee is someone who has been approved by BC to immigrate to BC but who has not yet arrived in Canada and become a permanent resident. Under Canada's immigration law there are multiple ways that a person may immigrate to Canada. 42 Some routes are nation-wide; others are eligible to immigrate because they are being nominated by one of the provinces. Other soon-to-be permanent residents (such as those nominated federally or by another province) are excluded from availing of the exemption normally available to Canadian citizens and permanent residents in paying the additional tax in BC. Meanwhile, among BC's provincial nominees, those applying under the entrepreneurial stream are ineligible for an exemption to the additional tax even if they have been approved. The entrepreneurial stream requires a personal net worth of at least CAD$600,000 and a minimum investment of CAD$200,000 in a business in BC which will create at least one full-time job for a Canadian or permanent resident. 43 In effect, the entrepreneurial stream is an investor visa.
In 2019, the Supreme Court of British Columbia dismissed a challenge to the constitutionality of the foreign buyer's tax and this was upheld on appeal in 2021. 44 The challenge argued that the additional tax violated section 15 of the Charter of Rights and Freedoms because it distinguished between individuals based on national origin and citizenship status. 45 Justice Bowden dismissed this on the basis that distinguishing between people based on immigration status is not an analogous ground under section 15's equality protections. 46 The argument that the tax caused indirect discrimination was also dismissed because ‘[t]he view that foreign buyers were contributing to housing unaffordability is not prejudiced in respect of any particular group’. 47 Justice Bowden also thought that even if his analysis under section 15 was wrong, the foreign buyer's tax would be a ‘reasonable limit’ allowed for under section 1 of the Charter. 48 The BC Court of Appeal agreed that ‘immigration status’ was not an analogous ground under section 15 and that the appellant's equality rights were not violated. 49
To date, there has been no similar challenge to Ontario's non-resident speculation tax. As with BC, Ontario's non-resident speculation tax is payable by those who are not Canadian citizens or permanent residents. Though those who pay it and later become permanent residents can recover the payment if they become a permanent resident within four years of paying. Those confirmed under the Ontario Immigrant Nominee Program are also exempt. Refugees are exempt, as are non-Canadian spouses jointly buying property with their spouse so long as the property is acquired as a principal residence. International students who are enrolled full-time in an approved institution for at least two years from the date of purchase can get a rebate, as can foreign nationals who work full-time on a valid work permit for at least one year after the date of purchase. To get the rebate, the property in question must have been the principal residence of the study or work permit holder. 50
The restrictions in Canada, Australia, and New Zealand target foreign buyers but it is possible for restrictions to focus on those who already own. For example, in April 2016, the UK government introduced additional taxes on the purchase of a second home. 51 This surcharge is refunded if the first home is sold within three years. The stated goal was to support first-time buyers, and to deter buy-to-let and investor purchasers. 52 Scotland was not included in this regime as it had replaced the UK Stamp Duty Land Tax (SDLT) in 2015 with a Land and Buildings Transaction Tax (LBTT). 53 Scotland introduced its own version of the additional tax via the Additional Dwelling Supplement in 2016. Since 2016, the UK tax regime has further diverged as Wales introduced a Land Transaction Tax in 2018. However as with the SDLT applied in England and Northern Ireland and the LBTT in Scotland, the Welsh regime also has a surcharge on the purchase of additional residential properties. 54 What is unusual about these surcharges, as compared with other jurisdictions in this section, is that they apply to all investment or second-home purchasers regardless of citizenship or residency status. It also applies regardless of where the first home is, that is, the first house can be outside of the UK and the surcharge will still be due. There are some reliefs available where a person is purchasing multiple dwellings. 55 Such reliefs imply that the tax is targeted at purchases which may result in residential property being left empty for long periods of time, rather than those seeking to develop a rental property portfolio.
