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Reports released by the B.C. government last week reveal that of the $7 billion money laundered in BC in 2018, $5.3B (or 72%) was in real estate.  Both revealed how criminals are using real estate to clean their money. As a result, the BC Government has called for a public enquiry into the problem.

The premier says, “The depth and the magnitude of money laundering in British Columbia was far worse than we imagined.”  Finance Minister Carole James says, "Housing should provide shelter, not a vehicle for proceeds of crime."  She continues, “Homes in BC are for people, not speculative investment or money laundering.”

However, is a public enquiry needed?  We have extensive material from two recently released reports.  Is there anything more we can learn?  Let’s do a quick review of what we do know.

The two recently released reports that have sparked the public enquiry are the  Combating Money Laundering in B.C. Real Estate report which puts forward 29 recommendations; and the aptly named, Dirty Money Part 2 which outlines some of the red flags that signal when illegal money is behind a real-estate purchase — including unfinanced purchases, private lending, unusual interest rates and purchases by homemakers and students.  Both documents identify numerous gaps in provincial and federal regulatory systems for keeping track of purchases and reporting suspicious transactions. 

There are many actions to be taken.  The BC Government has already taken some action that includes introducing proposed legislation called the "Land Owner Transparency Act.”  This Act would establish a public registry of beneficial owners of property in BC.  Corporations, trusts and partnerships that buy land would be required to disclose their beneficial owners in the registry hopefully ending the use of these vehicles to shield real estate purchases. Transparency International Canada highlighted Vancouver real estate in a 2016 report, concluding nearly one-third of the 100 most valuable residential properties in Greater Vancouver were owned by shell companies.

There is also the 30 Point Housing Plan – BC Document.   The main features of the plan are a speculation tax, a ramped-up foreign buyers’ tax, and a new property transfer tax:

  • The speculation tax is aimed at both the current 25,000 and future residences owned by local profiteers, out-of-province investors and “satellite families” who buy up housing stock and leave the homes empty, or vest nominal ownership in a “homemaker” or “student” who pays little if any taxes.  If it is found that the declared taxable household incomes are lower than the amount they pay in property taxes, utilities and mortgage payments; and equivalent incomes to those reported in the Downtown Eastside. CRA estimates that about $170 million in taxes went uncollected from BC real estate over the past three years. The speculation tax aims to fix this disconnect between declared income and housing wealth.

  • The existing (and largely ineffectual) 15 per cent Metro Vancouver foreign buyers’ tax will increase to 20 per cent; and

  • The new 5 per cent property transfer tax will target sales of homes worth $3 million and up.

These are the efforts underway to undo a decade of political indifference that turned Vancouver into an epicentre of fraud, scams and real estate mania.  Will this be enough?  The current picture of the Vancouver housing market is not pretty.  Here is more data.

A Globe investigation;"> published in February, 2018, uncovered how 17 underground lenders provided $47 million in drug-money mortgages and liens on 45 Metro Vancouver mansions. An RCMP intelligence report estimated that up to $1-billion from the proceeds of crime was used to purchase expensive Metro Vancouver homes.

Vancouver has become known as a free trade zone for gangland money launderers, absentee offshore real-estate speculators, Chinese princelings on the lam and globe-trotting tax frauds. Over the past decade, homelessness has doubled, at least 4,000 people are sleeping rough in the streets, and there are now 70 homeless camps across the region.

In January 2018, Vancouver showed up as the third most unaffordable city on Demographia’s list of 92 cities around the world. When it comes to cities undergoing a deterioration in housing affordability, Vancouver ends up the worst. 

At least we have a starting point and a current BC Government that has expressed their commitment to address the issues.  The Public Enquiry will release an interim report within 18 months and a final report by May 2021. The BC election is scheduled for October 2021.

We at CCEC plan to keep our members informed on developments in this area.

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Raise the Rates says that the BC Government $2million grant for “food rescue” operations will not solve the problem of food insecurity in BC as the root cause is income poverty.  

They say, “Distributing surplus food has won out over raising welfare rates to enable the hungry and homeless to afford to feed themselves and their families. The year’s humiliating $50 monthly benefit increase keeps them with incomes 50 per cent below the poverty line.” Cash is needed to shop for food in normal and customary ways: a living wage, adequate income benefits, real rent control.

Click here to read the article as it appeared in the Tyee.

