Over the past week, both the Law Society of BC (which regulates lawyers) and the Land Title and Survey Authority (LTSA) have published information about land transfer processes. Bottom line: so far, an in-person meeting with a lawyer or notary is still required.
The Land Title Act requires buyers and sellers to appear before an officer to execute the documents. There are a couple of options to accommodate social distancing:
- The LTSA will accept an affidavit of execution (written statement sworn under oath) – speak with a lawyer to learn more about how to make that happen.
- The witness and the party to the transaction can sign identical copies of the same document at the same time to allow them to avoid having to handle the same physical pages when meeting.
At this time, remote or videoconference witnessing isn’t allowed. BCREA is in contact with the legal community and other stakeholders to look for options that provide more flexibility.
- While it’s unknown how the unfolding COVID-19 outbreak will impact the economy in the long-term, BC is facing a sudden stop in economic activity with little guidance to when things may return to normal.
- Based on our scenario analysis, BC home sales and prices will likely face declines in the spring and early summer but should recover along with the wider economy in the second half of the year, contingent on the outbreak resolving.
- The postponed change to the mortgage stress test rate, originally slated for April 6, 2020, will mute the impact of falling interest rates for the BC housing market.
The BCREA Commercial Leading Indicator (CLI) fell for the second straight month to 134.3 in the fourth quarter of 2019. Compared to the same time last year, the index is up by 0.3 per cent.
Provincial economic activity continued to slow in the fourth quarter of 2019, with declines in wholesale trade and manufacturing sales more than offsetting a gain in retail. This left the economic activity component of the CLI negative for the sixth consecutive quarter. Office employment was up for the sixth consecutive quarter, but not enough to offset a decline in manufacturing employment, resulting in a negative change in the employment component of the CLI. The financial component of the CLI was also negative following three consecutive quarters of positive performance. The underlying trend in the CLI has been relatively flat over the past six quarters, suggesting a continued stable environment for commercial real estate activity in the province.
BC’s economy continued to slow in the fourth quarter of 2019. Weak manufacturing sales in durable goods, and lower wholesale trade sales in motor vehicles and machinery and equipment, put a drag on economic activity. Meanwhile, retail sales were positive after two consecutive quarters of negative growth. Despite this, retail sales ended 2019 with the lowest growth rate since the financial crisis in 2009.
Employment growth in key commercial real estate sectors such as finance, insurance, real estate and leasing continued to be positive, up by 1,600 jobs in the fourth quarter. In contrast, manufacturing employment fell by 6,700 jobs from the previous quarter.
The CLI’s financial component was negative in the fourth quarter due to a decrease in benchmark Canadian REIT prices and an increase in short-term borrowing costs.
Regional Sub-Markets provides BC’s real estate boards and REALTORS® with regional sub-market data, in the form of at-a-glance charts.
These charts provide information on average prices and sales in the province’s 11 real estate board areas and regional sub-markets for different housing types (single detached, apartments and townhouses). They also provide a comparison of monthly average prices and sales with the same month in the previous year. These charts are updated monthly to provide timely snapshots of regional sub-market trends across the province.
Click on the relevant real estate board chart below to access sub-market charts for that region. (Kamloops and Kootenay sub-markets will be added soon.)
Note: Regional sub-market data can experience large month-to-month changes, particularly in smaller areas. Therefore, adjustments have been made in order to smooth out the volatility.
Vancouver, BC – February 26, 2020. Today, the BC Real Estate Association makes our opening statement to the Cullen Commission of Inquiry into Money Laundering in British Columbia.
“We are committed to working with government to better understand this issue and address any pre-existing vulnerabilities within our sector,” says BCREA CEO Darlene Hyde. “It is our hope that by working collaboratively we can steer a path forward that strengthens consumer protection measures and limits illicit impact on the housing market”.
