New property transfer tax form for buyers or investors using corporation or trust will ask more probing questions

Joannah Connolly
Western Investor

The B.C. government is closing in on real estate tax evasion by requiring much more comprehensive information from anyone buying residential or commercial property through a company or trust, the Ministry of Finance announced July 25.

As of September 17, 2018, a new property transfer tax (PTT) return will ask those purchasing a property through a corporation or trust to disclose the same full slate of personal information that home buyers disclose on the regular PTT return.

This includes the individual buyer’s name, date of birth, citizenship information, contact details and tax identification numbers (such as a social insurance number)

Finance minister Carole James said in the announcement, “Our government has been clear that the days of skirting tax laws and hiding property ownership behind numbered companies and trusts are over. Not only is tax evasion in real estate fundamentally unfair, but it’s driving up the cost of housing for people who live and work in our communities. These changes give authorities another tool to make sure people are paying the taxes they owe.”

The province said in a media release, “There will be exemptions for certain trusts, such as charitable trusts, and certain corporations, such as hospitals, schools and libraries.”

The move is part of the B.C. NDP government’s 30-point plan for housing, which also includes the annual speculation tax and the school tax on $3 million-plus homes.

Under the plan, the province also recently announced that it would set up a property ownership registry to bring “hidden owners” of B.C. real estate into the light. It also intends to track presale condo assignments to prevent tax evasion by buyers flipping a presale condo, and establish a working group on tax fraud and money laundering in B.C. real estate.

More information on the new PTT reporting requirements can be found here.

Copyright © 2018 Western Investor

The housing market issue is of concern in the combination of elevated household debt and rising housing prices

Steve Randall
REP

There are many good things to say about the Canadian macroeconomic situation: low unemployment, inflation on target, and solid growth forecasts.

But the OECD still has two key issues with Canada – and one of them is the housing market.

In its 2018 Economic Survey of Canada, the organization says that the uncertainty surrounding trade restrictions, especially NAFTA, is weighing on growth forecasts and depend on political decisions, notably in the US.

The second issue of concern is the combination of elevated household debt and rising housing prices.

These factors, the OECD warns, could lead to a disorderly market correction “potentially reducing residential investment and household wealth and dampening consumption.”

The rising housing prices have not only increased macroeconomic risk but also created affordability challenges, the OECD says.

Noting the policy changes implemented by federal and provincial governments in recent years, the report recommends that the government should monitor the effects of recent targeted regulations, “paying close attention to high-debt, low-income borrowers most vulnerable to high debt-service loads as interest rates rise.”

The OECD report also recommends increasing the supply of affordable housing and better maintaining the existing social housing stock.

Copyright © 2018 Key Media Pty Ltd

New rental zoning laws implemented by Burnaby

REP

The City of Burnaby says it will be the first in British Columbia to take advantage of the province’s new rental zoning laws.

The city says in a news release that it will begin implementation of a rental zoning bylaw aimed at maintaining rental stock at affordable rates.

On Monday, Burnaby council passed a motion asking city staff to implement the bylaw requiring developers to replace all rental suites if an apartment is renovated or rebuilt.

The bylaw requires the replacement units to be in the same neighbourhood, rented at affordable rates and be made available to current tenants.

Legislation passed in May by the provincial government allows municipalities to zone undeveloped property for rental housing and set out a specific number of rental units in a development.

Burnaby Mayor Derek Corrigan says the city has been calling for municipal authority over rental zoning for almost 30 years.

“We were optimistic when the new legislation came in about six weeks ago that allows us the tools to require older market rental buildings be replaced as part of any redevelopment,” he says.

In the past, Corrigan says cities could only attempt to negotiate density in exchange for small numbers of rental suites, but the new legislation gives municipalities the authority to require replacement of rental suites.

Copyright © 2018 Key Media Pty Ltd

Jericho lands Planning work expected to start in the fall

Western Investor

Vancouver city council Tuesday morning approved a planning program for the future of the Jericho Lands.

 “The Jericho Lands in Vancouver’s West Point Grey neighbourhood will undergo a comprehensive planning and engagement program that will help guide future redevelopment of the site to create a new community that is sustainable, socially and culturally inclusive, and highly livable,” states a City of Vancouver press release.

