Vacancy taxes prompt sale of luxury condos in Downtown Vancouver

Pedestrians walk by the Trump International Tower and Hotel before a ceremony for the official opening on Feb. 28, 2017, in Vancouver. Jeff Vinnick / Getty Images

High-end buildings are seeing a high volume of properties going up for sale

If you’re in the market for a luxury condo in Downtown Vancouver, you’ve got a lot of choice. There are 15 condos for sale at Trump Tower on 1151 West Georgia St., priced from $1.298 million to $5.88 million.

Across the street at the Living Shangri-La at 1128 West Georgia St. and 1111 Alberni St., there are 17 condos for sale, ranging from $950,000 to $5.788 million.

There are 13 listings in the three-tower Harbour Green development at 1039-1069 West Cordova St. and 277 Thurlow St. in Coal Harbour. All of the listings are over $4 million, six are over $10 million and one has a list price of $38,888,000.

The glut of high-end listings even applies to buildings that aren’t built yet, like 1550 Alberni. The 43-storey structure designed by Japanese “starchitect” Kengo Kuma won’t be completed until 2020, but there are already 12 condos for sale there, from $1.74 million to $5.6 million.

What’s happening? To some degree, non-resident owners are selling their local pied-a-terres because they don’t want to pay vacancy taxes introduced by the city and the province.

“Many of these homes were purchased as second homes or third homes,” said real estate consultant Michael Geller. “People loved having a nice place in Vancouver for when they came here. Then we got the empty-home tax. That’s one per cent, but then the province comes in with the speculation tax, and if the unit is worth more than $3 million, then you have a (school) tax as well.

“Even if they’ve got a lot of money, at a certain point people say this is too much.”

A good example is a 58th-floor condo at Trump Tower that is on the market for $5.88 million. Realtor Wendy Tian said her client is selling because of the vacancy and speculation taxes.

“That’s the reason they want to sell,” said Tian, who works for Luxmore Realty. “My client bought it a couple of years ago. They wanted to use it as a vacation home, but now it’s impossible.”

Layla Yang of Dracco Pacific Realty is selling a 43rd–floor condo at Trump Tower for $3.98 million. She also says the vacancy and speculation taxes are spurring people to sell.

“Some of my clients never wanted to sell,” she said. “They bought it for like a vacation home (that) sometimes they can live in, and all of a sudden they have to pay this kind of an empty tax. They feel like it’s a lot of money … they feel it’s not worth it, so they list their property.”

This has led to a lot of inventory. Real estate sources say two to three per cent of properties are typically for sale in condo buildings. Trump Tower has 290 units, which means there would normally be six to nine units for sale, not 15.

There are 293 units in the two Living Shangri-La buildings, so it would also normally have six to nine units for sale, not 17. The Harbour Green complex has 209 units, so typically four to six condos would be for sale, not 13.

Josh Gordon of Simon Fraser University’s School of Public Policy isn’t surprised many luxury condos have been put up for sale.

“Both (taxes) are going to hit pretty hard,” said Gordon, an assistant professor at SFU. “If you leave a place empty, you could potentially be subject to three per cent (of the assessed value).”

That could be expensive — a property assessed at $4 million could face a tax bill of $120,000. In theory an owner could avoid the taxes by renting out their place, but Gordon said owners are “loath” to rent luxury condos.

“It’s one thing to rent a run-of-the-mill place, but with these high-end places, it’s hard getting a tenant who can pay you enough,” he said. “And you’re going to be very wary of any damage to a place like that, so that changes the dynamic.

“The other thing is (using a condo as) a long-term store of value. If you have this new policy regime which discourages foreign ownership through the satellite family and foreign-owner component (of the provincial speculation tax), then that changes your calculation.

“A lot of people will be selling, not necessarily because they’re subject to the tax, but because they think the price (of their property) is going to go down.”

Prices have dipped downtown, and some units are taking a long time to sell. A condo on the 67th floor of the Trump Tower recently sold for $2.95 million, but it took over a year to sell, and was reduced over $400,000 from the original sale price of $3.389 million.

Still the seller did well: they bought the condo for $2,038,346 in November 2016.

jmackie@postmedia.com

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Ottawa announces funding for 60 Victoria micro-suites

Published Tuesday, August 20, 2019 1:47PM PDT
Last Updated Tuesday, August 20, 2019 1:59PM PDT

The federal government is helping to fund a new six-storey, 60-unit micro-suite apartment building in Victoria.

The Sawyer Block at 840 Fort St. will consist of small units geared towards workers in the technology and services sectors.