To date, there have been few dependable statistics that indicate the true size and scale of money laundering in the BC real estate sector. Estimates often quoted from the Maloney Expert Panel Report on Money Laundering are based on the Utrecht Gravity model, which is not evidence-based. Figures as high as $5.3 billion are frequently quoted from the report, but by Maloney’s own admission those figures are at best a calculated guess, based on theoretical models.
Money laundering exists in the shadows. To truly address this issue and stem the tide of illicit funds will require coordinated effort at the international, federal and provincial levels with harmonized data sharing and joint investigative efforts.
“It is our hope that the outcome of this commission is a clearer, evidence-based indication of the scale of money laundering in BC,” says Hyde.
Last April, in collaboration with several sector stakeholder groups, we issued recommendations to assist with identifying and recommending necessary change. We continue to urge the provincial and federal governments to consider these recommendations:
- Accept only verified funds – For sectors of real estate that are not already required to do so, we recommend that they accept funds only in forms that are verifiable through Canadian financial institutions.
- Mandatory anti-money laundering education – We recommend the introduction of mandatory anti-money laundering education for all real estate professionals subject to the reporting requirements administered by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to ensure that those professionals are trained in recognizing and reporting suspicious transactions. As a first step, we were pleased to see the Real Estate Council of British Columbia introduce mandatory training for real estate professionals in January. FINTRAC should work with sector organizations, regulators and the provincial government to improve existing resources so that they better reflect real-world situations and improve compliance.
- Smart regulation – We recommend that the federal government amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to allow FINTRAC intelligence to be made available to additional regulatory authorities, including the BC Securities Commission and the BC Financial Services Authority. Optimally, the federal and provincial governments, as well as their respective agencies, should coordinate their actions, share information, such as the provincial assignment registry, and create a comprehensive, efficient enforcement regime.
- Ongoing engagement – We recommend governments and regulatory agencies, including FINTRAC, better utilize on-the-ground experience of real estate professionals to develop compliance resources and test policy ideas. This will result in well-crafted, practical regulation and foster a culture of compliance to protect consumers and the economy.
- Timely and transparent reporting – We recommend that FINTRAC implement a framework to identify and report trends on a regular basis and in language that is consistent and understandable to professionals, the public and media. This reporting system should also include consistency in examinations with immediate feedback designed to help industry professionals improve their compliance systems.
BC’s Budget 2020 offers some new investments to assist homeowners and their communities, but falls short of substantial changes to improve housing affordability.
We’re pleased by the promise of an additional $419 million investment over three years to support CleanBC for home and workplace electric vehicle charging stations and new pilot programs to further reduce carbon emissions. An additional $195 million will also be invested over three years to help communities better respond to and recover from wildfires, floods and other emergencies.
These are the highlights of the few budget items related to housing:
- an additional $118 million in operating funding and $56 million in capital funding to support BC’s housing strategy. This will result in a planned $1.1 billion in total capital funding to support housing and homelessness initiatives over the next three years,
- a new exemption to the Property Transfer Tax that will be introduced for qualifying Canadian-controlled limited partnerships. Effective on royal assent, the Property Transfer Tax Act is amended to clarify the calculation of partial principal residence exemptions where the land is greater than 0.5 hectares or the property includes non-residential improvements, and
- amendments to the Land Tax Deferment Act to centralize program administration within the Ministry of Finance, effective May 1, 2020.
In BCREA’s response to the Budget 2020 consultation, we recommend fairness and effectiveness in provincial property taxes, such as increasing the First-Time Home Buyers’ Program Property Transfer Tax exemption threshold to $750,000 from $500,000. We also recommend more policies to help increase housing supply, such as exempting properties in the development process from the additional school tax using the same policy framework created to exempt development projects from the Speculation and Vacancy Tax.
We will continue to advocate for housing affordability solutions through our submission to the Expert Panel on the Future of Housing Supply and Affordability in April.
More government information on BC Budget 2020: https://bit.ly/2vGSXGa.