Nothing it seems can be quite as dramatic as when unbridled greed crashes headlong into political expediency.
The unbridled greed in this case describes the actions of those Vancouver real estate agents who have been making bundles of money through a combination of questionable if not downright illegal activities.
The issues were first raised a month ago by NDP MLA and housing critic David Eby, and more recently touched on in a story about possible money laundering by the Vancouver Province’s Sam Cooper and Dan Fumano. Then there was the extensive investigation of “shadow flipping” reported on by the Globe and Mail’s Kathy Tomlinson.
This alleged scandalous behaviour includes agents obscuring the source of foreign funds in reports to FINTRAC, Canada’s anti-money laundering and terrorist financing watchdog; and the failure to pay clearly required property transfer tax as agents flip properties from one buyer to another, jacking up the price on each flip; and when the agent isn’t just benefiting from commissions on both ends of each sale, they may actually be the ones making unreported capital gains as the property’s assigned buyer and then seller.
The sum total of this sleazy activity not only serves to line the pockets of unscrupulous actors, it drives up the cost of what one would have thought would be a basic human right, which is to say affordable housing.
The political expediency in this collision of interests is the result of a provincial government scrambling to adjust its narrative heading into next year’s election. But more imminently, they are facing a meeting of the legislature this week and an Opposition party, with two byelection wins under its belt, gearing up for battle.
At a news conference on Monday, Eby continued to stir the pot. The tool these rapacious realtors are using for their benefit, Eby noted, is a clause in most real estate contracts that allow the “assignment” of the deal to another buyer before the closing date. This clause was primarily intended to help out a buyer who may have been in some distress financially. But in this most recent set of circumstances it was being used to “shadow flip” property from one investor to the next, all to the benefit of the agent who Eby said “plays both sides as suckers.”
Eby also produced a FINTRAC filing form required for all large money transactions. The application makes it clear that a money transfer by a “Canadian Citizen of resident” is a “low” risk and less likely to be scrutinized than a “foreign citizen” transfer. That explains why realtors have foreign clients use the realtor’s B.C. address rather than their actual overseas address when the form is filled out.
Eby also said that he first formally raised his concerns with the Real Estate Council of British Columbia in a letter dated Jan. 4 of this year citing concerns by other realtors over colleagues deceiving FINTRAC and “assigning” contracts. That council is the “self-regulating” body for realtors in this province.
In a letter of response some two weeks later, in Eby’s words, the council “blew me off.” Specifically they wrote “No specifics have been provided that would suggest your informant’s concerns are warranted.” No story here.
That is until the Globe and Mail story hit last Saturday. Combined with revelations in The Province, it provided Eby with ammunition to escalate his demands for actions by the Liberals in Victoria and a promise to keep the heat on until something was done.
Just a few hours later, we heard from the provincial government; a government that has so far done nothing to mitigate the socially destructive escalation of real estate prices in B.C.
There would now be an investigation of all these matters conducted by the once indifferent B.C. Real Estate Council brought to heel and overseen by the provincial watchdog on these matters, the Superintendent of Real Estate.
The announcement was made by cabinet minister Peter Fassbender. But when Premier Christy Clark did get to it, she had the real estate council in her sights. She told the Globe: "If they don't fix it, we're going to fix it for them. And we will do it in short order. Because what's happening in the housing market... it's crazy."
@allengarr
Note: this column has been updated since first posted.
