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Government secrecy underpins BC real estate revelations – Alaska Highway News

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Three recent revelations by media related to Vancouver’s real estate industry have stirred debate over the apparent upper hand wealthy elites, corporate interests and our elected representatives have in purchasing and controlling residential property.

And underpinning these stories has been how government policies dictating publicly available information on real estate have been thwarting the public’s right to know.

“We definitely have a culture of excessive secrecy and government across Canada,” said Duff Conacher, co-founder of Democracy Watch, a civic rights group that advocates for open government policies and reform of Canada’s access to information and privacy laws.

First, News1130 radio station reported on August 25 that federal Liberal candidate for Vancouver Granville Taleeb Noormohamed was a house flipper. Five days later the NDP released a more extensive list of 42 properties Noormohamed had sold in the past 17 years.

A provincial government registry maintains information on property sales. However, a standard search costs $10.50, as does further information related to mortgages on the property – meaning the NDP spent in excess of $800 for Noormohamed’s property portfolio.

The provincial government’s ongoing public inquiry into money laundering has heard testimony from several experts stating a well-enforced property registry for beneficial ownership should be free for the public in order to provide the benefit of identifying possible illegal or unethical activity.

The B.C. government has recently launched such a registry via the Land Title Survey Authority, however, there is an additional $5 fee on top of any title search.

“No one should have to pay because we already pay for the government to collect the information,” said Conacher. “If the government doesn’t maintain that information in a way that’s accessible, that’s the government’s fault and that’s what needs to be cleaned up not just starting to charge people. Clean up your information management system.”

Real estate critic and housing activist Rohana Rezel, who was first to spot a pattern of flipping by Noormohamed and shared his findings on Twitter, noted federal candidates have no requirements to disclose assets, including real estate, while running for office.

Since politicians set housing policies (the Liberals have proposed a house-flipping tax), it is in the public interest to understand what assets and private interests the politician may have, said Andy Yan, director of The City Program at Simon Fraser University.

“It’s not even interest, it’s full-on conflict. You have a candidate who has done this type of speculation in terms of residential real estate, and a prime minister and an entire political party saying, ‘I’m going to stamp this out, I’m going to tax this.’

“So is this just theatre where these sorts of conflicts are going to be hidden or papered over?” asked Yan, noting municipal candidates file such disclosures.

A second article, from the South China Morning Post on August 31, revealed that it took the Canada Revenue Agency over five years to reply to a request for a 1995 study on luxury home purchases in Vancouver by wealthy investor-class immigrants. Access to information requests by law should only take 30 days and the government can request extensions thereafter.

The study was kept secret by the CRA (and much of the Post’s response package is redacted). The study pertains to wealthy immigrants from Taiwan, Hong Kong and China buying property and reporting little income to support such homes.

Left unanswered is why was the study was hidden, and why it took five years to produce the requested information, especially during a time when, as Yan states, there was “huge public interest” in foreign investment in real estate.

Yan said such a delay creates a “crisis of trust” with government and, in his opinion, there’s a “direct lead” from that crisis to anti-vaccine and anti-vaccine passport protests being fuelled by such distrust.

In a third example of government failure to adequately produce records, the concealment of details of the Little Mountain property sale in Vancouver came to an end August 31 when developer Holborn Properties dropped its judicial review of an Office of the Information and Privacy Commissioner ruling calling for Holborn’s 2008 land sale contract with the government be publicly released.

The CBC and former NDP MLA David Chudnovsky had sought the records since 2018. The three-year saga highlighted the difficulties experienced by the public, including media, in accessing information from government.

“This is a transaction of public goods into private pockets,” said Yan, adding, “this, if anything, is a clear call for transparency. Because otherwise if it’s hidden under a veil of government secrecy, it creates an environment for corruption.”

The records showed what Chudnovsky described as a “sweetheart deal” whereby Holborn was given a $211 million interest-free loan from the provincial government plus an $88 million “credit” towards the promised construction of 234 non-market units on the property (that have yet to be built).

Conacher said access to information laws are full of loopholes, particularly the one protecting corporate contracts with government, as was the case with Holborn. His group advocates for proactive disclosure of most government information, save for truly proprietary corporate information, personal information, police investigations and matters of national security.

“Information is almost never proprietary, actually. It’s just used to hide bad deals where the public is getting ripped off or government is doing favours for insiders or friends of the ruling party and they don’t want the public to know that you’re doing these favours,” Conacher said. (Holborn donated over $226,000 to the governing BC Liberals before corporate donations were banned in 2018).

Conacher adds that there are no penalties against bureaucrats and politicians who break information laws.

During this federal election campaign no federal parties have specifically dedicated part of their platform to improving access to information laws. The Liberals, Conservatives and New Democrats have committed in their platforms to a federal property registry of beneficial ownership. Government has already committed to a likewise registry for corporations, including shells.

gwood@glaciermedia.ca

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Real estate investors brace for new Liberal laws – Business in Vancouver

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Thomas Davidoff, director of the University of British Columbia’s Centre for Urban Economics and Real Estate, says the best way to keep housing prices from rising is to have policies that encourage home construction and more rental housing | Rob Kruyt

If real estate investors needed clarity on what the general public thought about the practice of buying and flipping Metro Vancouver homes, they got it in the 2021 federal election. 