From April 2021 there is an additional tax for non-UK residents buying properties in England or Northern Ireland. 56 Unlike the taxes due in British Columbia and Ontario, this non-resident surcharge turns on the amount of time a person has spent in the UK prior to the purchase rather than whether the person is a British Citizen. If a person has not spent at least 183 days in the UK prior to purchasing property they will have to pay the non-resident surcharge. If they meet the residency requirements in the 12 months following the purchase, they may claim a partial refund. 57
Summary
The UK surcharges clearly differ from the other restrictions examined in this section by virtue of their uniform and nationality-neutral application. What the UK surcharges make clear is that the additional taxes on second properties are a tax on wealth rather than a tax on non-nationals. The additional taxes in BC and Ontario can also be understood as targeting wealth but they target foreign wealth rather than all forms of wealth. The additional charges levied on non-UK-resident buyers in England and Northern Ireland are aimed at keeping property affordable for those who are actually resident in the UK. Here there is a line drawn using residency rather than citizenship or nationality status in a way which differs from the foreign speculation taxes in Canada. BC and Ontario's additional taxes seek to make foreign ownership in specific locations more expensive without passing on those costs to Canadians but takes no steps to ensure that housing is affordable for resident Canadians.
Australia's FIRB approvals process can also be understood as a tax on wealth, specifically foreign wealth. Perhaps the more interesting aspect of the FIRB process are the temporary exemptions for those with certain types of visas. Similar exemptions are seen in Ontario which allows those who are legally in the country, though not permanently in the country, such as international students and foreign workers, to get a rebate on the additional tax. So long as the foreign national maintains their legal status, actually works or studies full-time and lives in the property for a set period, they can get a refund. The Australian and Ontarian exemptions for certain classes of visa-holders seems to allow for temporary ownership on the same terms as a citizen. Admittedly, in Ontario, the visa-holders do not have to sell once their visa runs out, but both jurisdictions require the visa-holders to use their property in a particular way. As such the nature of their ownership remains differentiated because they are non-citizens.
Restrictions on residents
In this section the focus is on restrictions on who can live in the property and other restrictions on how residential property is used. These restrictions can take various forms ranging from prohibitions on vacation rentals, to limiting residents to those who actually need to live in the area, to ‘right to rent’ measures which seek to limit renters to those with citizenship or legal immigration status. These restrictions, in contrast to those in section two, are properly on who may use the property rather than who can own it. As such they can be considered restrictions on use rather than just being about who can reside in the property.
The right to rent was introduced in England in 2016 and requires private landlords to check the immigration status of prospective tenants before renting to them. If the landlord fails to do so, the landlord is liable to prosecution. If the prospective tenant does not have legal status, the landlord must not rent to them. 58 The idea is that only British Citizens, Irish Citizens, 59 those with indefinite leave to remain (permanent residents), and those with valid work or study visas can rent residential property in the private rental sector. While it was anticipated that the right to rent would be extended to Scotland, Wales, and Northern Ireland, 60 the High Court's deeply critical assessment of it suggests that the entire scheme could and should be abolished. 61 The Court found the scheme resulted in discrimination, without clear justification, of non-British individuals who had a right to rent. 62 To date, however, the scheme remains in force in England.
It is not clear how or if the right to rent affects properties rented out via Airbnb and similar platforms. Nonetheless, several cities around the world have introduced restrictions on vacation rentals. In fact, in some cities, particularly in the US, vacation rentals are already illegal and the ‘new’ restrictions are actually additional rules around who is responsible for enforcing the law against letting residential property for less than 30 days. 63
It would be impossible to detail all the restrictions imposed in the various cities around the world. The focus here is on the limits introduced by New York City (‘NYC’), San Francisco, and Vancouver as all three are popular travel destinations with high rents, and high house prices. Under New York state law, rentals of less than 30 days are only legal if the owner or long-term tenant is present for the entire rental. 64 However, enforcement mechanisms were lax given the low uptake of such rentals until Airbnb revolutionised the process from 2007 onwards. 65 New legislation was enacted to require Airbnb to hand over data about hosts to prevent illegal uses of Airbnb. 66 In particular, NYC hoped to cut down on commercial vacation rentals and keep residential property as just that. After initially resisting the legislation via litigation, Airbnb agreed to hand over host data to NYC officials to ensure its platform is not used for illegal short-term letting. 67
The targeting of commercial vacation rentals also underpins San Francisco's and Vancouver's limits. Both cities require hosts to have a business license and hosts can only rent out their primary residence. In San Francisco, entire homes cannot be rented out for more than 90 days a year but renting out a spare room as a vacation rental is legal year-round. Certain properties, such as those which are below-market rate rentals, are permanently barred from being used as vacation rentals. 68
In summary, the restrictions seen on vacation rentals in these cities aim to do two things. First, they seek to keep residential property as residential property and prevent it from becoming a de facto hotel. Secondly, they seek to capture the tax that hotels and other legal vacation rentals pay. As with England's right to rent, the restrictions on vacation rentals rely heavily on the private sector for compliance and enforcement.
