Why Leave that Condo Empty

The Toronto situation Del Property Report http://delrentals.com/blog/analysis-planning-potential-toronto-vacancy-tax/

The discussion around a Toronto vacancy tax is based primarily on numbers: Statistics Canada’s 2016 census numbers, to be specific, where 65,000 Toronto homes were listed in the category of “unoccupied by usual residents” while 100,000 people move to the Toronto area every year. 

It’s important to break that number down. While it’s simple to picture tens of thousands of neglected units locking their doors to desperate new Torontonians, Statistics Canada’s definition of usual residents is more about who considers a space their primary residence and lives there year-round or close to it, not whether a space is housing anyone at all. With the census conducted in the summer, unoccupied by usual residents can mean anything from a student rental that will fill up again in September to a space that’s been sublet while the usual resident travels or visits family in another country. Mayor John Tory’s office isn’t troubled by that distinction, saying to the Toronto Star that if even half those units were unaffected by a vacancy tax, the gap the other half represented is still “worrying”.

The decision to bring in a vacancy tax does rest with the City of Toronto specifically, and City Hall has proven much warmer to the idea than they have a foreign buyers’ tax—at least so far. Efforts are already underway to use Toronto Hydro and Water data to winnow down those 65,000 units to a more realistic picture of vacancies, and turn that data into a feasibility report.

In the meantime, Ontario’s Finance Minister, Charles Sousa, has hinted that this year’s provincial budget is going to bring in cooling measures for the Toronto real estate market. With the budget being unveiled at the end of April, it’s not too long a wait to see which conditions will be on the table for landlords and tenants.

All in all, the impact, if a similar vacancy tax were put through in Toronto, could be significant to smaller investment owners. Vancouver’s 1% tax rate would likely be used as a model—legislation is much more easily drawn up when there’s a working model in the country—and even if a Toronto vacancy tax had its differences, it’s not a bad model to use when making your own decisions.

In Toronto, where home prices have skyrocketed a record 33% in just one year, the average condo price hit $550,299 last month with no real signs of stopping—which puts Toronto condo owners in an even tighter situation than Vancouver’s in the event of a vacancy tax. Paired with other proposals such as increasing the rent control guidelines to buildings built post-1991 and discussions around heavily regulating AirBnB in Toronto, it’s plausible that renting investment property in Toronto could quickly become an environment where making smart, deliberate choices really matters—and attention to property management becomes the core of your small rental business.

Consider why your property is empty—and make a plan

Less than 35% of rental units is comprised of condo units; with 20,000 coming on stream annually.

Why would I hesitate renting? 

Loosen the Rules on Owner Occupied Properties with rental potential. [owner]  has a complete basement apartment that i have never rented - and NEVER WILL RENT - under the current legislation. I would not be able to restrict people smoking in my home or restrict what pets they could have. 

In fact, I could not restrict them from growing pot as long as they had a legal license to do so, despite the fact that by doing so, my home has suddenly become a "grow op" and my property value could (would) be greatly diminished and could make it impossible for me to get insurance or a mortgage for.

I believe that these ideas could be implemented and would serve to reduce demand and slowly raise supply, which is largely the real cause of the rapidly escalating price of housing in the GTA without causing a major crash.

Buyershttp://business.financialpost.com/personal-finance/mortgages-real-estate/ontario-premier-kathleen-wynne-promises-housing-affordability-measures-very-soon

What keeps you from renting?

Making 10% ROI the retail value of your rental without any tenant cashflow? 

Add your thoughts 

They bought Firm but haven't sold Now what?

Our buyer cannot sell their existing home, now what?