The program approved by council Tuesday is the start of a two-year process aiming to establish principles, objectives and policies on: reconciliation, affordable housing, land use, density, height, public benefits, transportation, built form, character, sustainability, infrastructure and phases of development, the release states.

“A broad engagement process involving the community, stakeholders and participants from throughout the city will be integral to the program.”

Jericho Lands is a 36-hectare (90-acre) site in West Point Grey owned by the Musqueam, Squamish and Tsleil-Waututh First Nations and Canada Lands Company. It is bound by West Fourth Avenue to the north, Highbury Street to the east, West Eighth Avenue/West Broadway to the south and Discovery Street/Trimble Park to the west. The land is within the traditional territories of the three First Nations and in June the three nations and Canada Lands Company asked the city to initiate a planning program to create a vision and updated land use policy or the future of the site.

 The planning program will look at a number of areas, including:

• ways to advance our collective work toward reconciliation
• creating a complete community with new housing for a range of income levels, families and rentals
• providing new housing within walking distance of existing and planned rapid transit routes
• providing shops, services, childcare, community and employment space to support the new community and the rest of the city
• protecting cultural and heritage assets
• creating new parks and open space, and a comprehensive package of other community amenities that will be determined through the planning process

The planning process will also consider the existing uses on the site and their future. The land is currently home to Jericho Hill Centre, which is operated by the West Point Grey Community Centre Association and Vancouver Park Board, and West Point Grey Academy, an independent K-12 school, as well as the Jericho Garrison.

The garrison was owned by the Department of National Defence until 2014 when ownership was transferred to Musqueam, Squamish and Tsleil-Waututh First Nations and Canada Lands Company.

The defence operations have since moved but some of the existing housing will continue to be leased to military personnel until 2020.

Work on the planning program is expected to start in the fall.

Copyright © 2018 Western Investor

Development industry ?conditionally? backs increases if they result in shorter permitting processes

Joannah Connolly
Western Investor

A series of steep development and rezoning application fee increases recommended by City staff will go before council today (July 24).

The fee hikes, which would be effective from January 1, 2019, range from a 12 per cent increase “in most categories” to a jump of 55 per cent for “downtown rezoning enquiries and large sustainable site applications.” There will be no increase in laneway housing application fees.

The staff report being put before council says that the $7.9 million in additional revenue would go to increased staffing to process building permit applications.

The report says, “Given the continuing gap between city costs to process applications and the revenues generated by these permits, it is recommended that fees be increased.”

Responding to the report, Anne McMullin, president and CEO of development industry lobby group the Urban Development Institute, said the UDI “conditionally” supported the fee increases.

She said in a statement, “UDI has been conditionally supportive of the increased staffing and associated fee increases… as long as the incremental resources are directed at resolving the City’s chronic processing and approval delays. While the fee increases are quite high… if our industry’s processing times are dramatically reduced, the significant time savings will be worth the investment. Moving forward, it is critical that the City work with industry to ensure that the anticipated improvement in processing times is achieved.”

A recent C.D. Howe Institute report found that “barriers to building” such as zoning and land-use restrictions, planning delays, development cost charges and more are adding around $644,000 to the cost of a typical new detached house in Metro Vancouver.

That report was closely followed by a study out of UBC, which said that taxes and fees make up 26 per cent of the cost of a new Vancouver condo.

Copyright © 2018 Western Investor

Tale of the tower: mountain view versus rentals

Mike Howell
Vancouver Courier

What began as a debate at city hall Tuesday about a proposed 400-foot tower intruding on views of the North Shore mountains turned into a political battle over the need for rental housing.

In the end, the ruling Vision Vancouver council voted 6-3 to allow provincial Crown corporation PavCo to build a 40-storey residential tower on Pacific Boulevard, between Rogers Arena and B.C. Place Stadium.

The approval, however, hinges on PavCo making the entire building “secured market rental housing,” as successfully requested by Vision Coun. Raymond Louie during the debate.

If PavCo doesn’t want to go that route, the option is to build a bulkier 300-foot tower with the same square footage. PavCo hasn’t hired a developer, still has to submit an application to the city’s development permit board and would need the proposal to be reviewed by an urban design panel.