The units will range in size from 285 square feet for studio apartments to 358 square feet for one-bedroom units. Six of the suites will be wheelchair accessible.

"On day one, all the units in the building will be at below 30 per cent of median household incomes in the area," said Robert Fung, president of developer Salient Group. “The Sawyer Block is a purpose-built rental housing project that is intended to provide attainable and secure workforce housing for the growing region."

The micro-lofts are designed as compact urban suites with windows offering lots of daylight and over-height ceilings. The units will also have amenities like in-suite laundry and access to a communal rec room.

"There is a common amenity deck that will have barbeques and a community garden," said Fung. "It will be a space where people can just hang out."

The project is receiving $13.25 million in funding through the federal government's Rental Construction Financing initiative (RCFi), a National Housing Strategy program. The program supports affordable rental housing construction projects that encourage a stable supply of rental housing for middle-class families.

"Soon, the Sawyer Block will provide an affordable home for families and individuals near the heart of downtown Victoria," said Parliamentary Secretary to the Minister of Families, Children and Social Development Adam Vaughan.

"Our government is committed to building more rental housing to give hard-working middle-class Canadians much-needed relief in tight rental markets."

The Sawyer Block is one of the first projects in Victoria to receive financing support under the RCFi.

"The Sawyer Block is built for Victorians," said Fung. "Our goal is that Victorians embrace this neighbourhood and continue to make it as vibrant as it is now, but also really relevant to the future."

The ground floor of the building will include retail space. The Sawyer Block is scheduled to be ready for occupancy in the fall.

4 ways the federal government can improve housing affordability

A new report calls on the federal government to take four key measures to improve housing affordability and availability in the Vancouver region.

The Greater Vancouver Board of Trade has published a report called More Homes, More Choices in which it makes several key recommendations to the Expert Panel on the Future of Housing Supply and Affordability, which was announced earlier this year by the provincial and federal governments.

“The lack of available and affordable housing is a persistent challenge facing the Greater Vancouver region. It affects the quality of life of residents and impacts many local businesses, who are finding it increasingly difficult to attract and retain skilled workers due to the high costs of housing,” said Evi Mustel, Vice-Chair of the Greater Vancouver Board of Trade.

Among the report’s recommendations, the Board says the federal government should:

1. Coordinate current federal housing and transit investments and consider additional incentives or requirements to encourage more housing near rapid transit .
2. Make changes to the Income Tax Act to support new rental construction .
3. Explore creative ways to encourage new rental units within existing zoning, such as a tax credit for building new rental or laneway homes.
4. Double down on efforts to unlock federal lands and allocate proceeds from federal developments to support regional housing investments.

“In recent years, much of the public debate on housing affordability in the Lower Mainland has focused on the actions of local and provincial governments,” added Mustel. “While the federal government’s National Housing Strategy makes meaningful strides, the Board of Trade believes the federal government can unlock more housing — especially rental housing — by using a broader set of tools within their toolkit.”

Strategies to make your first real estate experience less stressful

Like many first-time homebuyers in Metro Vancouver, Victoria and Kelowna, Melissa Dirks was anxious about getting into the real estate market.

“I was nervous because Vancouver has been a hot market and difficult to break into,” says Dirks, who moved into her one-bedroom North Burnaby condo in June. “It’s obviously a very large purchase and it’s a lot of financial responsibility—the onus of that was nerve-wracking.”

A 2018 poll of 2,000 first-time homebuyers by Homes.com shows that two in five respondents describe purchasing a new home as “the most stressful event in modern life.” Not only that, homebuyers had an average of four arguments throughout the process and a third of them were reduced to tears at least once.

One reason people are so anxious is because they lack knowledge and confidence.

“Buying a home is a stressful experience, especially for first-time buyers who are unfamiliar with the process,” says Ashley Smith, president of the Real Estate Board of Greater Vancouver (REBGV). “People are looking at a big commitment and large investment, and the unknowns stress them out.”

Fortunately, there’s plenty you can do to reduce your stress. Here are six strategies to find your dream home with ease.

Hire a realtor who’s right for you

One of the most important steps you can take to reduce your homebuying stress is hire a local realtor to represent you and help you navigate the process.

“Having somebody to help you along the way and fill in any knowledge gaps is important,” Smith says.

Dirks credits her realtor with significantly reducing her stress and making the homebuying experience smooth and enjoyable.

“My realtor went through everything with me step by step,” she says. “He provided me with the right information and expert opinion, and he didn’t try to push anything on me. I felt like he was really protecting me and had my best interests at heart at all times.”