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The recently announced "First-Time Home Buyer Incentive" is a new way for government to stimulate demand for new housing and for mortgages, while representing the program as 'helping' young Canadians into the market.  Inducing young people into long-term debt obligations is not necessarily in their best interests. 

Under this program, the Canada Mortgage and Housing Corporation ('CMHC', a crown corporation) agrees to be a 'co-owner' of the qualifying property.  In addition, the borrower will have a CMHC insured high ratio mortgage, for which they pay a good fee.  In effect the buyer has to put up less savings to make the deal work.   

In economic terms, this kind of program brings new buyers into a market which puts upward pressure on prices.  This is one of the points made in a recent piece by Rita Trichur in the Globe.  Paradoxically, up price pressures are not benefiting new buyers who have limited debt servicing capacity. 

Additionally, the criteria for qualification may make the program irrelevant in the over-heated markets of Greater Vancouver and Toronto. The program criteria say household income may not exceed $120k, and the property value cannot exceed four-times that income (or $480k).  

Administratively, the program adds complications by introducing a new set of qualifications. In doing so it makes the process more cumbersome for a new buyer.  The program essentially reverses the constraints implemented in recent years on the mortgage insurance program which had required more direct investment by new home buyers, up to at least 10%.  Perhaps backtracking on the mortgage insurance front was viewed as politically unwise, so they've cloaked it. 

CMHC is still working out how this program will work.  However, it appears to be a pre-election gimmick more than a realistic housing program. It is unlikely to have significant beneficial impact in the cities with serious affordability problems. 

 

 

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Housing and land-use regulation are the biggest factors in affordability; those are responsibility of provincial, regional and municipal governments. There's little the federal government can do to improve housing affordability.

Learn more. CCEC has partnered with DOXA as a screening partner for PUSH, a global view on the housing crisis.

So the benefits of the recently announced federal government’s measures will be modest. For example, the increased RRSP withdrawal is equal to only six months of the average house-price increase since 2000. Between 2000 and 2015, average house prices increased about three times the increase rate of incomes.

The shared-equity mortgages, for example, would be available only to first-time-buyer households with annual incomes under $120,000. The CMHC mortgage limitation would further restrict the maximum mortgages to $480,000. Shared-equity mortgages are not very effective in Vancouver where most house prices are too costly for a $480,000 mortgage.

Yet the housing affordability crisis is serious. Vancouver ranked as the second-least affordable among 90 major metropolitan areas in nine nations in the latest Demographia International Housing Affordability Survey(released in Canada by the Frontier Centre for Public Policy), trailing only Hong Kong. 

The Vancouver housing-affordability crisis has also developed as our City Government has developed some of the most restrictive land-use policies in the high-income world. 

With our local urban-containment policy, denser, high-rise housing offers virtually no help. In Vancouver, condominium prices are nearly equal to detached house prices 10 years ago. This does not take into consideration the smaller size of condominiums compared to houses. Moreover high-rise condominiums provide no yards in which children can play, which makes them less family-friendly.

The average detached house in Vancouver averages about $1.5 million. Cities including Victoria and Kelowna now show average house prices equaling the $1 million in Toronto.

Solving Canada’s housing affordability crisis will require provincial, regional and municipal action. It must start with addressing the price of land, which is the proximate cause of both the housing affordability and cost-of-living crises.

(Points from National Post article by Wendell Cox, senior fellow at the Frontier Centre for Public Policy, co-author of the Demographia International Housing Affordability Survey and author of Demographia World Urban Areas.   https://business.financialpost.com/opinion/why-ottawas-attempts-to-help-young-canadians-afford-housing-simply-wont-work)

CCEC is pleased to partner with DOXA as a screening partner for PUSH, a global view on the housing crisis.

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April 24: Join the ACORN Fair Banking Campaign Rally at Fairstone Metrotown. 

At CCEC we support the work of ACORN Fair Banking campaign. and have been providing our members with emergency short term loans for many years. We also provide debt consolidation services to help our members avoid the predatory lenders. 

Non-bank lenders like Fairstone are unregulated when they give out loans over $1500. They give out loans up to $20,000 at rates as high as 59%  which is still considered legal (under 60% is legal in Canada). Fairstone recently rebranded from CITI Financial. You may have heard of them as they were a leader in the US with predatory mortgages. In the US, they paid penalties of over $7 Billion for their role in financially destroying millions of Americans. So, they renamed their high interest loan outlets as Fairstone. ACORN's campaign for Fair Banking is putting Fairstone on notice that their days of unregulated lending are coming to an end.