Vancouver Granville Liberal candidate Taleeb Noormohamed came under heavy fire after the media revealed that since 2005, he had bought and sold at least 21 homes within timeframes shorter than one year.

Many took to social media to express outrage that the Liberal Party of Canada candidate would do that when the party was promising to implement an “anti-flipping tax” that would be over and above the capital gains tax that real estate investors already have to pay on those sales.

Coverage of Noormohamed’s dealings may have almost cost him the riding, which he was able to win in a squeaker when mail-in ballots were counted. 

The issue became a flashpoint because the high cost of housing was a key issue for many voters.

Rentals.ca and Bullpen Research & Consulting’s latest rent report revealed that the asking price for Vancouver one-bedroom apartments rose 15.7% in September compared with the previous September. That was the highest increase in the country. The $2,167 average monthly price for a one-bedroom apartment that landlords were asking in Vancouver was also the highest rate in the country. 

The Liberals winning a minority government provides some clarity of what policies could be on the horizon to battle housing affordability. 

In order for a newly purchased property to qualify as a principal residence for tax purposes, the owner must live in the property for at least one year. The result is that the tax that the Liberals have proposed for home resales would only be for properties that are not considered primary residences. 

The Liberals would also need support from another party in Parliament to legislate the plan. 

If the Liberals succeed in passing the plan, it will not be a silver bullet to affordability, said Thomas Davidoff, director of the University of British Columbia’s Centre for Urban Economics and Real Estate.

“The reason people speculate is because they think prices are rising,” Davidoff said. 

The best way to keep prices from rising, he added, is to have policies that encourage home construction and more rental housing. 

He praised the Liberals for recently tweaking the Canada Mortgage and Housing Corp.’s mandate to include rental housing, which he said could help create more rental units. 

On the campaign trail, the Liberals promised to build, repair or preserve 1.4 million homes in the next 10 years.

The party also said a Liberal government would double the first-time home buyer tax credit – something Davidoff called inflationary because it gives new buyers more purchasing power. 

The current system provides first-time homebuyers with a $5,000 non-refundable income tax credit. Doubling that amount would put up to $10,000 in those buyers’ pockets.

“There will be action on the foreign buyers and foreign capital file,” said Simon Fraser University director of the City Program, Andy Yan. 

The Liberals promised in the campaign to implement a two-year ban on allowing foreign nationals to buy homes in Canada, but Yan doubts that the ban will materialize.

“If anything, it will be a foreign buyers’ tax, because, hey, that’s income,” he said.

Real estate developers, such as Hold It All owner Chip Wilson, similarly, like the idea of taxing foreign buyers more than banning them.

“Let them buy, but make them pay a premium,” Wilson told BIV.

Yan said that if the Liberals implement a new tax on reselling homes within a year of purchase, the levy is unlikely to evolve into being a tax on homes resold within longer timeframes. 

Doing so, he said, would mean taxing primary residences, and though that would be popular among some voters, others would be irate.

A flipping tax is aimed at deterring speculative real-estate purchases, Yan said, whereas taxing principal residences is just a money grab.

Real Estate Wealth Lab chief intelligence officer Jennifer Hunt told BIV that she expects the Liberals will try to win support from another party to introduce a new multi-generational home-renovation tax credit for homeowners who want to add secondary units to their homes to accommodate immediate or extended family members.

Those upgrades would increase real estate values and could be inflationary.

The Liberals promised in the campaign that homeowners would be able to claim a 15% tax credit, up to $50,000, in renovation and construction costs for these upgrades. That means homeowners doing those renovations could pocket up to $7,500.

Another Liberal housing promise that hinges on support from the NDP, or another party, is to provide $1 billion in loans and grants to develop, or scale-up, rent-to-own projects with private, non-profit and co-op partners. 

A typical rent-to-own scenario could be one where an individual commits to rent a property for a period of time and receives the option to buy the real estate at a locked-in price before the end of the lease.

“The policy that would be more likely to get passed, based on NDP support, would be to double the first-time homebuyers’ tax credit,” Hunt said.

The NDP promised in the campaign to extend the maximum amortization period for mortgages to 30 years, and this could be a part of horse-trading that the party engages in with the Liberals to support policies that the Liberals want to put in place, she said.

That Liberal policy could be the flipping tax, but Hunt still gives that policy only a moderate chance of becoming law.

“I don’t believe that the appetite from the other parties would allow for that policy to go through,” she said. •

gkorstrom@biv.com

@GlenKorstrom

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Joseph Montanaro pleads guilty after letting someone else complete his real-estate training | CTV News – CTV News Montreal

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MONTREAL —
One of Montreal’s top real-estate agents — one who just handled the sale of the premier’s mansion — is expected to pay a $20,000 fine after pleading guilty to breaching his industry’s ethics code.

Joseph Montanaro entered the guilty plea Tuesday during a disciplinary hearing for the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ), the body that governs real-estate brokers in Quebec.