Your buyer cannot sell their existing home, now what? By Mark Weisleder I am now being consulted by buyers who have purchased homes without any conditions and cannot sell their existing homes. This could be as a result of the recent government housing policy announcements, increased number of listings, uncertain lending conditions and fewer bidding wars. As such, you need to understand all the issues and consequences to provide timely advice and do what is necessary to protect your clients and your deals. Here are 5 things to understand: 1.      What if the buyer cannot close? If the buyer cannot close, they will likely forfeit their deposit and be subject to a lawsuit from the seller, for the difference in the sale price if the seller now sells the property for a lower price than the buyer agreed to pay. 2.      What are some options available to the buyer? One option is to approach the seller and request an extension of their own purchase agreement, so that they have more time to sell their existing home without panicking. Another option is to sell or assign their agreement to a third party buyer, to have another buyer take over their agreement, pay them back their deposit, and close directly with the seller. 3.      Do you need the seller permission to assign this agreement to another buyer? Under the terms of the OREA re-sale agreement, no permission is required. However, it is best to be up front and work with the seller for a number of reasons. The seller salesperson could have a list of buyers who have already seen the property who may be willing to take over this deal. In addition, any new buyer would want to see the home and since your client does not yet own it, they have no right to show the home. By obtaining the assistance of the seller, you can show the home and hopefully arrange for a new potential buyer to take over. 4.      Who will pay the real estate commission? The real estate commission will still have to be paid on both transactions. Therefore, the original buyer will likely have to sell for more than they paid, just to break even. In my experience, this should be made clear when trying to arrange this with the original seller, that the buyer will not be making any profit on this re-sale, and is just looking for someone to take over their purchase obligation. 5.      Who pays land transfer tax? Land Transfer tax will only be paid once in this scenario, by the new buyer who finally closes the transaction with the seller. In my experience, it is best to deal with all these issues early in the process, by being up-front and honest with your seller and finding a solution that works for everyone. By working together, you can likely reduce the potential losses on all sides and in most cases, complete the transaction to the satisfaction of everyone. At our firm, we not only close real estate deals all over Ontario, we also provide timely advice on how to deal with any closing issue you or your clients may face.If you have any questions about any closing issue, do not hesitate to contact me toll free at 1-888-876-5529 or at mark@realestatelawyers.ca   Mark Weisleder is a Partner, author and speaker at the law firm Real Estate Lawyers.ca LLP. Contact him at mark@realestatelawyers.ca or toll free at 1-888-876-5529

Home Buying Rules have changed

Home Capital is one of a number of lenders that provide a path to home ownership for people who would otherwise find it hard to borrow money for a house. But at the same time, the company has come under scrutiny for what some critics say are lax lending practices that have added fuel to real estate prices.  

https://beta.theglobeandmail.com/report-on-business/embattled-home-capital-secures-2-billion-lifeline/article34816524/

TRUMP imposes additional tariffs on Farmers and Softwood Lumber

United States will impose preliminary anti-subsidy duties averaging 20% on imports of Canadian softwood lumber, Commerce Secretary Wilbur Ross said on Monday, escalating a long-running trade dispute between the two neighbors. 

http://fortune.com/2017/04/24/canada-lumber-us-trade-duties/

AND THEN

Kathleen Wynne introduces Rent Controls further strangling the supply of rental units 

Ontario will impose a 15 per cent tax on residential real estate purchases by anyone who is not a citizen or permanent resident, if they are not living in the province. Called the "Non-Resident Speculation Tax," it is similar to the tax imposed in Metro Vancouver last year, but with a rebate for homebuyers who become resident within a limited time period after the purchase. 

The tax will apply to purchases in the Greater Golden Horseshoe, an expanse of land that includes the Greater Toronto and Hamilton Area, as well as the surrounding region stretching from Peterborough through Barrie, Waterloo and the Niagara Peninsula to the U.S. border.

the government will bring all tenants under the province's existing rent control system, ending the exemption that currently allows unlimited rent increases in units built after 1991. The change will mean annual rent increases for all tenants who stay in their rental housing will be limited to Ontario's inflation-based guideline (which this year is set at 1.5 per cent), unless the landlord gets approval from the Landlord and Tenant Board.

http://www.cbc.ca/news/canada/toronto/kathleen-wynne-housing-market-home-prices-rent-control-1.4076283

If you have been considering a consolidation to reduce interest costs or make home improvements; with a pool of ever more critical lenders this may be the time to Renew Your Mortgage.