The BC Government has introduced legislation that would license high-interest lenders, enabling them to cap the interest rates and other predatory lending practices. "Regrettably many people do not understand the true implications of taking out a high-cost loan only to find out later how hard and how long it can take to repay,” says Scott Hannah, president of the Credit Counselling Society.

Email Metrovan@acorncanada.org for more info on ACORN's campaign and be sure to join the rally on April 24!  

Call CCEC if you need a short term or other loan. We want to work with our members to avoid them feeling they need to work with predatory lenders. 

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BC has a high rate of foreign ownership. Why? Wealthy people in unstable regimes want to buy here; we have a history of 'selling passports or residency' to wealthy families; and our current tax system subsidizes foreign ownership. The tax called the Speculation and Vacancy Tax (SVT) is aimed at limiting speculation, not necessarily taxing “speculators”.

Read this article for more information  The Speculation and Vacancy Tax: An Explainer Josh Gordon School of Public Policy, Simon Fraser University March 4, 2019.  A few points from the article are noted here.

CRA  allows a wealthy person to access all of the social services and public amenities as the high-earning local individual, but not pay income taxes. They can file as a non-tax resident, even if their family resides here. This is the so called “satellite family” situation. Gordon, in his article, states that we can address this issue in the tax system by imposing a property surtax on families who have most of their income earned abroad. The speculation component of the SVT seeks to address a tax avoidance problem. 

However, there are many exemptions and foreign owners and satellite families are able to avoid a speculation tax liability if they rent out their properties to an arms-length tenant, in whole or in part. The  SVT aims to encourage unused housing units into the rental market with vacancy taxes. For many,  housing sitting empty, especially as speculative investments, in the midst of a housing crisis is unacceptable.

So, “Why don’t we just ban foreign ownership already?” Some have urged banning foreign ownership as an alternative to the SVT. With the foreign buyer tax, currently at 20%, purchases by foreign buyers are already down substantially at only 2-3 percent of total purchases last year in affected areas. 

The housing crisis is not an easy problem to solve. Learn more by reading this article about the SVT - Speculation and Vacancy Tax and it's intent and aims.  Tell us what you think. 

Read this article for more information  The Speculation and Vacancy Tax: An Explainer Josh Gordon School of Public Policy, Simon Fraser University March 4, 2019.​

 

 

 

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Rent increases, renovictions, gentrification and unaffordability is a key issue we hear from those who have completed our member survey. CCEC is sponsoring Push at the 2019 DOXA Festival. The issue is not about gentrification, it’s a different kind of monster: Housing as a financial asset, a place to park money. The film looks at housing prices skyrocketing in cities worldwide. Longtime residents are pushed out. Not even nurses, policemen and firefighters can afford to live in the cities that they are supposed to protect. Push investigates why we can’t afford to live in our own cities anymore. Housing is a fundamental human right, a precondition to a safe and healthy life. But in cities all around the world having a place to live is becoming more and more difficult. Who are the players and what are the factors that make housing one of today’s most pressing world issues?  Click here to read more about the film. 

May 4 12:00nn Vancity Theatre: part of the Justice Forum and includes a post-film discussion.

May 10 6:00pm SFU

Buy Tickets here

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Released March 18, 2019 called, TogetherBC.

BC. has one of the highest rates of poverty in the country, with more than 557,000 people living below the poverty line, including about 100,000 children. Nearly half of those who live in poverty work, and children from single-parent families, Indigenous people, refugees and people with disabilities are much more likely to be poor. In B.C., the poverty line is about $20,000 a year for singles and about $40,000 a year for a family of four.

The Plan brings together policy changes the NDP government has made since its 2017 election. Together, those changes are expected to reduce overall poverty by one-quarter and cut child poverty in half in the next five years. That means 140,000 people, including 50,000 children, should no longer be living in poverty by 2024.

“It’s a strategy that at its heart is about people,” said Shane Simpson, minister of social development and poverty reduction. “It’s about the challenges they face every day just to get by. It’s about the right of every British Columbian to be seen to be valued, to have access to opportunities for a better life for themselves and their families.”