In addition to the limits on vacation rentals, Vancouver also has a tax on homes which are left empty. 69 This tax applies to all owners of residential property regardless of citizenship. Vancouver homes which are subject to the empty homes tax cannot be used as a vacation rental. 70 The empty homes tax does not limit access to ownership but it does curtail what an owner may do and as such is better understood as a limit on use. Where the empty property is in a strata development and the strata bylaws impose limits on renting out individual units, the owner will be exempt from the tax. 71 Similar empty property taxes or levies are seen in other jurisdictions such as Ireland. Ireland's experiences suggest that the tax is administratively challenging to collect given the difficulties in monitoring vacant sites or unoccupied property. 72
There is one other sort of restriction on residents worth mentioning in this section and that is limiting occupation of the property to people who need to live in the area. Two examples are seen in Banff, Canada and the island of Guernsey which is a British Crown dependency and not part of the UK. While anyone can buy property in Banff, individuals may only live in such property if they have to be present in the National Park for work. 73 That is, a person could buy a house in Banff and never be eligible to live in it. Nor can they keep it just as a vacation property. This restriction is partially a response to the desirability of living in Banff but also the need to limit development in a national park.
Guernsey's situation is more complex and came to the fore in the European Court of Human Rights (ECtHR) decision of Gillow v United Kingdom. 74 Since the end of the Second World War Guernsey has engaged in population management. 75 The island's system of population management includes limiting who may reside in different types of property on the island. As a general rule a person seeking to reside in Guernsey must have some connection to it. The details of this rule have varied over the years and currently the island has a two-tier housing market of ‘open market’ and ‘local market’ housing. 76 The exact rules at issue in Gillow were somewhat different given that Gillow was decided in 1986. Nonetheless, Gillow remains instructive for its judicial discussion of limiting who can access residential property.
Gillow was a challenge based on a number of European Convention on Human Rights (ECHR) articles, including article 8 (respect for home), Article 1 of Protocol 1 (peaceful enjoyment of possessions) as well as the provisions around fair trials and protections from discrimination. 77 The Gillows were a married couple who wished to retire to the house they owned on Guernsey, having briefly lived on the island while Mr Gillow worked there. 78 When they returned, the Gillows needed ‘a license from the Housing Authority’ to occupy the house which they owned. 79 Such a license was not granted and proceedings for ‘unlawful occupation’ were issued against the Gillows. 80
The Gillows’ success was both partial and narrow. The ECtHR noted that A1-P1 had not been extended to Guernsey and so the Court could not examine that claim. 81 In terms of Article 8, the government conceded a violation, 82 but the ECtHR found that the interferences with the Gillows’ Article 8 rights were in accordance with the law, that the law had a legitimate aim, and was necessary in a democratic society. 83 What was disproportionate was how the housing laws had been applied to the Gillows because their particular circumstances were not fully considered. 84 Such a ruling left the housing law intact and even saw the ECtHR comment that ‘preferential treatment for persons with strong attachments to the island is legitimate’. 85 As such Gillow is deferential to how residential property fits within its broader community rather than to the rights of owners.
While the limits in Banff and Guernsey are need-based, any person who buys property in a state where they lack citizenship may not be able to live in that house full time. Some countries offer a path to citizenship through the purchase of property, 86 but most do not. Thus, immigration law can act as a limit on the use of property in a way not often appreciated.
Claims to property and commentaries on property
Running through the examples of legal restrictions seen in parts two and three is a concern about being physically present and legally entitled to be physically present. Both concerns are not always present in the same restriction or jurisdiction but, taking Vancouver as illustrative, its empty homes tax when coupled with the additional tax for foreign buyers clearly reflect the two concerns. Other restrictions, such as the prohibition on vacation rentals, are neutral with respect to legal presence in the jurisdiction and are more concerned with permanent physical presence. That is, they seek to restrict temporary residents. These restrictions contain within them a commentary on property: what it is for, who can make claims to property, and why. This section sets out these claims and how they illustrate, to varying degrees, both questions of belonging and the necessity of property for individuals.