Before the corporation does any of that, it has to decide which of the two heights best suits its plans for the site and the mix of housing it wants; the first three floors will be for commercial use.

Rehana Din, PavCo’s chief financial officer, told council the corporation is not opposed to rental housing for either option, but noted it was a long way from finalizing a detailed proposal.

Din told reporters after council’s vote that PavCo’s original proposal was for a 300-foot tower. But in February, council allowed for the incorporation of three tall towers in the city’s Northeast False Creek Plan; developer Concord Pacific has yet to submit a rezoning application for the other two towers, which could reach 425 feet each.

“What we [originally] put forward to the city was the 300-foot option,” Din said. “They asked us to look at a 400-foot option. We were fine with either. We’ll have to take a look back now to see how we feel about this change.”

When the Northeast False Creek Plan was approved, senior city staff said the towers—which are proposed to be located near a new intersection at Georgia Street and Pacific Boulevard once the Georgia and Dunsmuir viaducts are demolished—would create a more interesting skyline.

Kevin McNaney, the city’s project director for Northeast False Creek, said at the time the grouping of the towers would “create a magic moment in the skyline” and help the neighbourhood “sing in terms of urban design.”

The three towers, however, will intrude on three of the city’s own designated view cones or corridors—two looking north on Cambie Street between 10th and 12th avenues, the other looking north from Queen Elizabeth Park.

Louie pointed out the iconic Sears tower downtown and the Marinaside building in Yaletown already poke through one of the view cones. Also, the view cone further up Cambie would make seeing the towers difficult because trees obstruct that view, Louie argued.

Mayor Gregor Robertson said allowing the 400-foot tower, with market rental housing, was “a reasonable trade-off.” He picked up on Louie’s point about the view cones, noting traffic lights already impede some of the view of the North Shore mountains.

“They’re a much bigger incursion than this tiny slice of building adds,” said Robertson, also mentioning the trees alongside city hall block “a good chunk” of the view. “So are these view corridor advocates calling for those trees to be cut down to ensure that the full view corridor is available for public viewing? I think we need to be reasonable about this.”

Robertson was referring to more than 1,800 people who signed a petition to oppose the towers being allowed to intrude on the view cones. A coalition of neighbourhood groups also sent a letter to council in opposition to disrupting the views.

Melody Ma, who has led the “Save our Skyline YVR” social media campaign, described the council debate as “political posturing,” with Vision Vancouver turning it into a view cone versus affordable housing debate.

“If they were truly for affordable housing, they would also mandate that the 300-foot option also be 100 per cent rental housing,” Ma said in the council lobby after the vote.

Even so, she added, she questioned who will be able to afford what will likely be expensive rents, if PavCo chooses to build market rental housing. She accused Vision of “privatizing our views.”

Green Party Coun. Adriane Carr, who along with NPA councillors George Affleck and Melissa De Genova opposed Louie’s market rental housing condition, said she had no confidence rents would be affordable in the tower.

“What we need in this city is affordable housing, not just build, build any kind of housing,” Carr said.

She said Vancouver has always been known for its views of the mountains. She agreed with Robertson and Louie that the proposed towers don’t “intrude that much” on the view cones.

“But I think it’s like death by a thousand cuts,” she said. “You start intruding here, you start intruding there and it sets this precedent for the intrusions.”

Affleck accused Louie of “sugarcoating” and “deflecting” the real issue of tower heights and mixing it with rental housing.

“If we continue, potentially, to poke into these view corridors, we are in fact tampering with the beauty of our city over the long term,” he said. “It’s dangerous for us to do this.” 

Vision Coun. Kerry Jang said the number one issue facing the city is housing and creating more of it. Jang said all Vision was doing Tuesday in calling for market rental housing in a 400-foot tower was giving PavCo an option.

“Why close off any options?” he said. “To simply say no at the outset means you don’t stand for housing at all.”

NPA Coun. Elizabeth Ball was not at the meeting and Coun. Hector Bremner cited a conflict and did not participate in the debate.

Glacier Community Media © Copyright ® 2013 – 2018

Revenue agency asked to verify incomes for mortgages

Steve Randall
Canadian Real Estate Wealth

The CMHC wants the Canadian Revenue Agency to provide more robust verification of incomes stated on mortgage applications.

The call comes following an investigation by the CMHC into the correlation between incomes stated on mortgage applications and those reported to the CRA.

It now wants the tax agency to take a “more direct and formal role” in verifying incomes according to documents obtained by Reuters.

Some other countries including the US and UK have systems where the tax agency does provide lenders with verification of mortgage applicants’ incomes and the CMHC believes this would cut potential incidents of mortgage fraud, which can have a serious impact on the economy, especially if there is another financial crisis.

The CRA told Reuters that it is looking into ways that it can respond to CMHC’s concerns and provide lenders with income verification.

While the majority of Canadians are honest on their applications, a recent study by Equifax found that 13% think it’s ok to lie on a mortgage application and 16% believe mortgage fraud to be a “victimless crime”.

The study of mortgages originated between 2013 and 2016 found a 52% spike in suspicious mortgages, mostly in the highest priced housing markets.

Copyright © 2018 Key Media Pty Ltd

Seniors benefit from renting out rooms to students

Adina Bresge
REP

After her husband died, Elizabeth Hill says she would lay awake listening for bumps in the night in her eerily empty home _ so to get some shut-eye, she decided let a stranger live with her.

Since then, the 75-year-old has compiled seven “guest books” filled with photos and thank-you notes from the dozens of young international students who have stayed with her over the past two decades.

Hill is one of a number seniors who have been moving in with students in exchange for subsidized rent and occasional help around the house _ often with the added benefit of lasting friendships.

A Toronto elder-care initiative is working to replicate these mutually beneficial living arrangements this fall, in a provincially funded pilot project that aims to set the Canadian standard in intergenerational home sharing.

Researchers say these shared-living programs could help address two of Canada’s most pressing social issues: housing affordability and caring for an aging population.

But Hill and 32-year-old Julio Hernandez, who have lived together for seven years, say the benefits can go far beyond reduced living costs, because the care goes both ways.

“At this point, I see her more like a friend than my landlady,” Hernandez said. “She’s like my Toronto family.”

As baby boomers and millennials alike get priced out of red-hot housing markets, schools and community groups across the country have embraced various kinds of shared-living programs _ from a housing co-op in Winnipeg where women can grow old together, to a retirement home in London, Ont., that hosts Western University students.

In Ontario, more than half of residents _ and three-quarters of those over the age of 65 _ live in houses that are bigger than they need, leaving five-million spare bedrooms across the province, according to a 2017 report by the Canadian Centre for Economic Analysis.

That means many seniors have more space than they can afford, while students struggle to pay rent for cramped living quarters, said Raza Mirza, a University of Toronto researcher with the National Initiative for the Care of the Elderly.

The financial stress is exacerbated by growing costs and wait lists for long-term elder care or assisted living, Mirza said, while students face mounting tuitions.

With the Toronto Homeshare Pilot Project, Mirza and a group of researchers, social workers and government officials hope to find symbiotic solutions to these pressures so that seniors can stay in theirs homes, while students find new ones.

By Sept. 1, the four-month program is expected to match up as many as 20 pairs of senior-student roommates through a rigorous screening process. Participants will be asked to sign agreements that can require young boarders to commit up to seven hours per week to running errands or spending quality time with their hosts.

Researchers hope the insights they glean from the pilot project and subsequent studies will eventually be used to develop a home-sharing model that can be tailored to cities across the country.

But as they work out the kinks at this early stage, they’re counting on Hill and other seniors who shared their success stories at a recent information session to guide them.

Joyce Rainville, 69, has been on both sides of the home-sharing equation. In her 20s, Rainville said she moved in with a family in Guatemala, and despite not speaking Spanish, forged a relationship that would stick with her long after she returned to Canada.

In the past 14 years, Rainville professes to have taken in “hundreds” of students, sometimes as many as four at a time. She helps them practice their English, and in return, they often introduce her to customs and cuisines from their home countries.

“I always said when I can do it, I’ll give back,” Rainville said in an interview. “They were away from home, and my home was their home.”

When Hernandez arrived on Hill’s doorstep from Cuba in 2011, they agreed he could stay in her west-end Toronto home for a six-month trial period as he set out to earn his master’s degree.