http://www.mortgagealliance.com/VeronicaThompson/affordability-calculator

Give Veronica Thompson a call to see if you qualify*

FOREIGN BUYERS be careful

5 Things to know about the New Ontario 15% Non- Resident Speculation Tax

** Although the Province has just announced the 15% Non-Resident Speculation tax, there are already more questions than answers. Here is what you need to know. 1.      The tax is for non-residents of Canada buying 1-6 residential units in the Golden Horseshoe area of Ontario. This tax is in addition to any Land Transfer Tax payable. It applies only on 1-6 units of residential property purchased by a Non-resident of Canada in the Golden Horseshoe Region of Ontario, including Toronto, Niagara, Hamilton, Peterborough, Simcoe, Waterloo and York. It thus does NOT apply to any apartment building with at least 7 residential units, or any commercial property, industrial property or vacant land. 2.      What if you are a Canadian citizen but also a non-resident? If you are a Canadian citizen, you do not pay the tax. Even if you are a non-resident, living in the US, Great Britain or Hong Kong, as long as you are a Canadian citizen, you will not pay this tax. 3.      What if there are 3 buyers buying a property that cost $500,000.00, each owning a third of the property, with 2 owners being Canadian citizens and one being a non-resident? Here it becomes very problematic. Even if the non-resident will own only one third of the property, they must pay 15% on the entire purchase price of $500,000.00, or $75,000.00 4.      Lenders ask for parents to sometimes co-sign a mortgage for their children buying a home and take a small percentage of title, even 1%, to do so. What happens if the children are permanent residents of Canada but the parent is a non-resident? This is a disaster, because under the new rules, even if the parent was holding the 1% title in trust for the children, they must pay 15% of the tax on the ENTIRE purchase price.  Mortgage brokers, lenders and realtors must be aware of this when qualifying potential buyers. In this regard, lenders will have to start giving serious consideration to accepting a guarantee instead from the non-resident parents, to avoid the non-resident parents having to take any interest in the property, triggering this tax. The issue, however, is that if the children do not qualify based on their income, the parent may have to go on title to satisfy the lender requirements. In addition, the guarantee will likely require the parents to obtain independent legal advice , and permit them to raise more defences if the bank tries to enforce it. As you can see, this is not easy, and this must be determined before anyone in this situation puts in an offer to buy a home. 5.      Rebates Even if the tax is paid, rebates will be available if the non-resident becomes a resident of Canada or a Canadian citizen within 4 years of closing, or if the non-resident is a foreign student who has been enrolled as a full-time student at an approved Ontario institution for at least 2 years after closing, or the foreign national has worked at a full-time Ontario job for at least one year after closing. At our firm, we close real estate deals all over Ontario including the Golden horseshoe area.  With our mobile signing service we can come to you at the time and location of your choice to sign your closing documentation.   f you have any questions about the 15% non-resident speculation tax, do not hesitate to contact me toll free at 1-888-876-5529 or at mark@realestatelawyers.ca Mark Weisleder is a Partner, author and speaker at the law firm Real Estate Lawyers.ca LLP. Contact him at mark@realestatelawyers.ca or toll free at 1-888-876-5529

New Improved Land Transfer Tax

Great they reduced land transfer tax exemption for First Time Buyers from $2,000 to $4,000. 

For every dollar over and above that, the rate will rise from 2 per cent to 2.5 per cent. But the tax on the portion of the purchase price between $400,000 and $2 million will remain at 2 per cent. 
\
Big House buyers pay more!  

http://DavidPylyp.com https://www.thestar.com/news/queenspark/2016/11/14/first-time-home-buyers-to-get-4000-land-transfer-rebate.html


Are you ready to buy?

Call me 

647 218 2414

Condominium Ownership ~ WHAT you need to know!

Are ALL real estate agents like this?

Real Estate Industry

Consumer education is not a hallmark of Canada’s real estate industry. Purchasers are commonly warned that insisting on a home inspection may jeopardize their offer, and there is little, if any, formal training in building technology required to become a real estate agent. Explaining the potential pitfalls of a glass condo tower building may be in the best interest of the buyer, but not the agent. How much should real estate agents know about buildings, and how much of this should they divulge to prospective buyers? One way to approach an answer to this question is to compare what real estate agents charge for their services compared to the architects who design the buildings. Typically, real estate agents receive a 5% commission on their sales, whereas architects receive on average approximately 8% of the value of the building as their total fee, which is shared with their engineering consultants. Architects are obliged to know everything about the buildings they design and are professionally liable for errors and omissions. They must also provide expert opinions to their clients for all aspects of the buildings they design.