The complaint, filed by OACIQ official Alexandra Tonghioiu, stated that between 2018 and 2019 Montanaro “allowed, permitted or requested a third party to take training courses in his place in order to complete his OACIQ continuing education program training program.”

The offence is in violation of several sections of the Real Estate Brokerage Act. Brokers are required to accumulate “a certain number of continuing education credits” to complete the Mandatory Continuing Education Program (MCEP) every two years in order to maintain their licence and to keep their knowledge of the industry up to date, according to the OACIQ website.

Lawyers for Montanaro and the OACIQ agreed on the $20,000 penalty, which the discipline committee accepted after receiving a joint summary of facts in the case.

It’s believed to be one of the highest fines ever issued for realtors in Quebec.

AGENT SOLD PREMIER LEGAULT’S MANSION

Montanaro, who counts celebrities like Céline Dion and hockey player PK Subban among his previous clients, is one of Montreal’s highest-profile brokers, specializing in the sale of multi-million dollar homes in the city’s wealthiest neighbourgoods. 

Two weeks ago, he sold the 18,000-square-foot mansion of Premier Legault. The Victorian-style home in Outremont was listed for $4,995,000 and has eight bedrooms.

The home sold for less than the listing price, a source confirmed to CTV News.

The complaint against him appears to have been brought on by some bad blood within the real-estate market in Montreal. OACIQ was notified of the violation from Montanaro’s competition, according to his lawyer Alain Mongeau, who attended the hearing on Tuesday.

“It came in from the competition — people that are competing with Mr. Montanaro in the real-estate market,” Mongeau told CTV.

In explaining the nature of the offence, he said an ex-employee of Montanaro did the training on his behalf and claimed that he authorized it, but Montanaro doesn’t recall approving it, Mongeau explained.

“It’s a mistake and he’s sorry for it,” Mongeau said, adding that the whole process was allegedly fueled by Montanaro’s rivals.

“He’s angry that his competition would try to compete in this fashion rather than by providing good services,” he said.

“It’s an actual complaint by competition — why would they do that? It’s to harm his reputation for their own benefit.”

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Novel $10.7 Billion Swedish Deal Reinvents Real Estate Finance – BNN

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(Bloomberg) — A historic shift in how Swedish property firms fund themselves was already underway before a little-known private company revealed a $10.7 billion acquisition that will put the trend firmly on the map.

Heimstaden Bostad AB — owned by Ivar Tollefsen’s Fredensborg AS and pension funds — says it will use debt capital markets to refinance a jumbo bridge facility for the largest ever private property transaction in the Nordic region. 

The deal highlights a shift by real estate companies in the biggest Nordic economy into both bonds and euros. The trend is driven by a quantitative easing-fueled property boom that’s allowing companies to raise more money than is available in the local market.

“The real estate sector has grown so much because companies have replaced secured bank financing with unsecured bond financing,” said Max Berger at DWS Investment GmBH. More broadly, Europe’s property industry has become “the fastest growing in euro investment grade in the last couple of years.” 

Since 2010, the number of real estate issuers in the euro investment grade market has increased to 69 from five, according to Berger, who manages 6 billion euros ($7 billion) of bonds. Euros have now overtaken Swedish krona as the main funding currency for outstanding bonds sold by the country’s property companies.

Heimstaden Bostad’s bridge loan “will clearly be refinanced mainly in euro bonds,” said Anders Holmlund, head of bond origination at Svenska Handelsbanken. The banker adds that the domestic krona market “isn’t a realistic alternative” given the short time frame.

The boom in real estate bonds can be seen in its dominance of the Swedish central bank’s balance sheet, where more than half of the Riksbank’s corporate bond holdings come from property companies.  

The European Central Bank’s bond-buying program is adding further fuel to the market, according to Holmlund.

And the broader buyer base is allowing Swedish property companies to expand massively. Samhallsbyggnadsbolaget i Norden AB, for example, announced a plan recently to nearly triple its property portfolio size to 300 billion kronor ($34.4 billion) by 2026. 

“We will focus more on euro in the future,” Marika Dimming, a spokesperson, said in an interview. “It’s a natural progression for us,” she said, adding that “the trend is also to set up a subsidiary in the euro area so that the bonds can be bought by the ECB in their QE program,” she said. 

But a summer rally in Swedish house prices, warnings of excessive valuations in share prices and concerns about a withdrawal of central bank stimulus have stoked concern among politicians and analysts alike.

Equity analysts at Svenska Handelsbanken said they have “a clear negative tilt towards the sector universe,” citing “disturbances in the increasingly important capital markets” triggered by QE tapering as a possible downside catalyst.

Still, euro bond investors are attracted to Swedish residential firms’ risk-return profile compared with western European office companies, said DWS’s Berger.

“Nordic players have provided us with interesting sub-sectors that have defensive characteristics, but trade in line with the wider sector,” the Frankfurt-based portfolio manager said, adding that sub-sector selection within real estate is key to making profitable investments.

“The pandemic has been a good stress test for real estate companies’ balance sheets,” he said. “Even hotel and retail focused companies have weathered the pandemic.”

©2021 Bloomberg L.P.

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