𝐖𝐡𝐚𝐭 𝐢𝐟 𝐲𝐨𝐮𝐫 𝐛𝐢𝐠𝐠𝐞𝐬𝐭 𝐮𝐧𝐝𝐞𝐫𝐰𝐫𝐢𝐭𝐢𝐧𝐠 𝐫𝐢𝐬𝐤 𝐢𝐬𝐧’𝐭 𝐭𝐡𝐞 𝐛𝐨𝐫𝐫𝐨𝐰𝐞𝐫 𝐨𝐫 𝐭𝐡𝐞 𝐩𝐫𝐨𝐩𝐞𝐫𝐭𝐲 𝐛𝐮𝐭 𝐭𝐡𝐞 𝐧𝐞𝐱𝐭 𝐠𝐨𝐯𝐞𝐫𝐧𝐦𝐞𝐧𝐭 𝐩𝐨𝐥𝐢𝐜𝐲?

Vacant home taxes. Luxury taxes. Foreign investor taxes.

New York City’s proposed tax targeting certain high-end residential purchasers is the latest reminder that political risk plays a major role in real estate underwriting.

Our clients are used to analyzing:

📝 Borrower risk

📝 Market risk

📝 Construction risk

📝 Interest rate risk

But increasingly, 𝐭𝐡𝐞 𝐰𝐢𝐥𝐝𝐜𝐚𝐫𝐝 𝐬𝐞𝐞𝐦𝐬 𝐭𝐨 𝐛𝐞 𝐩𝐨𝐥𝐢𝐭𝐢𝐜𝐚𝐥 𝐫𝐢𝐬𝐤.

Is it possible that a deal that works today may not work after the next municipal election?

Across North America, governments are rolling out:

💸 vacant home taxes

💸 second-home taxes

💸 foreign buyer restrictions

💸 short-term rental bans

💸 anti-flipping rules

💸 development charge increases

💸 rent controls

These policies have many intentions but their real effect is uncertainty.

And uncertainty changes behaviour:

⛔️ investors hesitate

⛔️ developers delay

⛔️ lenders tighten

⛔️ capital reallocates

Policy risk is not theoretical.

It’s a part of everyday underwriting.

𝐈𝐧 𝐬𝐨𝐦𝐞 𝐦𝐚𝐫𝐤𝐞𝐭𝐬, 𝐩𝐨𝐥𝐢𝐭𝐢𝐜𝐚𝐥 𝐬𝐞𝐧𝐭𝐢𝐦𝐞𝐧𝐭 𝐢𝐬 𝐬𝐭𝐚𝐫𝐭𝐢𝐧𝐠 𝐭𝐨 𝐦𝐚𝐭𝐭𝐞𝐫 𝐚𝐥𝐦𝐨𝐬𝐭 𝐚𝐬 𝐦𝐮𝐜𝐡 𝐚𝐬 𝐦𝐚𝐫𝐤𝐞𝐭 𝐟𝐮𝐧𝐝𝐚𝐦𝐞𝐧𝐭𝐚𝐥𝐬.

The deals that survive over the next decade may not simply be the ones with the strongest fundamentals.

They might be the ones most resilient to changing political priorities.