New laws that kick in today will trigger major changes to real-estate transactions, as part of federal efforts to battle money laundering.

Under the new regulations, Realtors will have to collect personal information from property sellers and buyers, such as their name, address, date of birth and occupation, backed up by identification such as a driver’s licence or passport.

When dealing with foreign buyers, agents in Canada will now have to hire local agents who can vouch for the identity of the buyer.

The agents will be required to hang onto that information for five years and have it available for the Financial Transaction and Reports Analysis Centre of Canada (FINTRAC), if needed. Otherwise, the information will remain confidential.

The centre was established by the federal government in an effort to track suspicious property deals and prevent shady buyers from dumping large amounts of cash into property purchases.

Bill C-25, which was passed in 2007, demands several industries do their part to help put a stop to terrorist financing and money laundering.

It is estimated that nearly 63 per cent of money laundering is done through real estate.

ReMax reported having $2.6 billion in sales in 2007 in 67,000 transactions.

“Real estate agents have had legal obligations under the federal government’s push to prevent criminal activity and terrorism since 2001,” says Calvin Lindberg, president of The Canadian Real Estate Association. “In the first phase of compliance, real estate agents were required to report only suspicious transactions, or transactions involving more than $10,000 in cash,” he said in a news release issued Monday.

Now, real estate agents have to complete a report on the receipts of all funds received during the transaction, not just for $10,000 or more.

If an agent is dealing with the corporation, they must collect corporate documentation and the names of the corporation’s directors.

In cases where only one of the parties involved in the transaction is represented by the agent, identification must still be collected.

“Those buying or selling privately will be asked by the agent representing the other party involved in the transaction to provide proof of identity as well, and that record must be kept by the real estate agent involved in the transaction,” the news release said.

Bob Linney, CREA spokesperson, said there are also ways to keep track of buyers and sellers who choose to complete the transaction without the help of an agent.

“Sales involving private sellers only are not covered by the real estate regulations,” he told CTV.ca. “FINTRAC assumes they will be captured by regulations governing the banking industry now, and in addition by the legal profession when their compliance requirements kick in later.”

The new regulations will be non-negotiable and buyers who are unable or unwilling to provide the required information will not be able to complete property purchases. Additionally, the agent would be required to walk away from the deal or report the buyer to FINTRAC.

In Ontario alone, 47,000 realtors will be subject to the new rules.

Over the next six months, the government will perform random spot checks on real estate transactions. But once that window closes, agents will face fines, or even jail time, if they fail to comply with the regulations.

The new requirements for realtors are part of regulatory changes that Finance Minister Jim Flaherty announced in December of last year to strengthen Canada’s anti-money laundering and anti-terrorist financing regulations.

“The new regulations bring Canada’s anti-money laundering and anti-terrorist financing regime in line with the international standards set by the Financial Action Task Force, a G8 created body,” states a news release from FINTRAC.

On May 28th, 2008, MLS.ca will be introducing some new features to the web site on behalf of REALTORS® across Canada. The result will be an even better real estate resource, with more information about the properties displayed on the site.

The first change will be the introduction of interactive mapping. You’ll be able to use Microsoft Virtual Earth software on the site to determine your search area, and to determine where a property is located. Interactive mapping will make it much more convenient to search traditional neighbourhoods or a specific region.

The web site will also have a new streamlined text search. You’ll be able to input your initial search criteria without all of the details of an Advance Search. The site will still offer the detailed or Advance Search option, but also has a streamlined text version to make looking for properties even more convenient.

There will be a new look, or design. The traditional REALTOR® map is still a key part of the web site, but the new layout will make it easier to look for properties and information.

And there will be a new address - www.realtor.ca Don’t worry, you don’t have to memorize it. You’ll automatically be redirected to the new address even if you input our old one.

Unit sales in Canada for April rose the most in Newfoundland & Labrador at a 27 per cent gain over last year, followed by Saint John at 18 per cent, according to CREA.

While Home sellers flooded the markets in Toronto and Saskatoon last month, causing the number of listings to surge to a record level in Canada. Kitchener-Waterloo, St. John’s Newfoundland, and Thunder Bay actually saw a decrease in the number of homes on the market.

It appears that throughout most of Canada we are seeing a pull back in prices and real estate sales, a cool down. But not in Newfoundland. The only thing cool in Newfoundland right now is the temperature. Prices are continuing to rise. Buyers are continuing to flood the market and investors are still looking for rental properties.

In Saskatoon where prices are continuing to sky-rocket, buyers seemed leery about the idea of purchasing a new home. “70 per cent said it was not a good time to make a purchase.” In contrast to Atlantic Canada where 49 per cent were positive towards the idea of owning a new home.

CREA released it’s First Quarter Forecast 2008 earlier last week and as expected, MLS home sales are forecast to ease gradually in all provinces in 2008, but record-level activity in Saskatchewan and Newfoundland & Labrador during the first quarter will result in new annual records in these provinces.