Last Friday, the two of them decided to get out of the house and go to a restaurant to celebrate his successful defence of his doctoral thesis, which lists Hill in the acknowledgments.

Hernandez said he wanted to pick up the cheque to thank Hill for any number of things _ reducing his rent so he could make ends meet during his studies, comforting him through a breakup, or having supported his brother the same way when he lived with her years earlier.

“She was always there for me,” Hernandez said. “She was essential for me to get to this point in my life.”

Hill wouldn’t have it. Lunch was on her.

When Hill is feeling down, she flips through her guest books and looks back on all of the memories she’s shared with her unlikely roommates over the years.

There was the look on her first guest’s face when she showed him his room with a double bed and he asked, “Is this all mine?” And the student who massaged her back as they watched the sunset on Toronto Island.

Of course, she sometimes had to deal with wet towels on the bathroom floor, or wait up until 11 p.m. to make sure a young woman got home safe from her night on the town.

But 95 per cent of her experiences have been positive, Hill said. So she can put up with the little things, because she gets so much in return.

And besides, she noted, “I’m not their mother.”

But that doesn’t mean she isn’t family. 

The Canadian Press

Copyright © 2018 Key Media Pty Ltd

myLTSA service upgraded

Bob Mackin
other

The agency that keeps track of land in British Columbia quietly made it harder to access information about who owns real estate in the province. 

In a July 9 news release — ironically headlined “LTSA Releases Enhancements for myLTSA Service” — the B.C. Land Title and Survey Authority announced title search previews no longer show full names of persons or corporations for free. Instead, only the first two letters of a last name and first initial or the first two letters of a company name are visible under the “first owner name on title” column. 

“It came to my attention a few weeks ago now that that particular function wasn’t being used as much or was being increasingly used for reasons other than confirming buying the right title,” Craig Johnston, LTSA’s Director of Land Titles, said in an interview. “We want to still maintain a balance so customers don’t guess what title they’re buying.”

Hence, the abbreviations.

The fee per search is $9.45 plus a minimum $1.50 fee per transaction on the myLTSA website, plus sales taxes. The transaction fee is not charged for in-person searches at an LTSA office, such as Sixth and Cunningham in New Westminster. In some jurisdictions in the United States, such as Whatcom County in Washington and Maricopa County in Arizona, there is no charge to search property databases that contain the names of owners.

Since electronic access was introduced a couple of decades ago, the first name on title was visible without charge, to keep customers from guessing wrong and then asking for refunds. Johnston said the decision to hide the full names was his, under his duty to interpret the Land Title Act, without input by the board or the government. 

“The intent under the statute is if you need that part of the title, you should buy it. Otherwise there would be a provision under the act where you could get the owner name for free,” he said.

B.C. Assessment Authority doesn’t offer free access to land owner names on its website, but its database is free to search at one of its offices. That, however, requires a trip during business hours Monday to Friday to a place like 2925 Virtual Way in Vancouver. 

Mike Larsen, the president of the B.C. Freedom of Information and Privacy Association, criticized LTSA for “nickel and diming” and making the process “a little bit more difficult, a little bit more opaque.” The first owner name on title was available for free for so long and useful for journalists making initial inquiries for research, he said..

“I’m always frustrated when things that are previously available become closed off to access to information,” said Larsen. “There seems to be a bureaucratic capacity issue: we can do this, we have the authority, and so we’d like to.”

In 2004, Premier Gordon Campbell announced LTSA would assume the provincial land title and survey system as an “independent, not-for-profit authority.” It regulates and operates the land title and survey systems for the province, which appoints two of the 11 board members. 

It now costs to see the first owner name on title for a prominent $78.8 million Point Grey mansion. (LTSA)

LTSA reported $8.58 million net income on $43.01 million revenue for the year ended March 31, 2018. A third of its revenue was from information products and 16% from fees for electronic processing of transactions through the myLTSA electronic portal. The company is forecasting a nearly 10% drop in revenue for 2019 to $38.7 million, based on increased salaries and benefits for new technical and business development staff and the B.C. Real Estate Association’s forecast of an 8.6% decrease in unit sales.

The NDP government is working on a beneficial ownership registry. It published a white paper in June about the proposed Land Ownership Transparency Act and is seeking public feedback through Aug. 19. 