Dirks adds that finding a realtor with a personality that suited hers was helpful.

“My realtor and I were a great fit,” she says. “We got along, so it was easy to ask him questions and stay connected. He was knowledgeable and helpful.

Know your price point

When you’re looking to purchase a home, understanding what you can afford is essential, Smith says.

Before you start house shopping, it’s important to get preapproved for a mortgage. Take some time to understand how different mortgage rates work and make sure you can still afford your home should rates change in the future.

Don’t forget about other costs associated to buying a place (taxes, legal fees and moving expenses) or ongoing expenses associated with homeownership, such as property taxes and home insurance.

“Staying on top of those expenses, and all of the other details, can be stressful, but your realtor and mortgage professional can help you,” Smith says, adding that a realtor will work with you on a homebuying negotiating strategy based on what you can afford.

Know the market

Understanding how much the homes you want are selling for in the neighbourhoods you desire can reduce your stress and strengthen your bargaining position, Smith says.

Realtors can access data on past sales and create a personalized comparative market analysis that gives you a clear picture of the trends in the area.

“Your realtor will also be invaluable when it comes to market analysis,” Smith says. “We analyze the most recent trends and determine what the competition looks like so you can make a competitive offer.”

Line up the professionals you’ll need

Work with your realtor well in advance to line up all the professionals you’ll need to contact during the homebuying process.

Your realtor can recommend home inspectors, lawyers, insurance agents, movers and contractors. Having your team selected before you put in an offer helps ensure the move in process happens in a timely manner and you’re not left scrambling and stressed.

Dirks’s realtor recommended several professionals, saving her time, reducing her stress and giving her confidence they would do a good job.

Go through strata documents

If you’re purchasing a condo, your realtor will read and go through the strata minutes – notes from a building’s strata council meetings.

Wading through these reports can seem daunting, but with the help of your realtor you’ll learn important information about the building, including details on repairs that have been done or are needed and whether there’s a contingency fund in place to deal with issues as they arise.

“Reading through all the minutes and trying to figure out what everything meant was one of the most stressful things, but my realtor really helped me,” Dirks says. “He was always available for any questions.”

Know the little things

Smith advises homebuyers to make detailed lists of all the things they want in a home. This can help people identify the little things that are important to them, like being able to walk to a grocery store and public transit.

Sometimes, the little things can add up to something big. For example, if you’re a night-shift worker, you may not want to live in a condo that faces east because it gets sunlight early in the morning. Your realtor can help you identify these sometimes-overlooked issues, Smith says.

Before Dirks put in an offer on her place, her realtor toured her around the neighbhourhood, discussing its liveability and future, and pointing out the closest grocery stores and where to catch the bus.

“My realtor really went above and beyond and helped reduce my stress,” she says. “He had my back and he made sure I got the best deal possible.”

Canadian home sales rise for fifth straight month as mortgage rates decline

Sales in Vancouver and Toronto remained 'well below' the levels achieved before mortgage stress tests were introduced, CREA said

Homes sales across Canada rose for the fifth consecutive month and recorded a double-digit increase compared to a year ago in part aided by interest rates, according to the Canadian Real Estate Association.

However, sales in Vancouver and Toronto, the two largest domestic markets, remained “well below” the levels achieved before mortgage stress tests were introduced last year, the association said.

Sales rose by 3.5 per cent in July compared with June and by 12.6 per cent versus the same month in 2018, the association’s figures show. The Bank of Canada kept interest rates at 1.75 per cent last month after raising them five times from 2017 to last Oct.

“After a challenging 18 months, the Canadian housing market is showing widespread signs of, not just stabilizing, but firming again,” BMO Chief Economist Douglas Porter said in a note to clients. “With global uncertainties driving borrowing costs lower again — Canada’s 20-year government bond stands at a record low yield today — the market is poised to receive a further fillip.”

House prices advanced 0.6 per cent from June, the largest monthly gain in two years, and 0.2 per cent from a year ago, according to the MLS Home Price Index. Ontario cities and Montreal were mostly responsible for the increase.

“The extent to which recent declines in mortgage interest rates have helped lift sales activity varies by community and price segment,” CREA President Jason Stephen said in a statement. “All real estate is local.”

The average transaction prices, which tend to be more volatile than the MLS index because they don’t take into account changes in the housing mix, rocketed 3.9 per cent compared with a year ago. Porter says the average price is still good leading indicator for the index and prices “are clearly headed higher.”

