Time To Get Dirty Money Out Of Canadian Housing Market
Keeping the Canadian dream of home ownership within reach has become a key issue in the 2019 federal election and rightly so. Home ownership rates in Canada are on the decline for the first time in history as young families struggle to do what generations before them have done — buy a home.
Among all of the ideas to support affordable homes, three parties — the Conservative Party, the Liberal Party and the New Democratic Party — have committed to addressing the problem of money laundering in the Canadian housing market. One of the solutions that has been put on the table is the creation of a beneficial ownership registry.
The registry would require companies, trusts and partnerships to publicly disclose controlling shareholders, beneficial owners and partners so everyone would know who purchased a property.
Ontario realtors have been fighting to get dirty money out of Canadian real estate and we are pleased to see growing momentum behind a beneficial registry. It would allow law enforcement, tax authorities, media and everyday citizens to search for properties of corrupt officials, their families or people they may know who are involved in money-laundering crimes, and better connect money from criminal acts overseas to property purchased in Canada.
Currently, weak corporate transparency rules in Canada allow criminals to hide behind anonymous shell companies and wash large amounts of money through housing. That’s because shell companies are permitted to buy homes without disclosing the names of the beneficial owners —those who enjoy the benefits of ownership even though the title of the property is in someone else’s name.
According to a recent report by Transparency International Canada, more than $28.4 billion worth of residential properties in the Greater Toronto Area have been purchased by shell companies since 2008. The problem is we don’t know how much of this money comes from legitimate businesses and how much are anonymous front companies hiding laundered money.
What we do know is the dirty money coming into our housing market is competing against hard-working young families trying to buy homes — and that has to stop.