The Ontario government has introduced a new measure to protect condominium buyers, a lot of whom have felt short-shifted in past purchases.
“Realtors in Ontario have been very frustrated that purchasers of preconstruction condos have been misled or ripped off with far too many projects that got delayed, or where the final product was not what they were promised,” Tim Hudak, CEO of the Ontario Real Estate Association, which lobbied the provincial government for mandate, told CREW.
“There are too many stories of people who purchased condos that are either badly delayed, never developed, or not what they were promised. OREA went to bat to raise consumer protection with preconstruction condos. We need a level playing field when it comes to protecting consumers from buying homes.”
Beginning this year, developers operating in Ontario must provide purchasers of new or preconstruction condos with a copy of the Ontario’s Residential Condominium Buyers’ Guide, which was prepared by the Condominium Authority of Ontario, and failure to do so could nullify the purchase agreement.
The 37-page guide will cover everything from the purchasing process to condo corporations and any issues that may arise while the resident is living in their unit.
Moreover, effective Feb. 1, as per the New Home and Construction Licensing Act, Tarion will no longer be responsible for regulating new home builders and vendors, ceding the authority to the Home Construction Regulatory Authority.
Led by Hudak, the former leader of the Progressive Conservative Party of Ontario, OREA had been lobbying the provincial government to expand protections for consumers in the real estate sector because many of them enter purchase agreements at sales presentation centres without fully understanding the terms of the agreements, which can be costly. Hudak says sales centre representatives should adhere to stringent professional standards and ethics like real estate sales agents do.
“It’s a great document that OREA had input on, with clear language about the process, the rights consumers have, and their options if they feel they’re not being provided what they contracted for,” said Hudak.
Erica Mary Smith, broker of record at Stomp Realty, says that, unfortunately, not many consumers who visit presentation centres know what they’re walking into, and seemingly small clauses that can carry hefty price tags can be averted with the guidance of a sales agent.
“My business partner and I worked in sales offices for five or six years, and a lot of people don’t know you can bring a realtor into a preconstruction office and the sales office rep will know they can’t get away with anything,” she said. “Your closing costs for preconstruction are typically 16-20% if you don’t know how to negotiate, whereas a realtor can keep it down to 5%.”
Alex Balikoev, senior vice president of sales at Sotheby’s International Realty Canada, welcomes the government-mandated condo guide because, he says, the majority of condo purchasers grew up in ground-related homes and aren’t familiar with the ins and outs of condominium ownership, often to a surprising degree.
“Even current owners don’t know how condo corporations are run,” he said. “That’s why some buildings have higher condo fees—because owners are not involved, not because they’re lazy, but simply because they’re not aware of how much involvement they can have. A condo corp might interview three or four contractors for repair work, but an active board will interview 10 to 20 and find the best and cheapest ones. It’s all about how active and involved the condo corp is.”
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage.
Source: Canadian Real Estate Magazine – Neil Sharma 11 Jan 2021
Securing financing from A institutions for micro condos—categorized as anything below about 500 sq ft—has always been thorny, and with the COVID-19 pandemic taking a bite out of many downtown condo markets, it’s certain to remain so. However, it can still be done.
The big banks are chary about financing these units because they’re rarely end user-occupied, and nearly always purchased as income properties.
“They’re typically investor units or short-term rentals, essentially serving as hotel substitutes, and there are issues around financing,” said Toronto-based Simeon Papailias, co-founder and managing partner of REC Canada. “The bank always mitigates risk on a default scenario, and it’s not a very marketable property. They look at the heavier risk they take by lending on a micro-unit as opposed to a regular unit.
“There are special programs the five major banks rotate between themselves, depending on what the banks’ goals are for the year. CIBC can do it one year, then TD could the next. There are special programs made for this, and it’s something a prudent investor should know.”
Alternatively, the B channel is a much less knotty way to secure micro condo financing, although the rate will be higher.