The Pan brings together policies already announced by the government, such as increasing minimum wage to $15.20 by 2021 and making childcare more affordable, which the government plans to spend $1 billion on between 2018 and 2021.

In this year’s budget, the government announced a new child tax credit, which boosts the money families with children get to a possible $1,600 per year, up to age 18. It also increased income and disability assistance rates by $50, bringing basic income assistance for a single, employable person up to $760 per month, still well below the poverty line. The plan uses the Market Basket Measure, which is based on what it costs to buy the goods and services for a modest, basic standard of living, to count people living in poverty.

Future changes could include initiatives on a basic income plan — a plan where all people would receive a minimum income, based on what it takes to live a basic life in BC. An expert panel is exploring the idea, including looking at what may need to happen as artificial intelligence and automation grow and the jobs of today disappear. It is also reviewing our income assistance programs.

Poverty costs all of us, every day. We see its effects in our schools, in our hospitals and on our streets as people struggle to get by. How poverty interacts with our justice and mental health systems is impossible to separate. Alleviating poverty benefits everyone — it’s money well spent.

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In the City of Vancouver, 44 per cent of tenants do not have affordable rent.  The Canada Mortgage and Housing Corporation defines affordable housing as shelter that costs less than 30 per cent of before-tax household income. ACORN BC says,” One in five households in Metro Vancouver spend half of their income or more on shelter”.

One year ago, the City of Vancouver said that $3,702 rent was “affordable” housing for a 3 bedroom and $1,903 for a one bedroom; and in East Vancouver a three bedroom rent of $3,365 was affordable.  

Rental housing is scarce.  A single mother is quoted on a CBC release saying, "Everything that was in my price range was kind of dumpy and just not suitable for my daughters and I." At a recent neighbourhood conversation held in Little Mountain Riley Park, community members commented on the lack of rental housing in the area citing that most housing is owned.  There are approximately 1.5 million renters in British Columbia today. Vacancy rates in BC are some of the lowest in the country, averaging 1.3% and in some communities, such as Vancouver and Kelowna, the vacancy rate has fallen below 0.9%.

Affordable housing is an issue in BC and more so in Vancouver. In April 2018, Premier John Horgan appointed a Rental Housing Task Force to advise on how to improve security and fairness for renters and rental housing providers in BC. https://engage.gov.bc.ca/rentalhousingtaskforce/   Their task was to receive submissions from interested parties, review the information and offer advice to the BC government on how it can “ensure safe, secure and affordable rental housing in BC”

Reading through the submissions that are available on line and comments provided by our members, you will see common threads.  A few comments are:

  • Councilor Jean Swanson says rents will keep rising unless vacancy control and rent freezes are implemented.
  • The BC Poverty Reduction Coalition says, “We are calling for stronger tenant protections including tying rent control to the unit as a central recommendation within an effective poverty reduction plan”. They add, “Without rent control tied to the unit, many of the government’s policy changes will not have the beneficial impact expected or hoped for”.  For example, the social assistance rate increases in the past year have been eaten up by increases in the cost of (SRO) rental housing.  Stronger tenant protections, and building affordable social and rental housing is needed.
  • The Office of the Seniors Advocate says, “The most vulnerable are the 20% per cent of seniors who are both low income and renters. The median income for BC seniors is $26,000 a year, who spend 35% of their income on housing, leaving them with $16,900 a year ($1400/month) to meet all other expenses. But, half of BC seniors who rent have a gross income of $21,000 ($1530 per month) or less. These seniors make tough choices on what bills to pay or prescriptions need to be filled (the deductible for Pharmacare was recently eliminated for those on low income but the co-payment remains). Many necessities including: assistance with housekeeping, grocery shopping, shoveling the sidewalk, a walker, eyeglasses and hearing aids, all have fees that add up and cannot be paid with their monthly income.
  • ACORN Members’ Top Three Priorities are Lack of affordable housing; Rent control loopholes; and Renovictions and demovictions.
  • Canadian Centre for Policy Alternatives says, “There is a grave risk that all the improvements and gains experienced for low-income people due to minimum wage increases, welfare rate increases, child care fee reductions and more will be wiped out by rent increases”.

