The tax is aimed at freeing up more units for the city's tight rental market.

VANCOUVER — Nearly 8,500 homes have been declared vacant or underused in Vancouver after the submission deadline passed for the city's new empty homes tax.

The figure not only includes properties that were deemed unoccupied for six months or more, but also those that claimed one of the various exemptions to the levy. It also includes about 2,100 homes that will be hit with the tax because no declaration was submitted by Monday's deadline.

Near-zero vacancy rate

The tax is the first of its kind in Canada and is set at a rate of one per cent of a home's assessed value. It's aimed at freeing up more units for the city's tight rental market.

"Vancouver housing needs to be for homes first, not just treated as a commodity," said Mayor Gregor Robertson in a news release.

"We brought in an empty homes tax because Vancouver has a near-zero vacancy rate and many people are struggling to find a place to rent."

About 184,000 homeowners — 98 per cent — submitted their declarations on time.

​​​​​​Sixty per cent of the empty or underused units are condominiums, 34 per cent are single-family houses and six per cent are multi-family and other types of homes, the city said.

Downtown Vancouver is home to 2,250 unoccupied or underutilized homes, by far the largest number. But the West End and Shaughnessy have the highest percentage of vacant units relative to the total number of residential properties in the neighbourhoods, at eight per cent each.

Declared vacant and undeclared properties will be issued a vacancy tax bill in mid-March with payment due by April 16, the city said.

But the city did not say how many of the 8,481 unoccupied or underutilized homes were granted an exemption. So it's unclear how many homes will receive a tax bill, apart from the 2,132 undeclared units.

Numbers, revenue to be released in fall

There are a wide range of exemptions for homes that are left empty for more than six months a year, including if it's a primary residence, if it's undergoing renovations or the owner is in hospital or long-term care.

City spokesman Jag Sandhu said specific numbers of exempt or vacant declarations will not be confirmed until audits have been conducted and owners have submitted appeals. The numbers will be released, along with the revenue raised by the tax, in an annual report to council this fall, he said.

The provincial government signalled in its budget last month that it intended to introduce a tax on homeowners who do not pay income taxes in B.C. and leave their units vacant. The plan means that some owners of empty Vancouver homes could end up paying both a city and a provincial tax.

A 2016 city-commissioned report analyzed electricity use and found about 10,800 Vancouver homes were left vacant for more than a year, most of them condominiums.

Original Article HERE

It’s not always enough to have a mortgage approved – there are lots of factors that could mean you don’t get the funds, advises Alisa Aragon

You have saved enough money for the down payment and you are excited to buy a property. You have spent considerable amount of time looking for the right home and your mortgage has been approved. However, there are certain things that can affect your mortgage approval, which is based on more than just having the down payment. Some of the things lenders also consider are your income, employment history, credit history, other properties and so on.

Most lenders request your credit score within 30 days of the approval – and they might even request a new one between the mortgage approval and funding date, especially when there is a long period between the two.

So how can you ensure nothing goes wrong in that time?

The following helpful tips explain what not to do between the time your mortgage is approved and when you receive the funds.

• Don’t buy a new car or trade up to a more expensive lease.
• Don’t quit your job or change jobs. Even if it’s a better-paying job, you still are likely to be on a probationary period. If in doubt, call your mortgage expertand they can let you know if this may jeopardize your approval.
• Don’t change industries, decide to become self-employed or accept a contract position –even if it’s within the same industry. Delay the start of your new job, self-employment or contract status if you can, until after the funding date of your mortgage. Any changes could definably jeopardize your mortgage approval.
• Don’t transfer large sums of money between bank accounts. Lenders get especially skittish about this one because it looks like you are borrowing money. Be ready to document cash transactions or money movements.
• Don’t delay payment of your bills, even ones that you are disputing. This can be a legitimate deal-breaker. If the lender pulls your credit bureau prior just to the closing and sees a collectionor a delinquent account, the best you can hope for is that they make you pay off the account before they will fund. You don’t want to have to scramble to pay off a debt at the last minute or even worse, put your approval at risk!
• Don’t open new credit cards. Again, just wait until after your funding date.
• Don’t accept a cash gift without properly documenting it – even if this is from proceeds of a wedding. If you have a bunch of cash to deposit before your funding date, give your Mortgage Expert a call before you deposit it.
• Don’t buy furniture on the “Pay nothing for XX years” plan until after you get mortgage funding. Even though you don’t have to pay now, it will still be reported on your credit score, and will become an issue – especially if your mortgage approval was tight on the debt service ratios to begin with.

Buying a home and getting approved for a mortgage is not meant to be a difficult process. It is important to do your due diligence and know as much as possible and make informed decisions on your path to homeownership. If you are in doubt, it’s always best to call your mortgage expert before making a move that could jeopardize your approval.