Why should real estate agents not be required to possess a competent knowledge about the buildings they are selling?

Buyer beware would not be considered an ethical position for architects and engineers serving the public. Compared to all of the work involved in designing and specifying the various components, assemblies and systems that make for a modern building, it is not unreasonable to expect real estate agents to be forthcoming with vital information about the durability and operating costs of the buildings they are selling. Explaining the potential problems associated with glass condo towers that have been identified by technical experts to their prospective buyers, would be no different than a general practitioner explaining the risks associated with certain medications and procedures to their patients. The real estate industry has not taken a proactive approach to such issues yet it is usually the first point of contact for consumers of real estate.

http://www.cbc.ca/toronto/features/condos/pdf/condo_conundrum.pdf

Would you like to talk about Tarion? Reserve Fund Studies or Performance Audits?

I have condo Board experience as well.

#askPylyp

http://davidpylyp.com

Condominium Ownership WHAT you need to know!

http://www.millerthomson.com/assets/files/article_attachments3/MT_A-Residents-Guide-Living-and-Buying-a-Condominium_A-Loeb.pdf

Telecom access in a condo building

Clear decision from the courts on the limitation of cable and internet services provided inside condo buildings

You cannot exclude a service provider.

CRTC Ruling on Telecom Service Provider Access to Condo Buildings

In a recent decision, the Canadian Radio-Television and Telecommunications Commission (“CTRC”) threatened to cut off all telecommunications services to a condominium building if the condominium corporation did not provide timely access on reasonable terms and conditions to a fourth telecommunications service provider (“TSP”).

There were already three TSP’s providing services to TSCC No. 2322 (the “Corporation”). Discussions between the Corporation and Beanfield Technologies Inc. (“Beanfield”) failed to result in any access rights being granted to Beanfield. The Corporation’s position was that:

§ The building’s infrastructure could not accommodate Beanfield’s network, as there wasn’t sufficient capacity in the existing conduits for Beanfield’s fibres;

§ Allowing Beanfield to install additional conduits (which Beanfield offered to do at its own expense) would cause unnecessary disruption to residents;

§ If access was given to Beanfield to construct additional conduits, the construction would have to be done by contractors approved by the Corporation;

§ As there were already three TSP’s in the building there was sufficient competitive choice for residents to select a TSP.

Beanfield brought an application to the CRTC requesting that the CRTC require the Corporation to provide access to Beanfield. Beanfield also requested that access be granted on commercially reasonable terms as set out in either its standard access agreement or in the access agreements which the Corporation had previously entered into with Bell or Rogers.

The CRTC determined that at a minimum Beanfield should be entitled to access from the street to the building’s main terminal room, access to the units upon request for its services, plus access required for the purpose of installing, operating, maintaining and replacing Beanfield’s facilities. However, the CRTC felt that it was not appropriate for the terms of either the Bell or Rogers contract to apply as Beanfield was not entitled to benefit from negotiations in which it did not participate.  The CRTC also did not support the Corporation’s position that Beanfield’s installations could only be carried out by contractors approved by the Corporation, on the basis that this was a term that the parties should negotiate between themselves.

Ultimately the CRTC did not order the Corporation to provide access to Beanfield. Instead, the CRTC left it to the parties to finalize negotiations for access, with strong negative ramifications for the Corporation and in particular, the residents, if Beanfield was not granted the access rights as described above:

§ If access is not granted to Beanfield within 60 days, then the existing TSP’s would not be permitted to provide services to any new resident of the condominium or to any current resident who was not an existing customer of the applicable TSP.

§ If access is not granted to Beanfield within 90 days, then the existing TSP’s would not be able to upgrade or modify the services currently being provided to existing customers.

§ If access is not granted within 120 days, then the CRTC would consider either issuing an order requiring that access be granted to Beanfield or alternatively, issue a decision that the existing TSP’s would no longer be permitted to provide any services to the condominium residents.

The CRTC decision was aimed at facilitating competition and maximizing consumer choice, so that residents would be able to select the TSP of their choice regardless of the type of dwelling in which they resided.

This decision by the CRTC puts all condominium corporations on notice that they cannot deny timely access on reasonable terms and conditions to any new TSP.

Technology changes everything.

Time to sell?
Call me

David Pylyp
647 218 2414