Canada’s province of British Columbia will end self regulation of the real estate industry as government officials move to rein in unethical practices that may be stoking home prices in Vancouver, one of North America’s fastest-appreciating cities.
“The real estate sector has had 10 years to get it right on self regulation and they haven’t,” Premier Christy Clark said at a news conference Wednesday. “So we are going to end the right to self regulate.”
The moves follow recommendations released Tuesday by an independent panel to impose tougher oversight and greater transparency in the industry. Public pressure for a crackdown has been mounting in Vancouver, where the price of a typical detached home rose 37 percent in the past year to top C$1.5 million ($1.2 million).
The government will enact the panel’s recommendations to raise fines by 25-fold to as much as C$500,000 on brokerages that engage in misconduct, and to ban agents from representing both buyers and sellers, she said.
Clark also said the provincial government has started working with the city of Vancouver on ways to tax owners of empty properties. Vancouver Mayor Gregor Robertson said in a June 7 interview with Bloomberg Television Canada that homes that aren’t lived in or rented out are essentially business holdings that should face similar levies.
British Columbia’s Finance Minister Michael de Jong met Robertson on Monday “to really start digging into work” on how to impose such a tax, Clark said.
The government will appoint a new superintendent dedicated to real estate, who will take “all authority for regulation, penalties and for rulemaking,” she said. The job was advertised Wednesday.
Record home prices have prompted the heads of National Bank of Canada and Bank of Nova Scotia to suggest tighter mortgage rules to cool demand. Vancouver’s housing market is in an “outright bubble,” David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates Inc., said on Bloomberg TV Wednesday.
While British Columbia has already taken steps to address affordability — including a transfer tax on luxury homes that levies an extra 3 percent on the value of a property above C$2 million — more work lies ahead, Clark said.
“In the coming weeks we’re going to take more action,” Clark said. “All options are on the table.”