Writing in the late 1990s, Bright and Bright observed that land cannot be moved across borders. 87 As true as this comment is, money and titles to land can be moved across borders. The globalization of the property market has proven to be a disruptive force and underpins many of the legal restrictions examined in parts two and three. 88 For example, in 2018, David Parker, then New Zealand's minister for Trade and Economic Development stated that the goal of his nation's restrictions was to ‘ensure that the market for our homes is set in New Zealand, not on the international market.’ 89 Similar worries motivated the additional taxes seen in British Columbia and Ontario. 90 Unfortunately the end result has been that the legal restrictions, to a greater or lesser degree, direct the blame for the housing crisis in a particular direction: outsiders.
Blaming outsiders is, of course, seductive for its simplicity. It ignores the other factors which have resulted in the housing crisis and does nothing to challenge the fact that owning property in land is seen as a secure investment, a desirable status, and a safety net against personal economic calamity. 91 As such, it should come as no surprise that the legal restrictions which seek to limit “outsiders” from becoming owners do very little to guarantee that, where the property is residential, the property will actually be used as a residence. Instead, these restrictions on accessing ownership seek to preserve the economic value of residential property rather than its use value.
The point here is a subtle one and reflects a minor but important difference in ideology between the property laws in different jurisdictions. 92 While it is true that each of the jurisdictions examined is a common-law jurisdiction, they have diverged from each other. The divergence which is relevant for this article is the protection afforded to property rights and, more specifically, the protection given to an owner's discretion over deciding how to use their property. Each jurisdiction will protect both the economic value of the property (e.g. via compensation for expropriation) as well as the physical uses of the property (e.g. via nuisance) but, where the two conflict, the jurisdictions will differ in which sort of use will win out. To give an example, Ontario's adverse possession law relies on the inconsistent use test which means an adverse possessor must use the land inconsistently with the true owner's use. 93 In cases where the land is held as an investment, there are few uses inconsistent with that and the end result is a subtle preference for the investment use of land rather than the physical use. 94 The legal restrictions examined in this article might seem to favour the actual use of land, here residential property being used as residential property, but outside of those restrictions aimed at residents, such as prohibitions on vacation rentals and those seen in Banff and Guernsey, investment use remains protected. In fact, the takeaway is more often that investment use by non-citizens is objectionable and contrary to the purposes underlying property law.
Here, the additional taxes in seen in the constituent nations of the UK are outliers. The taxes on the purchases of additional property apply to everyone, regardless of citizenship. Some reliefs are available where a person is buying multiple properties at the same time. Such reliefs can be understood as part of the push for the professionalisation of the rental market in the UK, 95 which has, to date, attracted fewer institutional investors than other European jurisdictions. 96 However, absent linking the reliefs for multiple dwellings with any mechanism to ensure the dwellings are actually rented out, there is no guarantee that the housing will be available for others. Consequently, the target of the tax is small-scale investors, or second-home owners, rather than large-scale investors.
The additional tax on non-resident purchases in England and Northern Ireland will apply to non-resident British citizens. While taxes on purchases of additional residential properties can be understood as taxes on wealth, the non-resident surcharge does not fit so neatly into that box. The refund available to those non-residents who buy and later become resident is only partial. It is not so much a tax on wealth but a differentiation between residents and non-residents which penalises non-resident citizens as much as others who are non-resident. The non-resident surcharge adds an additional layer of belonging beyond citizenship and suggests that those citizens who are non-resident do not really belong.
