The move known as LOTA (Land Owner Transparency Act) has been triggered following a property price boom in Vancouver that has been unnaturally driven by foreign investors who purchase property for letting or simply to accumulate capital gains.
LOTA proposes that for relevant partnership and trust all beneficiaries with direct or indirect investment or interest in the property must be identified on a report. Those who directly or indirectly own 10% of the shares or 10% of the voting rights, must be disclosed.
Prior to this, the ownership threshold that set the benchmark for owners who have a significant interest has been set at 25%.
Housing prices in Vancouver have increased at a rapid rate since January 2002 reaching 316%. As a result, most average homes are not attainable for the typical home buyer with just a simple bungalow costing almost half the average family income, more than double the national wage.
Due to these issues, a report was commissioned in May by the BC government that discovered that billions of dollars of illicit money were laundered through property sales in the province in 2018, most of it in Vancouver. Due to the dirty money that was laundered in 2018, property prices have increased by 5% reported by British Columbia’s Expert Panel on Money Laundering in Real Estate.
Our housing market should be used for housing people, not for laundering the proceeds of crime,” stated Carole James, Minister of Finance.
The amount of money being laundered in B.C. and through real estate is much more than anyone predicted. Our government is tackling the housing crisis head-on and taking action to combat the money laundering that has been allowed to drive up housing costs for British Columbians for far too long.
The report estimates that C$7.4bn was laundered in British Columbia through different avenues in 2018 with the majority of C$5bn laundered through real estate.
Non-government organisations such as Transparency International Canada, Canadians for Tax Fairness, and PWYP have been critical of Canada for the lack of public registry of beneficial ownership for corporations and trusts operating across the country.
The Ministry of Finance reports that LOTA is expected to be implemented sometime in 2020. For pre-existing owners, the new regulation will allow for a grace period during which time the pre-existing owner will be required to file a transparency report.