At the same time, Canada recognizes housing as a human right.  So, what did the BC Government learn through the Rental Task Force and what is next?  While they have a Report with recommendations released in the fall 2018, let’s look at what the latest BC Budget included:

  • Funding for 200 Modular housing units but Councilor (and CCEC Member). Jean Swanson, who introduced the city’s motion calling for 600 more modular homes, recently estimated there’s a need for 2,500 units in Vancouver.
  • Establishing a province wide rent bank, which provides low-interest loans to renters who need immediate, short-term relief to prevent unnecessary evictions.
  • Providing additional benefits to seniors living independently in rental accommodation, through the Shelter Aid for Elderly Renters (SAFER) program, by an average of $930 per year,

There is also a groundswell of community members rallying and creating options to deal with the lack of affordable housing and coming up with various options.  For example, CCEC Member, the Galiano Community Loan Fund.  While they are not working specifically on the rental housing situation, they are providing funds to support housing on the Island and their story is worth mentioning. The fund was created by Galiano Islanders who have come together as lenders to support borrowers in the community who need access to affordable housing on the Island (and other needs).  Over the past 8 years, the fund has provided loan guarantees of approximately $100,000.  To date, they have not had one loan that has not been or is not being fully repaid.  Anita Braha, President for the Fund says, “Most, if not all of those loan guarantee decisions were made by the Board.  We know each other.  We are neighbours, friends, we may work together, we may volunteer together.  In most cases, the loans have a large component of character behind them”. 

Their model has been successful.  Anita says, “There seems to be a lot of interest in what I will call impact financing; that is, money raised and used to benefit people and communities”.  They have been contacted by various firms interested in community investment programs, seeking to better understand their fund and to get advice on this type of initiative. The Federal Government also recognizes the benefit of the social finance ecosystem and marketplace by investing $50million into an investment readiness stream  (Lauren Dobell, VCIB, Nov. 25/18)

Yes, housing and especially the lack of affordable rental housing is an issue.  Cities throughout B.C. have been too reliant on housing such as secondary suites to fill the rental stock.  We need to put more emphasis and reorient our thinking towards secure, long-term rental housing.

Share your thoughts and comments! 
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The nutritious diet recommended in the new Canada Food Guide is out of reach for millions of Canadians because they can’t afford it.

If we want to stop millions of Canadians from going to bed hungry every night, we need to ensure that they have the ability to access food. So, who is going hungry in this country?  We know that BC has the highest poverty rate in Canada. However, did you know that we have a growing community of working poor whose wages do not cover basic necessities? Inadequate wages, shrinking social assistance rates, meagre pensions, illness and disability are at the heart of food insecurity in this country.

Did you know that 31% of single mothers are missing meals so their kids can eat? Or that one in six children live in households that can’t afford to put supper on the table? In BC, the average monthly cost of the 2017 nutritious food basket for a family of four is now $1,019.  

Individuals don’t fare better. A person receives $760 per month on social assistance and has $18.25 per week to spend on food. Despite the two increases in the past year that have raised the rate to $760 per month, the additional $150 has been eaten by the increase of $130 in rents to Single Room Occupancy hotels in Vancouver’s Downtown Eastside (example).  Jean Swanson, speaking to her experience on the Welfare Food Challenge says, “It was hard eating on $19 a week (2017 amount). I tried, then cheated and gave up. The food was too boring and not nutritious. Dieticians have told us that you just can’t have a healthy diet on this paltry amount of money.”

The new Canada Food Guide aims to support people to live healthier lives. The new guide provides guidance on what we should eat that is more plants and plant-based protein, more whole grains, less sugar, less saturated fat—and more importantly,  how to eat—at home, with others, with joy and  pleasure. The addition of this social context is important. We know the power of food to connect us to our communities and neighbours thereby increasing our sense of belonging. 

The guidelines in the new Canada Food Guide are to be commended, especially introducing the social aspect on eating with friends, family and at home. As long as we continue to have poverty in our rich country, there will be millions of our neighbours who cannot afford to live healthier lives.  Poverty is the root of the problem for those who are food insecure. 

We encourage all our members to support the work of the BC Poverty Reduction Coalition and Raise the Rates, and to support food and garden programs that allow all our community members to eat and share a meal together. CCEC will continue to advocate for decent living wages and fairer social benefits.

For more information:

The new Canada Food Guide highlights the biggest obstacle to healthy eating—poverty – McLeans Article

The New Canada Food Guide

Jean Swanson on Why the Welfare Food Challenge was cancelled in 2018

 * Food Costing in BC 2017: Assessing the affordability of healthy eating  October 2018

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