The non-resident surcharge in England and Northern Ireland thus offers a photographic negative of some of the exceptions to the Canadian and Australian limits on foreign owners. The restrictions in Canada and Australia are not simply anti-foreign nationals; sometimes the restrictions recognise that certain non-citizens ought not to be under the same legal disability as others. These people are generally those with legal status – permanent residence, study or work visas and so on – in short, they are those who have already been pre-approved by the community of citizens. Such exceptions raise questions about the linking of owners and citizens and suggest that those who are allowed to be physically present for an extended period are investing in the community in a way that will be rewarded by being allowed to invest in property as though they are citizens; provided, of course, that they maintain their physical presence and do what their visa says they ought. It is as though they are renting or trialling citizenship and, if they adhere to the rules, they will get some of the benefits – whether they will actually stay permanently (or want to) or not. 97 Strikingly where a non-national – here meaning someone with neither citizenship nor permanent residence – does buy second-hand property in Australia or wishes to access the tax rebate in Ontario, they must abide by additional rules relating to the property; they must actually use it as a residence themselves. In effect, by buying property like a citizen, the non-national does not access the same level of autonomy and choice that the citizen-owner acquires but, rather, finds themselves under more restrictions. All of which further suggests that the non-citizen owner is seen as aberrant. In the Australian context, it effectively turns the non-citizen's ownership into something more like renting because the property must be sold if the non-citizen leaves Australia or ceases to use it as their permanent home.
The Canadian, Australian, and New Zealand limits on owners reflect a hierarchical approach to property relationships. The limits assume that owning property is a desirable goal and that it is a status to which citizens should aspire. Moreover, by restricting non-citizens, these jurisdictions suggest that property within specified areas is primarily for citizens and thus grants citizens a preferential claim to certain types of private property. By linking citizenship and property ownership, these jurisdictions suggest that residential property ownership belongs to citizens and vice versa. The end result is that both citizens who do not own and non-nationals who do own can seem out of place, and not ‘properly oriented’ in that particular jurisdiction. 98
Meanwhile, England's right to rent suggests that those who cannot afford to buy property are suspect and must prove their entitlement in a way those who purchase property do not have to. England's right to rent also valorises ownership and, when coupled with the various additional surcharges for second homes and non-resident purchasers, seems to suggest that ownership is primarily for those actually living in the country. The rules in England, when taken together, illustrate a two-tier society of owners and renters but also target foreign renters more strongly than foreign owners. Foreign owners, including non-resident citizens, face an additional tax in the English context while foreign renters may find themselves completely excluded. In England, it is anyone who rents who seems aberrant and who finds themselves subject to additional checks, whereas owners may find themselves subject to more taxes and thus, quite literally, contributing more. Once again, renters are rendered out of place and ‘[im]properly oriented’. 99 So too can it be assumed that the restrictions against foreign renters will disproportionately affect minority groups who are often assumed to be unentitled regardless of citizenship status. 100
The linking of property rights and legal status ought not to be surprising. Both property law and immigration law govern where a person can be, how long they can stay, and what they can do while there. Banff's and Guernsey's examples offer a different, heavily localised way of linking property and immigration. In contrast to the bans on foreign buyers or additional taxes for foreign buyers, Banff and Guernsey's examples suggest that residential property use belongs to the local community. They illustrate how local housing needs – which themselves are rooted in what the community needs – can trump owners’ rights. It is doubtful, however, that the restrictions seen in Banff and Guernsey would be readily transferable to other places. Both Banff and Guernsey are restricted by their size and by their need to ensure that essential workers and those with longstanding links are not priced out of living there. Their solutions offer a stark response to the downsides of a free market in residential property and a potent reminder that residential property is not just a financial product or liquid asset. 101
What is, perhaps, more surprising are the restrictions which target visitors regardless of their citizenship status. Such an approach is seen in the prohibitions on vacation rentals. The restrictions on vacation rentals could be construed as a backlash against tourism. By preventing ordinary residential properties from being used as de facto hotels, the prohibitions on vacation rentals suggest that visitors and tourists belong in hotels or hostels and so on. There is a tacit suspicion of such temporary residents in these prohibitions and, certainly, there is ample anecdotal evidence from neighbours of apartments used as vacation rentals that guests are disruptive. 102 So too have vacation rentals been blamed for rising rents in many of its more desirable destinations, 103 to say nothing of the broader critiques of mass tourism.