“I had private financing with Home Trust, at the time, on a 380 sq ft micro-unit investment property in Yorkville back in 2011, when those units just started becoming more common in the marketplace,” continued Papailias. “Today, around 30% of most condo buildings are under 500 square feet, and the reason has everything to do with affordability.”
Locale is another variable, says Dustan Woodhouse, president of Mortgage Architects. A micro-unit in a building near a university or college, for example, is far more likely to receive funding than a similar-sized condo situated around fewer amenities.
Securing financing for a resale micro-unit is a little easier, he added.
“Pull title on the property,” said Woodhouse. “Pull title on that unit and pull title on four more units in the building and see who the lender is on the title. Then you’ll know who to call.”
The pandemic has left downtown condo markets reeling, but as any savvy investor knows, that’s when opportunity comes knocking.
“Prices on micro condos are dropping the furthest and the fastest over any other type of properties. On the one end of the spectrum, detached houses are rocketing upward, and at the other end of the spectrum you have micro condos dropping in price.”
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage.
Source: Canadian Real Estate Wealth – Neil Sharma 16 Dec 2020
Fast-forward to April 2020, at which point COVID-19 public health and safety measures had been in effect for a full month and a number of home buyers and sellers opted to remain on the sidelines. Home sale activity slowed considerably, with double digit sales declines in the City of Toronto in April. For the condo apartment segment in particular, the dip in y-o-y sales in April was a steep 70 per cent.
To understand how COVID-19 measures impacted real estate market dynamics, particularly condo apartment prices in the City of Toronto, Zoocasa used data from the Toronto Regional Real Estate Board (TRREB) to compare how median prices changed between February and April 2020 for 35 city neighbourhoods. For neighbourhoods with at least 10 condo apartment sales in April, Zoocasa calculated the dollar and percentage change in the median sold price to get a snapshot of how the market evolved one month after COVID-19 measures were introduced.
The median condo apartment price is defined as the price at which half the condo apartments in an area sold at a higher price than the median, and the other half sold at a price lower than the median price.
City of Toronto Median Condo Price Fell by $65,000 Since February 2020
For the City of Toronto as a whole, the median condo apartment price declined a steep $65,000 (-10 per cent) between February and April 2020 to $574,000. In a true reflection of economic and healthcare measures in place for COVID-19, condo apartment sales dropped 64 per cent since February, with just 482 transactions taking place across the city in April compared to 1,335 in February.
A closer look at all 35 City of Toronto neighbourhoods revealed that 21 city neighbourhoods had fewer than 10 sales during the month of April, which is three times the number of neighbourhoods with a low sales volume in February. In the 14 neighbourhoods with at least 10 sales, the median condo price rose in just one neighbourhood, and fell in all the others. More specifically, the median condo apartment price:
Dropped more than $100,000 in two neighbourhoods
Fell between $50,000 – $100,000 in four neighbourhoods
Declined between $1 – $50,000 in seven neighbourhoods
Rose $34,000 in one neighbourhood to $506,500
Toronto Centre Neighbourhoods Saw Largest Price Declines
Condo apartment prices were significantly impacted in Toronto Centre, with the top five neighbourhoods with the greatest price declines (and at least 10 sales) located in this part of the city. C10 (Mount Pleasant East) topped the list with the median condo apartment price declining $131,500 (-18 per cent) to $617,500.
This was followed by C08 (Regent Park, St. James Town, and Corktown), where the median price dropped $103,400 (-14 per cent) to $611,600. In C14 (Newtonbrooke East, Willowdale East), the median condo apartment price declined 12 per cent to $597,950, marking an $85,050 drop since February. C07 (Willowdale West, Lansing-Wesrgate) and C01 (Downtown, CityPlace, Trinity-Bellwoods, and Harbord Village) rounded out the top five neighbourhoods with price declines of $70,000 and $60,500 respectively.
Emma Pace, a Zoocasa agent in the City of Toronto, noted that new market conditions since COVID-19 have created opportunities for buyers who may have previously remained on the sidelines. Pace said, “due to the competitive nature of the market subsiding, qualified buyers who may have otherwise forgone an attempt at a home search even four to eight weeks ago are now reviewing how they can participate and starting to enter the market.”
Median Condo Apartment Price Rose in One Toronto East Neighbourhood; Prices Fell in Two
When considering neighbourhoods with at least 10 condo apartment sales in April, Toronto East neighbourhoods fall in the middle of the pack when it comes to price declines. The median condo apartment price in E09 (Morningside, Woburn, Bendale) declined exactly $50,000 (-10 per cent) since February to $465,000, and dropped $47,750 (-10 per cent) in E04 (Dorset Park, Kennedy Park).
In E07 (Milliken, Agincourt North) on the other hand, the median price rose by $34,500 (+7 per cent) to $506,000. Of all City of Toronto neighbourhoods with at least 10 condo apartment sales in April, this was the only area that experienced a median price increase. Here, condo apartment sales were down 49 per cent compared to February, representing a less severe sales drop when compared to the City of Toronto’s overall sales decline of 64 per cent for condo apartments.
According to Jelani Smith, a Toronto Zoocasa agent with experience working in Scarborough, showings began to pick up toward the end of April as more buyers started to return to the market. “Properties that were sitting on the market for almost a month started to get sold relatively faster, since showings started to pick up. In some cases, I’ve been involved in bidding wars similar to what we saw before COVID-19,” said Smith.
Median Condo Apartment Prices in Toronto West Neighbourhoods Declined Between $15,000-$45,000
In Toronto West, median condo apartment prices dropped between four per cent and 10 percent since February 2020 in the following neighborhoods with at least 10 sales:
W10 (Rexdale-Kipling, West Humber-Claireville) prices declined $44,500 (-10 per cent) to $418,000
W06 (Mimico, Alderwood) prices dropped $35,500 (-6 per cent) to $577,500
W08 (Islington-City Centre West, Eringate-Centennial-West Deane) prices fell by $25,500 (-4 per cent) to $570,000
W04 (Yorkdale-Glen Park, Weston) prices declined $18,450 (-4 per cent) to $479,000
W05 (Black Creek, York University Heights) prices fell $15,451 (-4 per cent) to $409,999
Carlos Moniz, a Zoocasa agent with Etobicoke and Toronto West expertise noted that when COVID-19 hit, many buyers in the very early stages of their home searches took a step back and slowed down their searches to get a better sense of the impact on the market. According to Moniz, buyers who were further along in their home search recognized this as an opportunity to regain some negotiating power in these new market conditions where there were fewer buyers and less competition.
Here’s a snapshot of how median condo apartment prices changed in Toronto’s 35 neighbourhoods between February and April 2020, including a list of the neighbourhoods with the largest declines. Note: the percentage change in median price is only calculated for neighbourhoods with at least 10 condo apartment sales.
Toronto Neighbourhoods with the Largest Declines in Median Condo Apartment Prices
Based on neighbourhoods with at least 10 condo apartment sales in April 2020.
1. C10 – Mount Pleasant East
Condo apt median price, Apr 2020: $617,500
Condo apt median price change from Feb 2020: -$131,500 (-18%)
Condo apt sales, Apr vs. Feb 2020: 16 vs. 37 (-57%)
2. C08 – Regent Park, St. James Town, Corktown
Condo apt median price, Apr 2020: $611,600
Condo apt median price change from Feb 2020: -$103,400 (-14%)
Condo apt sales, Apr vs. Feb 2020: 74 vs. 127 (-42%)
3. C14 – Newtonbrooke East, Willowdale East
Condo apt median price, Apr 2020: $597,950
Condo apt median price change from Feb 2020: -$85,050 (-12%)
Condo apt sales, Apr vs. Feb 2020: 28 vs. 70 (-60%)
4. C07 – Willowdale West, Lansing-Westgate
Condo apt median price, Apr 2020: $580,000
Condo apt median price change from Feb 2020: -$70,000 (-11%)
Condo apt sales, Apr vs. Feb 2020: 11 vs. 57 (-81%)
5. C01 – Downtown, Entertainment District, CityPlace, Trinity-Bellwoods
Condo apt median price, Apr 2020: $677,500
Condo apt median price change from Feb 2020: -$60,500 (-8%)
Condo apt sales, Apr vs. Feb 2020: 106 vs. 330 (-68%)
Median condo apartment prices and sales for April 2020 and February 2020 were sourced from the Toronto Regional Real Estate Board.
The median price is the price at which half the homes in an area were sold at a higher price and half the homes were sold at a lower price.
The percentage change in median price is only calculated for areas with 10 or more condo apartment sales.
If you’re hoping to purchase a home—especially as a first-time homebuyer—in 2020, you will face a challenging market defined by low inventory and high prices (which appear to be climbing higher).
But you’ll also enjoy low interest rates and, if you qualify, help from the federal government’s First-Time Home Buyer Incentive.
Penelope Graham, the managing editor of real estate brokerage and website Zoocasa, says that the current dearth in housing supply (just 335 homes hit the market in December 2019) has driven the average home price up to $799,593 in Mississauga.
While the supply and demand imbalance is tough, there are homes available for under $500,000 in the city.
Here’s a look at some affordable homes that hit the market in late 2019.
This one-bedroom, one-bathroom, 500+ square foot unit just sold for $285,000 after being listed for $275,000. The suite, which is good for investors or first-time buyers who don’t mind giving the place a little TLC, offers a large balcony and proximity to shopping and transit.
This approximately 499 square foot bachelor suite offers one bathroom and no parking space, but it’s a pretty rare find in the city. The unit just sold for $325,000 after being listed for $354,900, and it offers ensuite laundry, a back door exit to the patio, low condo fees and a pretty prime location.
This 599 square foot condo boasts one bedroom, one bathroom and one parking spot. It sold for $364,000 after being listed for $361,000, and it features an open-concept living, dining and kitchen combo and additional cabinets in the kitchen.
This two-bedroom, one-bathroom unit boasts up to 799 square feet of space and two parking spaces (which is rare). The unit sold for $373,000 after being listed for $375,000, and the building features a gym, party room, tennis court, sauna, outdoor pool, children’s playground and visitor parking.
This one-bedroom, one-bathroom unit spans about 599 square feet and offers one parking spot. It sold for $380,000 after being listed for $395,000. It offers laminate flooring, ensuite laundry, a modern kitchen and double sinks.
Grammy Award-winning artist, songwriter and producer Pharrell Williams is collaborating with developers on a new midtown Toronto condominium project.
Westdale Properties and Reserve Properties launched the marketing for their two-tower residential development, called untitled, today during a press event in Yonge-Dundas Square. Williams, who introduced the project via video on the screens across the public square, partnered with the developers on the design and creative elements of the condominium tower.
The future condo building, located near Yonge Street and Eglinton Avenue, will consist of 750 one- to three-bedroom units divided between two towers and a joint-podium.
“This partnership has evolved from a desire to do something really unique for Toronto in architecture and design as a whole,” said Sheldon Fenton, president and CEO of Reserve Properties, at the launch. “We believe that by bringing in a cultural icon with vision and ideation, from outside the realm of real estate, it would allow us to break the mold in terms of what has been traditionally done.”
Untitled is said to focus on key themes surrounding, “essentialism, connections to the elements and the universality of space,” according to a project press release. Williams desired to create an ethos of universality within the project, whereby “physical space is only a backdrop.” Drawing from these ideals, the project team landed on the name, untitled.
“We wanted to make sure that it continued to give you the message of this amazing vibration of being home, and once you get in it, you make it you,” said Williams via a recorded video, who could not be present for the launch in person. “It’s universally beautiful, but there’s enough space for you to get into it and make it yourself.”
Working with the project team, which also consists of Toronto-based architects IBI Group and local interior design firm U31, Williams played a role in crafting the vision and material aspects of untitled. His involvement ranged from consultation on the architectural and interior design, to choosing the furnishings in specific spaces. Williams is best known for his appearances as a judge on The Voice and his 2013 chart-topping single, “Happy.” Untitled marks his debut into multi-residential development.
