BC Tackles Money Laundering in Real Estate
A report by Transparency International Canada indicated nearly one-third of the 100 most valuable residential properties in Metro Vancouver were owned by shell companies.
Finally, the BC government seems to be doing something about it. On Tuesday, April 2nd, Carol James introduced legislation aimed at preventing tax evasion and money laundering. Their goal is to bring anonymous real estate owners hiding behind shell and numbered companies out of the shadows. The Landowner Transparency Act will create Canada’s first public registry of property owners to compel corporations, trusts and partnerships to disclose the owners of the land.
I have two problems with what they are doing.
One, it’s far too late. The horses have left the starting gate and they are already halfway around the racetrack. There have been reports for years of up to a billion dollars a year being filtered through the BC economy. There are 25,000 empty homes in Greater Vancouver bought in some part with dirty money. The Liberals urgently needed to address this, but did not, and BC’s economy and Metro Vancouver’s real estate market has irrevocably changed as a result.
My second concern is, while it looks like the NDP are taking very necessary steps, they have a propensity to take things too far. Notice the language Carole James used when she said, “the legislation is part of the government’s housing strategy to close real estate ownership loopholes and crack down on property speculation, tax evasion and money laundering.”
While she talks about closing loopholes, notice she has lumped “property speculation” in with “tax evasion” and “money laundering”. The last two activities in this sentence are illegal. The first activity is not illegal. Indeed, the BC Government has not provided any details about what they mean by “property speculation”. Do they mean to say they are going to make it illegal for people to buy property in the hopes of fixing it up and flipping it (thereby supporting the local economy)? Do they mean they will make it illegal for people to buy property with an intent to rent it out (thereby helping to create a larger rental pool)?
What do you think they mean?