Alisa Aragon - Dominion Lending Centres Mountain View July 4, 2016

But even some alternative lenders are tightening their standards.

Original Article HERE

Mortgage brokers say the borrower rejection rate from large banks and traditional monoline mortgage lenders has gone up as much as 20 per cent after Canada's banking regulator imposed a new stress test for home buyers who don't need mortgage insurance.

As a result, alternative lenders are seeing an uptick in business as brokers increasingly direct home buyers toward borrowing options that are beyond the reach of the Office of the Superintendent of Financial Institutions' newly enacted tighter lending requirements.

Clients who don't meet the bar are turning to private lenders, mortgage investment corporations (MICs) and credit unions, which are provincially regulated and not required to implement the stress test, said Carmen Campagnaro, president of Pro Funds Mortgages in Burlington, Ont.

Campagnaro is one of the brokers who said rejected loan applications to traditional lenders have risen by 20 per cent since Jan. 1, when OSFI mandated a new stress test for uninsured borrowers, or those who have more than a 20 per cent down payment.

Private lender Fisgard Asset Management Corporation in Victoria is seeing an influx of borrowers and "better quality business" said Hali Noble, its senior vice president of residential mortgage investments and broker relations.

"A lot of these people should be bankable," said Noble. "But they're not."

The guidelines, known as B20, are aimed at curbing risky lending amid rising household indebtedness and high home prices in some markets.

In order to get a loan from a federally regulated lender, home buyers have to prove that they can service their uninsured mortgage at a qualifying rate of the greater of the contractual mortgage rate plus two percentage points or the five-year benchmark rate published by the Bank of Canada. An existing stress test already requires those with insured mortgages to qualify at the Bank of Canada benchmark five-year mortgage rule.

Superintendent Jeremy Rudin has said OSFI is aware the stricter rules could have unintended consequences, such as sending borrowers towards more risky lenders that are out of the regulator's purview.

"We can't control what we can't control,'' he said in October.

"Our mandate is focused on the safety and soundness of the federally regulated institutions ... It isn't something that we favour but it isn't something that we have an authority to prevent.''

Since the revised mortgage guidelines came into force, both the Bank of Canada of rate and benchmark rate has risen, dealing a "double extra whammy" to borrowers, said Dave Teixeira, vice president of operations, public relations and communications for Dominion Lending Centres.

Dominion mortgage brokers are seeing a higher rate of rejection and clients have to submit multiple applications to various institutions before finding a lender that works, he added.

In turn, their brokers are submitting 80 per cent more applications than last year, Teixeira said.

"Normally, we would see our volume going to the big banks and monolines, and now we're seeing a little bit more of that, roughly up to 20 per cent ... moving over to credit unions."

Tighter standards at the credit unions

However, some credit unions have voluntarily implemented the new stress test or tightened their own requirements.

Quebec credit union Desjardins Group has been applying OSFI's new mortgage rules in full since Jan. 1.

"We believe it represents an effective way to protect consumers against interest rates variations," said Desjardins spokeswoman Valerie Lamarre.

Vancouver-based Vancity Credit Union has voluntarily increased the stress test its members must meet to qualify for a mortgage.

Rick Sielski, Vancity's senior vice president of risk, would not disclose the mechanics of the stress test and said it was too early to gauge the impact of the new guidelines.

"What we're really trying to do is make sure we're serving our market, serving our members in a responsible way," he said.

Lenders getting pickier

The higher bar for borrowers is also shifting business to riskier lenders.

Harold Gerstel, better known as Harold the Mortgage Closer from his television ads, said his Toronto-based mortgage arm is seeing an influx as well.

"We're definitely getting more business. Whether it's a substantial change, it's too early to tell," he said.

The new rules are sending better quality demand down the credit line, said Robert McLister, a mortgage planner at IntelliMortgage and the founder of RateSpy.com.

"The demand is shifting down the ladder, so you have these less regulated lenders with higher risk tolerance now seeing materially more business. And they can charge more, and they can be pickier with the types of borrowers that they lend to."

The City of Vancouver brought in an Empty Homes Tax, also known as the Vacancy Tax, on January 1, 2017 under Vacancy Tax By-law No. 11674.

The tax came into effect January 1, 2018.

All Vancouver home owners have now received a property status declaration from the city and are required to submit a declaration.

The declaration helps the city determine if a property is subject to the Empty Homes Tax.

Deadline and instructions

Home owners must return their declaration by February 2, 2018. These instructions outline how to submit a declaration.

If the city determinesa property is empty, the owner must pay a tax of one per cent of the property’s assessed taxable value.

The Empty Homes Tax doesn’t apply to principal residences or homes rented for at least six months of the year.

The city reports that 55 per cent of home owners have already submitted declarations.