“The opportunity to apply my ideas and viewpoint to the new medium of physical structures has been amazing,” wrote Williams in the release. “Everyone at the table had a collective willingness to be open, to be pushed, to be prodded and poked, to get to that uncomfortable place of question mark, and to find out what was on the other side. The result is untitled and I’m very grateful and appreciative to have been a part of the process.”
Jamie Golombek: The CRA’s ability to hunt you down over your real estate transactions is better than ever; this tax case looks at what constitutes a flip
If you plan on selling a home or condo that you bought fairly recently, especially if you never actually moved into it, be wary as the tax man will be carefully watching how you report any gain on your tax return, lest it be seen as a “flip” and be fully taxable as income, rather than a half-taxable capital gain.
The Canada Revenue Agency’s ability to hunt you down over your real estate transactions has improved thanks to the recent $50-million boost in funding over five years announced in the 2019 federal budget to help “address tax non-compliance in real estate transactions.” The CRA uses advanced risk assessment tools, analytics and third-party data to detect and “take action” whenever it finds real estate transactions where the parties have failed to pay the required taxes. Specifically, the CRA is focusing on ensuring that taxpayers report all sales of their principal residence on their tax returns, properly report any capital gain derived from a real estate sale where the principal residence tax exemption does not apply, and report money made on real estate “flipping” as 100 per cent taxable income.
But what, exactly, constitutes a real estate flip? That was the subject of a recent Tax Court of Canada decision, released this week.
The case involved a transit operator for the Toronto Transit Commission who, along with his brother, bought and moved into a two-story, three-bedroom townhouse in Vaughan, Ontario, in 1999. His brother contributed toward the initial down payment, lived with him and together they equally shared all household expenses, including the mortgage payments. In 2003, the taxpayer’s brother met the woman who would become his future wife, whom he married in April 2007. She moved into the townhouse and they had a child together in February 2008.
Sometime prior to this, the taxpayer and his brother began discussing going their separate ways. The taxpayer testified that he wanted to sell the townhouse and move to a place that was smaller and closer to work. Indeed, in 2006 he found a smaller place, a two-bedroom condo, which was in the pre-construction phase. The tentative occupancy date of the condo was April 2008, but that date was pushed back several times, ultimately to 2010.
Prior to taking possession of the condo, however, circumstances changed. In December 2008, the brothers’ father passed away while in Jamaica, where he lived together with their mother for about six months each year. Following their father’s death, their mother did not feel safe living alone in Jamaica and in March 2009 she moved into her sons’ townhouse. The taxpayer testified that his brother and his family shared the master bedroom, while the taxpayer and their mother each occupied one of the remaining two bedrooms. This living situation didn’t last long and the taxpayer refinanced the mortgage on the townhouse in order to buy out his brother’s share of the property, enabling him and his family to move out.
In August 2010, the taxpayer took possession of the condo and immediately arranged to list it for sale, realizing that it would be too small for both he and his mother. No one lived in the condo in the interim. He sold it in October 2010 resulting in a net gain of $13,412, which the taxpayer reported as a capital gain, taxable at 50 per cent, on his 2010 tax return. The CRA reassessed him, finding that the $13,412 should have been reported as fully taxable income and slapped him with gross negligence penalties.
The common question of whether a gain from the sale of real estate is on account of income or on account of capital always comes down to the underlying facts. The courts will look to the surrounding circumstances and, perhaps most importantly, the taxpayer’s intention.
The judge reviewed the facts in light of the four factors previously enumerated by the Supreme Court of Canada by which these types of cases are decided: the taxpayer’s intention, whether the taxpayer was engaged in any way in the real estate industry, the nature and use of the property sold and the extent to which the property was financed.
