Our world is becoming increasingly globalised. As a result, traditional employment for many people has become less reliable and more people are looking to other countries for opportunities.

A 2010 report by the Asia Pacific Foundation of Canada (the most recent date for which data is available) found there were 2.8 million Canadians living abroad, a higher population than exists in six of the country’s provinces. With so many Canadians deciding to live abroad we decided to look at some of the differences in real estate markets and processes in the world’s biggest markets.

Buying properties in different countries has a number of benefits. If you have the capital, it can be a good way to diversify and protect your investments. Richard Silver says it’s both:

I think people who are high-net-worth like to have properties all over the world for a couple of reasons. Both for investment, but also to diversify their portfolio. I think they’re often nervous about having all of their property and investments in one country.

Down South

Most Canadians who leave the country live in the United States. Luckily for anyone looking to buy property while living there, the processes are remarkably similar.

Canadians base their mortgages on a 25-30 year amortization rate, with the contract renegotiation every five years, adds Silver. Whereas in the United States, the mortgage lasts for 30 years without a renegotiation.

There’s also a thing in the States where you can deduct your mortgage interest payments but you cannot in Canada.

Applying for a mortgage as a Canadian will likely be more tedious. To apply for and secure a mortgage in the U.S. can take up to 45 days. Still, buying property south of the border may be a good investment. Particularly when you look at data released by BMO last year showing Canadian homes were 41 percent more expensive than in the U.S.

Over the Pond

For anyone thinking about hopping the pond to the United Kingdom, it’s advised to do your homework as the process there is quite different.

As Silver points out, one of the biggest differences is that they don’t use a multiple listings system in the U.K.

If you’re working with an agent in the United States and Canada, they can basically show you a whole myriad of properties that are listed with Sotheby’s, they’re listed with Royal Lepage, they’re listed with Bosley. They’re listed with all different companies. But then in the UK, if you see a sign you have to go to that agent. And if you want to buy that property you have to buy it through the agent.

Sherille Layton is originally from England, so she’s intimately aware of the differences between the two countries. Layton says on a recent trip to London, she and Richard gave some presentations on Toronto and the market there and the people at the London branch were impressed.

Layton calls the U.K. system “archaic” as she talks about the differences.

It’s not as organized at all. Because the difference is, to do real estate there you don’t pass any exams, you can just come out of school at 16, walk into an estate agency and get a job and then start showing houses.

The buying process is entirely different as well according to Layton. In Canada, a client usually needs to sign a ‘buyer representation agreement.’ When they find a house they want to put an offer on, they have to sign an ‘agreement of purchase and sale,’ which gives them a finite closing date.

In England, an agreement can be made verbally, which makes things much less clear.

So if you put an offer in and they accept it, one month later they can turn around and say someone else came and they’re giving 5 thousand pounds more. You just never know when you’re going to close until you close. It’s crazy.

Richard Silver agrees with Sherille and adds how much more comfortable the process is in Canada thanks to formal agreements.

[In Canada], once you’ve signed an agreement a contract is a contract. But in the UK they have what they call ