TORONTO — NDP Housing critic Jessica Bell (University-Rosedale) and Parkdale-High Park MPP Bhutila Karpoche are introducing legislation to crack down on fraud in Ontario's housing market — one of many measures needed to rein in skyrocketing home prices.
The NDP’s bill would end the practice of numbered companies buying up swaths of homes while shielding themselves from transparency. The Anti-Money Laundering in Housing Act would require corporations, trusts, and partnerships that own real estate to disclose individual owners, with failure to comply resulting in fines of up to $100,000.
"Everyone in Ontario deserves a safe, affordable home," said Bell. "Yet rapidly rising housing prices and investor-driven speculation have made it next to impossible for regular Ontarians to afford their first home.“
"While individual buyers are required to publicly register the property they own, investors can set up numbered corporations, trusts and partnerships that are allowed to buy and sell property anonymously, making Canada a global hotspot for money laundering and fraud," said Karpoche.
"Doug Ford has done nothing to crack down on shady real estate deals including money laundering, tax evasion and rampant housing speculation."
Between 2008 and 2018, privately-owned corporations in the GTA spent $28.4 billion on luxury residential homes and failed to include information on beneficial owners, according to a report by Transparency International Canada. A whopping $25 billion in residential mortgages are filed by unregistered lenders that aren't subject to money-laundering provisions.
"If we want more of Ontario’s homes to be affordable for people and families, we need to take action to stop anonymous investors from outbidding families who just want to own one home," Bell said.
The Fall Economic Statement falls short because minor changes to address this big problem shield the identity of beneficial owners, and open massive loopholes that trusts, partnerships, and foreign corporations can easily exploit to dodge taxes or launder money.
“The government’s new rules will not adequately address tax evasion, money laundering and fraud in the real estate sector, as the registry will be inaccessible to the public, and some corporations, such as trusts, joint partnerships, and businesses incorporated outside of Ontario, will not be required to register, opening up a loophole for tax cheats and money launderers,” Bell said.
James Cohen, Executive Director, Transparency International Canada:
“Housing prices are skyrocketing out of reach for many Ontarians, and the problem is in part caused by crooks, kleptocrats, and tax dodgers taking up residential spaces as safety deposit boxes for their dirty money.
Transparency International Canada found multiple risk indicators in Greater Toronto Area real estate alone, including that 25 per cent in residential mortgages were provided by unregulated lenders with no anti-money laundering reporting obligations from 2008 to 2018. A publicly accessible land ownership transparency registry in Ontario would be a crucial tool to fight these problems.”
No more numbered companies buying up homes anonymously, says NDP (full press conference here)