The taxpayer testified that he purchased the condo with the full intention of living in it after his brother moved out of their shared townhouse; however, when his father died and his mother wished to return to Canada to live full-time, the taxpayer “changed his plans to move so that his mother could live with him at (the townhouse), which was a larger space.” He testified that since he could not afford to own both homes, he listed and sold the condo shortly after assuming title. As he testified, if not for his father’s death and his mother’s return to Canada, he would have carried out his plan to sell the townhouse and live in the condo as his primary residence.
The judge concluded that the taxpayer’s intention with respect to the condo was indeed to live in it as his primary residence. He had no secondary intention of putting the condo up for resale at the time of purchase.
The judge therefore concluded that the sale of the condo was properly reported as a capital gain and ordered the CRA to reassess on that basis and cancel the gross negligence penalties.
One final note is warranted: while justice was ultimately done and the taxpayer prevailed, it actually took him nine years and three separate visits to court to get relief. The CRA originally reassessed his 2010 capital gain as income back in 2014. The taxpayer filed a Notice of Objection to oppose the reassessment, which was reconfirmed by the CRA in January 2016. The taxpayer then had 90 days to appeal the CRA’s reassessment to the Tax Court. For a variety of reasons, he missed that deadline and ended up in Tax Court seeking an extension of the deadline to file an appeal. The Tax Court denied his request for an extension. He then went to the Federal Court of Appeal which, in June 2017, reversed the lower court’s decision and allowed an extension of time to appeal to Tax Court, which heard the case in March 2019 and released its decision this week.
While many first-time buyers look to condos as a relatively affordable option, one Toronto housing market expert says that it is actually less expensive to buy a low-rise home in the GTA.
According to Realosophy Brokerage co-founder John Pasalis, when you control for the size difference between low-rise and condos in the GTA, condos are more expensive per-square-foot.
In the Maple neighbourhood of Vaughan a 1,385 square-foot rowhouse costs $685,000, while a condo of a similar size in the area would likely cost $684 per-square-foot, or $947,000. It’s just one example of a price difference that can be seen across markets in the GTA.
Pasalis believes that this discrepancy in prices can be chalked up, in part, to investor demand.
“The majority of new condominium construction is driven by investor demand — not demand from families,” he writes in a recent blog post. “Investors are willing to pay much more (on a per-square-foot basis) than end users are.”
Pasalis says that investors prefer smaller units, which typically have a better return on investment, which means that developers are creating units that are too small for families, at prices they cannot afford.
“When developers are pricing a unit, they’re thinking to themselves, why would I charge this much when I can get this much?” Pasalis tells BuzzBuzzNews. “And those prices don’t make sense for a two- to three-bedroom unit, which is likely why we’re not seeing as many of those units being built [in the GTA.]”
In order for a condo to be good-value-for-money for a young GTA family, Pasalis says that low-rise prices would have to increase at a much faster rate than they currently are.
“The rate of appreciation for low-rise homes in the 905 region isn’t going to be very high in 2018,” says Pasalis. “So I don’t see this trend changing in the next year or so.”
While Pasalis admits that for families with a budget of $400,000 or less, a condo may be the only option for homeownership, he says that those with one of $700,000 or more should consider their options.
“They can choose to buy a two-bedroom 1,000 square-foot condo in Maple for that price, or a three bedroom 1,385 square-foot row house with a finished basement and backyard. For most, it’s a pretty simple choice,” he says.
Source: Canadian Real Estate Wealth – Neil Sharma13 Nov 2017
With the cost of condos in Toronto surging, it’s only a matter of time before investors find the next hot market. And as it turns out, they might not have to go far.
Hamilton is enjoying a renaissance that’s, in part, being catalyzed by the astronomical cost of living in Canada’s largest city. While Hamilton’s amenities are no match for Toronto’s, they’re showing enough promise to lure millennial-aged Torontonians westward.
Brad Lamb, owner of Brad J. Lamb Realty Inc. and Lamb Development Corp., says investing in Toronto’s vertical homes is producing diminishing returns.