There was a first-quarter sales lull as buyers and sellers came to grips with last year’s regulatory measures on mortgages.

“We’ve now had a reawakening of sales for several months, Avery Shenfeld, Chief Economist at CIBC Capital Markets in Toronto, said by phone. “In addition, mortgage rates have been edging lower so the combination of the two is making for an active market.”

Ontario’s housing market continues to warm up, the data show. Niagara, London and Windsor led gains in prices with double-digit increases over a year ago while six of 7 reporting cities in Western Canada declined.

The number of new listings was almost flat, easing by 0.4 per cent in July as increases in Calgary, Toronto and Edmonton offset a decline in B.C. and Montreal, CREA said.

“Sales continue to rise in housing markets where the mortgage stress test had little impact due to upbeat local economic conditions and a supply of affordably priced homes,” CREA Chief Economist Gregory Klump said in the statement.

“Meanwhile, the mortgage stress test is doing no favours for homebuyers and sellers alike in places facing challenging local economic prospects and subdued consumer sentiment.”

• Email: cmcclelland@postmedia.com

'Their money's gone, my money's gone': Single mom, others duped by rental scam

A Vancouver Island woman and her kids are without a place to live after showing up at the house they rented only to discover they were the victims of a scam – and they weren't the only ones.

Melissa Hyland, a single mom, was looking for a new rental after she said her landlord gave her 30 days' notice to vacate the home she had been renting for the last eight years.

When she found an ad for a home at 2845 Pickford St. in Langford, she thought her wishes had finally been answered.

"When I found this place that would take boys – I've got boys, I've got a dog and myself – I was thrilled," she said.

Hyland met with the man claiming to be the homeowner and did a full walkthrough before filling out an application.

"He accepted my application and then he gave me the information where to send a deposit to – $1,900."

Up to that point, the process seemed legitimate. But the first red flag came when Hyland showed up to get a copy of the rental agreement.

"We had just pulled into the driveway and all of a sudden a truck appeared and he became very agitated, told us we had to leave immediately," she said. "I was like 'Oh, I'm really sorry, I thought this was a good time,' and he said 'No, my roommate just came home.'"

Hyland said when she questioned him further he changed his story, saying the man in the truck was a good friend who was upset because he had just gone through a breakup.

As it turns out, the man driving the truck was the actual homeowner.

Bruno, who did not want his last name used, is in the navy and had returned home from sea early, surprising the "landlord" who in reality, was his tenant.

"He was kind of acting a little weird from what she was saying," Bruno told CTV News. "He said 'Oh, this is just extra work on the side that she wants me to get done' and I really didn't think anything of it. Nothing was out of the norm at that point."

But Hyland left the home, not yet realizing she was the victim of a rental scam.

That realization came the day before she was set to move in when she came to the home to pick up her keys.

She knocked on the door and was greeted by Bruno – and the full extent of the scam was revealed.

"When this man opened the door his face fell and he said, 'Oh no. Are you another one?'" she said. "Then I knew that he was the owner and that we had been scammed. So he said, 'Yeah, I'm really sorry but you're the fourth family to show up."

Bruno said he had been in communication with his tenant, who was also doing carpentry work in the home, while he was away working.

"On the Friday I learned that he told his girlfriend that he was going to Pender Island to buy a boat," he said. "I texted him again, never got an answer, and just by chance I had taken leave so I was going to be here all this week."

On Monday, a family showed up at Bruno's house with a moving truck, ready to move in.

"I was like, 'What are you guys talking about?' It ended up being that he had set up this family to come and rent out this house without permission."

Two more families showed up before Hyland arrived to pick up her keys. All of them had paid a damage deposit to the man claiming to be the homeowner, Bruno said.

He said he later found copies of the fake lease agreements left by the tenant and his girlfriend in the room they'd been renting.

"I don't understand how this could happen where you just pulled that stuff up," he said. "I'd like to have him found so we can resolve all the money."

Bruno also claimed his tenant gave him a false name when he moved in.

West Shore RCMP investigating

Bruno said he has since been in touch with police, who have opened an investigation.

"Every time the families come… I gave them all that information so they can add on to the same file and they can kind of keep track of it, hopefully," he said. "I'm sure there's going to be more and more that's going to come out of this."

West Shore RCMP say they are investigating two reports of rental scams involving the home.

"Police are still investigating these reports but have learned that at one point in time the suspect rented a room at the very same property and therefore had knowledge of the home," Const. Nancy Saggar said in a news release.

Investigators say the suspect has been using the alias of Jason LeBlanc and are asking anyone else who has been defrauded by someone using the name to come forward.