It is, however, open to question as to how much of the increase in rents and lack of supply is down to vacation rentals. 104 Some studies which blame vacation rentals for these consequences have been commissioned by hotel associations. 105 Obviously, vacation rentals are but one factor in the broader housing crisis and the various platforms simply facilitate rather than mandate vacation rentals. Part of the blame for the negative effects of vacation rentals must also rest with the “hosts”, to borrow Airbnb's term, who list their properties. As much as restrictions on vacation rentals can be seen as targeting tourists, their proper target is how owners use their property. In fact, some cities have sought to protect tourists using vacation rentals by imposing safety measures, such as requiring smoke alarms, rather than outright prohibitions on vacation rentals. 106 Such measures further support the idea that restrictions on vacation rentals are aimed at regulating use.
Property law and theory often asserts, implicitly or explicitly, that owners have broad discretion over uses but the reality is quite different. 107 Uses are everywhere circumscribed and the limits on vacation rentals fit well within the broader prohibitions on, say, using a house as a factory. Such limits on use recognise that uses matter to more than just the owner because uses overlap and interact with neighbouring uses and, indeed, matter more broadly. By limiting vacation rentals to a person's primary residence, and to a set number of days per year in cases where the entire property is rented out, Vancouver and San Francisco are making several tacit points about property. First, the restrictions on vacation rentals make it clear that residential property should be used as residential property and not as a hotel. Secondly, the fact that owners can make more money using their property as a vacation rental is irrelevant if the property is residential. The residential use matters in a social sense in that other people in the community will have a need to use the property as their home if the owner does not need it as a home. This suggests a communal claim to, or a communal interest in, otherwise private property. 108 Admittedly, under the vacation rental laws, owners are not forced to rent their property but, given Vancouver's empty homes tax, for example, there may be incentives to do so. Thirdly, if owners want to run a business, they will need the appropriate permissions and will need to pay the appropriate taxes. Part of the result of living in society is sharing the costs just as much as the benefits.
Yet, in the context of restrictions on accessing residential property, there remains a large degree of deference towards owners in the legal restrictions. The limits on vacation rentals do not force owners to use their properties as long-term residential rentals. Insofar as they limit owners’ discretion, they do so in a minimal fashion. Outside of non-Australians buying second-hand homes in Australia, 109 the legal restrictions generally do not require owners to undertake specific acts. The English right to rent, for example, does nothing to ensure that an eligible person can actually rent a suitable home. In effect, those who need to rent remain at the mercy of owners’ decisions over whether to rent their property or not.
To be clear, none of the legal restrictions reflect a right-to-housing claim. Even if they did, the extent to which a human rights claim can defeat or limit a property rights’ claim is disappointingly small. 110 There are increasingly efforts to incorporate a human-rights aspect into property theory but as yet that has not been widely accepted. 111 The evidence suggests extensive resistance to recognising housing rights in a way which would impinge on private property rights.
Empty property levies and prohibitions on vacation rentals do indicate some hints of a recognition that property is necessary for human life; however, these restrictions limit owners rather than empower potential long-term tenants. The more worrying restrictions are those which seek to link immigration status to entitlement to housing or property instead of recognising that such entitlement rests on the fact that every human being needs housing or property to survive. Immigration status then acts as a Trojan horse for value judgements about who belongs, and can lead to discrimination as seen in the challenge to England's right to rent. It is this risk of discrimination which ought to be guarded against in crafting restrictions on who can access residential property.
Conclusion
This article has sought to explore legal responses to the housing crisis to examine what they can tell us about property. In particular, its focus has been on the legal restrictions imposed on accessing residential property. The article has argued that there two main ways to categorise the legal restrictions: those restricting who can be owners and those which restrict who can be resident in the property. The article has also argued that the formal restrictions tend to affect “outsiders” – whether foreign nationals, tourists, or investors who are not part of the local community. These legal responses reflect a communal claim to otherwise private property. As problematic as these claims can be, in that they can all-too-readily blame outsiders for the housing crisis, they also remind us that property is about use and that the backlash is primarily around investment use. As such, those restrictions which seek to preserve residential property as residential property, such as those which limit vacation rentals, are to be preferred. These restrictions tacitly remind us that everyone needs somewhere to live and subtly seek to rebalance the property market so that those who actually live in particular locations can access residential property. These restrictions do not go far enough, however, because they maintain deference towards owners over and above the human need for housing. Nonetheless, the human aspect of property is attracting increasing attention from property theorists. 112 Whether or not the theorists’ approach will help or hinder the current housing crisis is a question for another article.