“It’s getting harder and harder in places like Toronto and Vancouver to buy a home, like a condo, and rent it and have it make any sense as an investment because you’re paying $1,000 per square foot,” he said. “You’re paying $500,000 for a one-bedroom condo apartment that’s 500 square feet and you’re going to rent it for $2,000 a month, but when you add up your mortgage, your condo fees and taxes, it doesn’t cover it. It certainly doesn’t cover in Vancouver, where that property is $650,000.”
Lamb says Hamilton has benefited from the black hole Toronto’s become. Steeltown has quietly cultivated a strong cultural scene in the city’s downtown, mostly in the James St. radius.
“Toronto’s real estate unaffordability shines a nice light on Hamilton, so investors are looking at alternate places to invest and prospective homeowners are looking for other places to live, where they can have a decent life in a nice home,” said Lamb. “Hamilton is a real city with a real urban vibe. It has a great parks system and an amazing amount of amenities. It’s a real city with a great food scene, and a great art scene, and a great music scene, so to me it makes sense that Hamilton is the next city. It’s a much more vibrant city now than ever. Every year it’s going to get larger, better, richer, and more expensive.”
The Hammer is a medium-sized city with over half a million residents, so it has retained its quaint, small-town charm, but Lamb believes it’s on the cusp of a population boom. Its downtown is lively on Friday and Saturday nights, and Lamb says business always follows in the tracks of younger people.
“Every month I see new things popping up that are very cool,” he said. “What gets me excited about a city is great retail. When you see young people out, it makes you want to visit and it makes businesses want to open there, because businesses want to be where young people are.”
Many millennials are flocking to Hamilton’s tech sector, where they’re paid good wages and promised bright futures, however, the linchpin is the city’s quality of life.
“Hamilton is going to experience a population growth much higher than what they’re projecting,” said Lamb. “More and more young people are frustrated with the cost of living in Toronto, and the inability of Toronto to create housing at a pace that is needed. I believe Hamilton will grow by 10,000 people a year.”
A Federal Court judge has approved at least one court order that will require a British Columbia developer to turn over information to tax officials about people who bought and flipped condo units before or during construction.
And several similar applications are under way, reflecting the federal government’s efforts to crack down on potential tax cheating in the presale market.
A July 25 Federal Court order requires the developers of the Residences at West, a Vancouver condo project at 1738 Manitoba St., to provide the Canada Revenue Agency (CRA) with documents related to presale flips, also known as assignments, in the building, including proof of payments and correspondence between the developers and people who buy the assignments.
That order followed a June 29 application from the federal government.
In September, the Minister of National Revenue applied for court orders related to One Pacific, a Concord Pacific project, and Telus Gardens, a downtown project developed by Westbank Corp.
Both developers said they would comply with the request for documents.
“Customer information is protected by privacy laws and is not at the developer’s liberty to disclose unless ordered by the Court,” Matt Meehan, senior vice-president of planning at Concord Pacific Developments Inc., said in an e-mail.
“To protect our customers’ information and ensure any release will be compliant with the law, we have asked CRA to obtain a court order, which we will adhere to.”
In an e-mailed statement, Westbank said it would comply with the minister’s application.
The CRA is investigating potential tax cheating in the presale market.
Developers presell units in projects to obtain bank financing. Those sales agreements can be “assigned,” or flipped, to somebody else before the building is finished.
A unit may be flipped several times before a project is completed. But only the transfer of legal title from the developer to the final purchaser is registered with the B.C. land title office.
That means the CRA does not know the identities of any buyer but the final one, and has no way to check whether the others have paid applicable taxes on those transactions.
The provincial government last May announced new regulations designed to limit assigning: Sellers have to consent to the transfer of the contracts, and any resulting profit must go to the original seller. But those new rules apply to single-family homes, not condo presales.
As the CRA heads to court to obtain data on presale buyers and sellers, some observers say the provincial government could cool speculation in the presale market – and support federal tax-enforcement efforts – by changing reporting requirements.
Presale purchasers may include people who are not Canadian residents and whose profit from flipping a presale contract would be subject to a federal withholding tax, said Richard Kurland, a Vancouver immigration lawyer.