Corporations, trustees and partners will be required to report the beneficial owners of properties. The measure is aimed at cracking down on tax evasion, fraud and money laundering via nominees and numbered companies. LTSA would be the operator of the registry, but the fees have not been determined. The government, taxing authority, police force, financial sector regulator and a prescribed person or entity would be excused from paying fees. The latter class has not been defined.

Neither finance minister Carole James nor attorney general David Eby responded to theBreaker. But Sonja Zoeller in the finance communications office sent a prepared statement. 

“The proposed registry would include public access to the name, nationality and city or country of residence of beneficial owners. This information will end hidden ownership and help tackle tax evasion in real estate. One of the purposes of the public consultation is to look at the appropriate application of fees and we’re looking forward to feedback on that question as part of the consultation process.”

Land is ?the new gold? ? and B.C.’s Fraser Valley the motherlode

Frank O’Brien
Western Investor

British Columbia’s Fraser Valley is in the midst of a land rush that has driven prices up three-fold in the last two years and helped make land the dominant real estate investment in the Lower Mainland.

In the first quarter of this year, land accounted for 56.8 per cent of all the property transactions in the Lower Mainland, according to Altus Group, with sales of residential development land alone worth more than $1.1 billion. Sales of non-residential land, primarily for industrial, tallied another $530 million in the three-month period. But, as reflected in housing sales, sales of residential land in the Lower Mainland, while still strong, were down 46 per cent from the fourth quarter of 2017 and down 21 per cent from the white-hot pace in the first quarter of last year. Sales of non-residential land also cooled in the first three months of this year, dropping 15 per cent from the fourth quarter 2017 and 9 per cent below the first quarter of 2017.

Yet, with land sales averaging nearly $500 million a month so far this year, any talk of a downturn appears misplaced, especially in the Fraser Valley.

“The Fraser Valley is the future,” said Joe Varing, director of sales for Abbotsford-based Varing Marketing Group, with Homelife Glenayre Realty Company Ltd.

And, despite continual warnings of a land shortage, Varing maintains there are plenty of “greenfield” parcels in the Fraser Valley ready to build on.

“There is a bottomless supply of land,” he said. 

Varing recently sold around 30 acres of bare land in Langley in the $50 million range, among dozens of other land sales. 

Varing estimates valley land prices have tripled since 2016. Because of these rising prices, some detached homeowners have found value in joining with adjacent neighbours in land assemblies. One example in the Yorkson area of Langley saw three housing lots assembled into a 3.6-acre parcel that sold for $8.3 million. 

Varing often markets development sites to Vancouver area multi-family developers looking for opportunities from White Rock to Langley, Abbotsford and Chilliwack. The planned extension of light rapid transit, he said, has boosted demand for land assemblies from central Surrey to Langley. Developers are land banking, he said, and looking forward three to seven years for new multi-unit residential projects.

“Land is the new gold,” Varing said. 

Industrial speculation 

While Varing concentrates on residential development parcels, demand for Fraser Valley industrial land is also ramping up, according to Avison Young.

More than 1.9 million square feet of speculative industrial construction is set for delivery in the Fraser Valley over the next 12 months, Avison Young confirms – and the speculators are willing to pay big money to get into the market.

This March an investor, a B.C. numbered company, paid $2.4 million per acre for a parcel on 66 Avenue in Surrey, and Zenith Development Ltd. paid $2.7 million an acre for 2.5-acre site on 88 Avenue in Surrey in the same month. Abbotsford prices are also catching fire, with industrial land prices topping $1.1 million per acre this year in five recent deals.

Industrial vacancy rates are at near-record lows of 1 per cent in Surrey, 1.5 per cent in Langley and 1.8 per cent in Abbotsford, which are among the lowest in the Lower Mainland, according to CBRE. 

 “We are at a critical stage and we need to find industrial areas for these companies,” CBRE vice-president of industrial Chris MacCauley said. “It used to be that when companies couldn’t find space in Vancouver, they moved to the Fraser Valley. But now the valley doesn’t have much inventory left either. There’s a threat we’re going to see companies relocating out of province or it will limit their growth potential.”

© Copyright 2017 Western Investor