Resources

A Guide to Vancouver’s Empty Homes Tax, July 14, 2017

If you have any questions about the empty home tax, contact me HERE

A majority of the world's housing markets are seeing slowing momentum, and Canada could soon be among them.

Orignal Article HERE

Housing markets around the world are showing signs of losing steam, but Canada's market isn't among them — yet.

The Great White North is still clocking in some of the world's fastest house price growth, though that is likely to come to an end in the first half of this year, amid tough new mortgage rules and higher interest rates.

According to data released this week by the Global Property Guide, a site for residential real estate investors, Canada saw the world's fourth-fastest property price growth in the third quarter of 2017, behind only Iceland, Hong Kong and Macau.

But prices in a majority of housing markets surveyed by GPG have either turned negative or slowed down. The U.K., Beijing, Singapore and Mexico are among the places now seeing falling house prices.

"Globally housing markets are slowing sharply," GPG said in a release Tuesday.

Of 47 housing markets surveyed, 21 recorded lower house prices in the third quarter of 2017 than a year earlier. That's a notable change from the previous quarter, when only 15 countries were showing year-on-year declines.

Two-thirds of all housing markets surveyed showed slowing momentum — either lower prices or slower price growth than earlier. Once-hot New Zealand is now barely eking out any price growth at all.

Meanwhile, "Canada ... is in the middle of a house price boom," the report noted.

That's despite the introduction of foreign-buyers' taxes for the Toronto and Vancouver housing markets, as well as other measures in Ontario's Fair Housing Plan designed to cool house price growth.

Recent data suggests that while the detached-home markets in those cities have slowed down, condos are still seeing strong price growth.

For instance, the Real Estate Board of Greater Vancouver (REBGV) reported on Wednesday that benchmark condo prices in the metro area soared nearly 26 per cent in the past year, while detached home prices grew a slower 7.9 per cent.

A perfect storm for Canadian housing

Canada's housing markets are moving into 2018 facing a perfect storm of conditions that could put a damper on activity and add the country to the list of places where residential property is slowing down.

A new "stress test" for borrowers of traditional mortgages comes into effect this month, and it's expected to reduce homebuyers' purchasing power by about 21 per cent. The Bank of Canada estimates that the new rule will disqualify about one in 10 prospective homebuyers.

At the same time, the experts predict the Bank of Canada will continue raising interest rates this year, though there is little agreement as to how quickly that will happen.

A report from credit rating agency DBRS last fall warned Canadian mortgage borrowers risk "payment shock" in the coming years. After years of slowly declining mortgage rates, Canadians can now expect to see mortgage rates start rising in the long term, DBRS said, putting pressure on household finances.

With adverse conditions ahead, the Canadian Real Estate Association (CREA) has downgraded its forecast for Canada's housing market for 2018. It now predicts nationwide home sales will fall by 5.3 per cent in 2018.

"The overwhelming majority of the forecast decline in sales next year reflects an expected decline in Ontario sales, with activity anticipated to remain well below the record levels logged in early 2017," CREA said last month.

It sees house prices staying flat in British Columbia in 2018, while falling 2.2 per cent, on average, in Ontario.

The association estimates that the slowdown in the housing market will take a $1.1-billion bite out of Canada's economy, and will translate into 12,000 fewer jobs.

But CREA doesn't see disaster on the horizon. The group predicts a rebound in Canada's housing market in the second half of the year, once prospective buyers have adjusted to the new mortgage rules and higher interest rates

Original Article HERE

Effective January 1, 2018, home buyers who don't require mortgage insurance — those with a down payment of 20 per cent or more — must qualify for their mortgage at a higher rate.

This new stress test doesn't apply to people renewing their uninsured mortgage.

Canada's Office of the Superintendent of Financial Institutions (OSFI) announced these rule changes on October 17. Draft changes were released in the summer for public feedback.

Under the new rules, the minimum qualifying rate for uninsured mortgages will be the greater of the Bank of Canada’s five-year benchmark rate or the contractual mortgage rate plus two per cent.

OSFI will also require lenders to enhance their loan-to-value (LTV) limits and restrict certain lending arrangements designed to circumvent LTV limits.

These changes apply to all federally regulated financial institutions.

This is the seventh time since 2008 that the federal government has made mortgage policy changes.

Cameron Muir, BC Real Estate Association chief economist believes this will have a significant impact on the real estate market:

The impact of the new stress test requirement will be to lower the purchasing power of households by up to 20 per cent. Like past tightening of mortgage regulations, we anticipate that the market impact will be sharp but temporary. In the past, we’ve seen home sales decline in the three to nine months following the implementation of tighter mortgage lending standards, with the severity of the impact fading within one year. However, these new regulations impact a larger pool of mortgages and so the impact could be more significant than in the past.

Read the government’s full announcement here.