He used the example of a person from Iran who buys a presale contract for $100,000 and sells it for $125,000 a month later. Under the Income Tax Act, that profit – because it went to someone who is not a tax resident of Canada – would likely be subject to a 25 per cent withholding tax, he said.
“If nobody knows that you’re from Iran and not a tax resident, and nobody withholds the money, you just walked off with $6,000 tax-free,” he said.
If information on buyers’ identities were routinely provided, the agency could more readily check to determine if, for example, anyone was claiming the principal-residence exemption on more than one property, Mr. Kurland said.
Asked if the CRA would like the province to make changes such as requiring routine disclosure of the identities of presale buyers, agency spokesman Bradley Alvarez said in an e-mail that, “any additional information, including that obtained from other governments and third parties, enhances the CRA’s ability to detect non-compliance.”
The CRA has found some flips are reported incorrectly or not at all and “the CRA welcomes any endeavours to obtain any information that can assist the Agency in detecting non-compliance.”
Developers support the CRA’s goals, but have to take privacy regulations into account, said Anne McMullin, president of the Urban Development Institute.
“It’s not the developers not wanting to hand over information, it’s, ‘Let’s do this safely,’ because of privacy laws,” Ms. McMullin said.
The NDP, which came to power after the May election, had said while in opposition that the Liberals were not doing enough to curb speculation in B.C. real estate.
In its election campaign platform, the NDP promised to set up a multi-agency task force to fight tax fraud and money laundering in the B.C. real estate marketplace.
Finance Minister Carole James was not available for an interview.
In a statement, her office said the province is monitoring the federal government’s court action, and tax fraud is “something that is taken very seriously.”
The B.C. government is working on a comprehensive housing strategy, and any policy or legislative changes will be made public once that strategy is developed, the statement added.
Mississauga has become the GTA’s largest condo hub after Toronto, and its torrid pace of residential, infrastructure and amenity development are conspiring to make it ripe for investment.
In tandem with the Places to Grow Act, Mayor Bonnie Crombie has recalibrated the city’s growth plan to quickly turn it into an urban hub. Mississauga’s city centre already has a dazzling skyline, and it’s expecting 23 new mixed-use condominium towers.
Major builders like Daniels, Amacon, Camrost and Solmar all have major projects going up there that promise to bring life to what’s been a sleepy downtown. However, without a crucial piece of infrastructure, some of these developments might never have been conceived.
“The timing is largely a result of the LRT breaking ground next year,” Crombie told CREW. “It is 20-kilometres long with 22 stops, beginning in Port Credit, and then looping around downtown where there will be four stops. It will pull into the transit terminal – the second-biggest in the GTA – then go into Brampton.”
The city centre in Canada’s six-largest city has long been built around Square One Shopping Centre, which just received a major facelift and extension, but there are newer arrivals. Sheridan College has two campuses in or near the city centre, with a third in planning stages, and University of Toronto Mississauga isn’t very far away, either. Apartment buildings in the area are being outnumbered by condos, and students will naturally rent them.
Over the next two decades, Peel Region is expecting 300,000 new residents and 150,000 jobs, of which 60% are projected to be in Mississauga.
Zia Abbas, owner and president of Realty Point, a brokerage that’s grown to 26 franchises in only two years, says the cost per square foot in Mississauga’s condos make investing there a no-brainer.
“The average of any new launch in downtown Toronto is around $1,000 (per square foot),” he said, “with the cheapest I’ve seen in Liberty Village starting around $850 to $900 per square foot before parking. In Mississauga it’s between $640 and $670, parking included.”
Abbas says the LRT will add substantial value to the city centre’s condo cluster, and added that Mississauga has other hot spots too, like Erin Mills and the Hurontario and Eglinton neighbourhood.
“Compared to downtown Toronto where eight out of 10 people rely on transit infrastructure, in Mississauga it’s five out of 10, I’d say.”
But as Crombie’s vision for an urban Mississauga materializes, that number could start rivalling Toronto’s.