Florida agents fear unintended consequences of China real estate ban
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Following its passage by the Florida Senate and House of Representatives on May 8, Governor Ron DeSantis signed Senate Bill 264, which seeks to severely limit property ownership by selected foreign nationals in the state.
The law is currently due to come into effect on July 1, 2023.
In a statement from the governor’s office, DeSantis stressed how much Senate Bill 264 would limit the “malicious influence” of China and the Chinese Communist Party, but the law would also affect citizens of Russia, Iran, North Korea, Cuba, Venezuela. and Syria, whose citizens, in turn, could have a greater impact on the state’s luxury real estate market, agents told Inman.
It’s not all about China
“Florida hasn’t really been a hotbed for Chinese buyers, Asian buyers because of the distance,” said Inman Kara Amir of Coldwell Banker, a coastal agent for Florida and California. “So convenience has always been the main reason they didn’t go to Florida.”
California has traditionally attracted Chinese buyers because of its direct flights, Pacific climate and good schools, Amir says.
“This law also applies to residents of Cuba and Venezuela,” Amir continued. “Miami has a lot of South Americans – that’s what makes Miami “Miami” with its culture, restaurants and other things. So basically, you get it, okay, we don’t want them to buy agricultural land and stuff next to military bases and all that… But I think it sends a signal that they’re highlighting people who maybe not welcome to the state.”
The law can discourage buyers who are not covered by it
The details of the law — that buyers from these countries cannot buy land larger than two acres, cannot buy land within five miles of military installations, and cannot buy agricultural land, among other things — may not even matter much to these buyers. or not have much of an impact on them in terms of the logistics of their Florida real estate ownership, Amir argued. Rather, the opinion proposed by law is more likely to have a greater impact.
“People are not going to waste time reading every little detail of this law,” she said. “They’ll just say, ‘Yes, we’re not welcome here. Okay, we’ll take our money elsewhere.”
According to Florida Realtors’ 2022 International Residential Real Estate Activity Profile published in April 2023, none of the countries covered account for a significant portion of transactions with foreign buyers in Florida. the new law is Venezuela, whose foreign buyers make up 4 percent of Florida’s overseas transactions by number of purchases.
The vast majority of foreign buyers in the state come from Canada, accounting for 21 percent of the state’s overseas transactions. Canada is followed by Colombia (8%), Argentina (8%), Brazil (6%), Peru (4%), Germany (4%), United Kingdom (4%) and Venezuela (4%). percentage of transactions with foreign state buyers.
China itself isn’t even mentioned in the Florida Realtors report, only mentioned in how many foreign buyers in the state came from Asia and Oceania in 2022, with 7 percent coming from that region. Nearly half of all foreign buyers in Florida in 2022 were Hispanic and Caribbean, 18 percent were from Europe, 1 percent were from Africa, and 8 percent of respondents declined to state their regional origin.
“The short answer is: not much,” Chris Pollinger of RE Luxe Leaders told Inman in a text when asked how much the law could affect the Florida luxury market.
“While Chinese wealth wants to invest, they can still do so in Florida within the rules,” he explained. “The rich also have ways to keep the title through holding companies. The same applies to the other named countries, since the Russians have already (felt) the severity of the sanctions a little.”
Interpretation is a major problem
Howard Elfman of The Agency, which operates in Miami-Dade, Broward and Palm Beach counties, said his office typically caters to a large subset of foreign luxury buyers, many of whom are Chinese and Venezuelans looking for beachfront luxury condominiums.
Elfman said the biggest problem with the new law right now is interpreting all the details. On the day he spoke to Inman, Elfman had actually just walked out of a meeting between lawyers and real estate professionals who represent the state of Florida in real estate transactions to discuss Senate Bill 264. The biggest confusion so far has come from defining a host of terms. used in the bill, including things like “critical infrastructure,” which will now have limits on how close foreign buyers can buy property.
“A “critical infrastructure facility”: it could be a telephone tower (we don’t know where all the communication towers are), a seaport that is basically a cruise ship port that will shut down all of South Florida because of where our cruise ships are. ,” Elfman said, explaining the many definitions that the term could potentially include.
“There are still a lot of questions as to what the qualifications might be – (for example) you can buy an apartment or a house as long as it’s not more than two acres – so there’s still a lot of confusion around the bill.”
A group of Chinese citizens who live and work in Florida have also sued the state, alleging the new law is discriminatory, encourages racial prejudice against Chinese Americans and threatens their financial independence.
“This erroneous rationale unfairly equates the Chinese with the actions of their government, and there is no evidence of national security damage resulting from Chinese property ownership in Florida,” the American Civil Liberties Union of Florida, which represents the plaintiffs, said in a statement. says in a press release.
Over the past few months, other state governments have introduced more than a dozen pieces of legislation similar to Florida’s bill, but Florida’s law will be the first of its kind.
Elfman added that the current lack of clarity on what all parts of the bill mean is likely to have a larger indirect impact on the luxury market.
“Indirectly, it will affect (the market),” he said, “because it would require disclosure if you are going to be someone who falls under this foreign entity. It’s so technical at the moment that I’m sure there will be a lot of concern that if you’re a foreigner from any of these countries, you’re not allowed to buy in Florida, which is not the case. But when there’s so much confusion behind it all, people go to extremes.”
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Email Lillian Dickerson