As for Hyland, she's out $1,900, has no place to live and isn't sure what she and her boys will do.

"Initially I was really shocked and then I felt angry, of course, to hear that I was the fourth family, that there were other single moms with kids who had shown up in moving trucks expecting to move in," she said. "Their money's gone. My money's gone. I'm working two jobs, 12-14 hours a day, I'm going to job interviews to try to get a better paying job."

In a tearful plea, she asked anyone who has a place to stay to get in touch with her by emailing healing7rest@gmail.com.

"If anybody has a motorhome to let us rent, any help at this point helps, because I literally don't know what we're going to do."

Anyone with information or has been similarly scammed is asked to contact RCMP at 250-474-2264 or Crime Stoppers at 1-800-222-8477.

B.C. government seeks to seize properties allegedly linked to $165-million stock fraud

B.C. Civil Forfeiture Office alleges a $1.6-million house on Mission Ridge Road in Kelowna and a $524,000 condo at nearby Big White ski resort are the proceeds of crime

The B.C. government is suing to seize properties in the B.C. Interior that it alleges were linked to a $200-million-plus international stock fraud.

In a lawsuit filed in B.C. Supreme Court this month, the B.C. Civil Forfeiture Office alleges a $1.6-million house on Mission Ridge Road in Kelowna and a $524,000 condo at nearby Big White ski resort are proceeds of crime and should be forfeited.

The properties are owned by Cuatro Cienagas Inversiones Ltd., incorporated in Hong Kong in January 2017 and registered in B.C. three months later as an extraprovincial company.

Named in the suit are Benjamin Thomas Kirk; Kayley Tyne Johnson, the current or former spouse of Kirk; and Carlos Gomez Brana. Kirk and Johnson’s last known address was at the Mission Ridge home and Brana is believed to live in Mexico.

None of the defendants has responded to the civil lawsuit. It contains allegations that have not been proven in court.

Among the allegations of unlawful activity against the trio are breaches of the U.S. Securities Act and the B.C. Securities Act, possession of proceeds of crime, fraud, manipulating stock prices, laundering money and tax evasion, according to court documents.

The forfeiture office alleges that Cuatro Cienagas Inversiones is owned and operated by one or more of Kirk, Johnson and Brana and was set up in B.C. to receive and distribute money from a stock fraud investigated by the U.S. Securities and Exchange Commission.

In the fall of 2018, the SEC said it halted the penny stock fraud scheme by freezing assets of two individuals, including a British citizen, Roger Knox, and their companies.

The SEC said the scheme generated more than US$165 million in illegal sales of shares of at least 50 micro-cap companies, those with a value of $50 million to $300 million. Knox, and his Swiss-firm Wintercap SA, formerly Silverton SA, concealed stock ownership, allowing stocks to be pumped up in price and dumped for a profit, according to the SEC.

Knox faces criminal charges in the United States for the scheme.

The SEC’s complaint alleges Michael T. Gastauer aided the fraud by establishing several U.S. companies, including virtual financial firms, and allowing Knox to use the bank accounts to disburse the proceeds of his illegal stock sales.

According to the forfeiture office’s court filings, proceeds from the scheme were transferred to or on behalf of one or more of Cuatro Cienagas Inversiones, Kirk, Johnson and Brana.

Cuatro Cienagas then used that money to buy the properties in the Interior, according to the civil forfeiture office’s claim.

On March 22, 2017, Cuatro Cienagas used accounts set up by Gastauer to transfer $101,000 to Norwich Real Estate Services Inc. in Kelowna. On May 10 and 11, another $1.529 million was transferred in three instalments to an unnamed Kelowna law firm.

On May 18, Cuatro Cienagas bought the Mission Ridge home for $1.6 million in cash.

From May 30 to Oct. 23, 2017, Cuatro Cienagas transferred in three instalments $250,500 to a Bank of Montreal account. In December, Cuatro Cienagas also directed the Swiss firm, formerly known as Silverton, to transfer in three instalments $548,000 from another Bank of Montreal account to the unnamed Kelowna law firm.

On Jan. 10, 2018, Cuatro Cienagas bought the condo at Big White ski hill.

The unnamed law firm acted as Cuatro’s lawyer in the property purchases, according to the court filings.

According to the civil claim, Kirk was charged in 2013 of violations of the U.S. Securities Act. In 2015, Kirk admitted to breaches of the Alberta Securities Act and agreed to pay a fine of $100,000.

ghoekstra@postmedia.com

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