Source: Homes Market Flooded by Sellers - Globe and Mail

Canadians are increasingly migrating to regions where new jobs are plentiful, and they must be able to move their assets with them. Households can move their furniture and their stocks and bonds, but not their real estate investments, without substantial tax consequences. Reinvestment in real property should be facilitated so that investors can reposition existing investments without punitive tax measures. The deferral will facilitate more effective management of real estate investment portfolios in recognition of the fact that Canadians are becoming more financially self-reliant in retirement.

The Canadian Real Estate Association (CREA) is recommending to the federal government to amend the Income Tax Act to promote increased reinvestment in real property. The amendment would effect a deferral of both the capital gains tax and the capital cost allowance recovery for all real property investments when an investment property is sold and the proceeds are invested in another real property within the subsequent year. Any proceeds that are eligible but not reinvested, or where such reinvestment does not meet the criteria, would be subject to capital gains tax. (Similar to the United States 1031 Exchange)

The proposal also helps make the federal government an active participant in the regeneration and intensification of urban neighborhoods. This requires properties to be turned over at a rate that is sufficient to promote regeneration.

Finance Minister Jim Flaherty has announced changes to Canada’s anti-money laundering legislation, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. The changes will have an impact on how real estate transactions are conducted in Canada. New amendments to money laundering legislation are effective on June 23, 2008.

Basically for the general public this means you will have to provide proof of identification when you sit down to purchase a property. Not really much difference from when you open a bank account, purchase a car or purchase insurance or receive a VISA. Need a Passport? Guess what….you need to show birth certificate and another form of identification. Need a marriage license…..same thing. Real Estate was lacking behind in this area. About time the government stepped up in my opinion.

For the Realtor? We have to Identify our clients. Currently, if you have identified an individual before, you do not have to do so again if you recognize the individual. Once the changes come into effect, if you have doubts about the information collected concerning an individual’s previous identification, you will have to identify that individual again.

If the parties in the transaction are each represented by a different real estate broker or sales representative, you will have to identify the individual or confirm the existence of the entity that you represent in the transaction.

If some parties in a real estate transaction are not represented by a real estate broker or sales representative while other parties are, each real estate broker or sales representative who represents a party to the transaction will have to identify or confirm the existence of the parties that are not represented.

To learn more visit FINTRAC’s website at www.fintrac.gc.ca

Although a recent report pegged St. John’s as one of the most affordable cities in the G7 nations, affordability is a growing concern. Buyers continue to face challenging market conditions, including unprecedented demand and extremely tight inventory levels.

Multiple offers are quite prevalent. It is not uncommon to see quality, new listings generate three to four offers after only a few days on the market, with most selling for more than list price. Bungalows are especially coveted.

Despite a sense of urgency in the marketplace, buyers remain quite determined. Most are willing to compromise by way of necessity, while others ante up more money to compete. Some entry-level purchasers are sitting on the fence, waiting for more product to come on stream with the Spring market and better weather.

Currently, average price in Greater St. John’s hovers at $172,000. Although the St. John’s downtown core has more affordable options, most purchasers prefer Woodlands, Cowan Heights, and Mount Pearl, where three-bedroom, resale homes start from $180,000.

Condominiums are a viable alternative, but this type of product is popular with only a small percentage of first-time buyers. St. John’s Condos can start from $100,000 for a one-bedroom unit in an old military conversion to $130,000 for a two-bedroom in an older building in the northwest end of the city. Duplex product, though limited, is also growing in demand, and more units are coming on stream.

The least expensive sales recorded to date in St. John’s include a detached home with some new upgrades that changed hands for $140,000 and an 800 sq. ft. condo apartment that sold for $95,100 in an older, but renovated, building. Both were located in the city’s east end.

With average prices forecast to experience double-digit momentum yet again this year, it is expected that the first time buyer segment will remain very active as purchasers try to buy in before prices rise further.

A surge in single-detached construction drove urban housing starts during the month of March, according to preliminary data released today
by Canada Mortgage and Housing Corporation (CMHC). March’s total housing starts surged 155 per cent, with 56 posted within the province compared to 22 a year ago. 55 of the 56 starts were within the St. John’s region versus 21 last March, an increase of 162 per cent. The bellwether single-detached housing segment climbed 188 per cent to 49 starts within St. John’s metro versus 17 new homes during the same period last year.
Provincial urban housing starts increased 18 per cent during the first quarter to 176. “After a soft month in February in terms of new home construction, March’s surge in single-detached housing starts is a clear signal that there is unmet demand for new homes within the local housing market,” said Chris Janes, Senior Market Analyst with CMHC in Newfoundland and Labrador. “Low inventory levels of resale or existing homes is causing many prospective buyers to opt for a new home because they simply cannot find what they are looking for within the resale market,” added Janes.
For Canada’s urban centres, total housing starts were up 24 per cent to 15,608 in March compared to March of 2007. Single-detached starts fell 14 per cent to 4,743, while multiple starts of 10,865 represent a notable 54 per cent increase over last year. Throughout Atlantic Canada, there were 522 urban housing starts versus 169 the previous March.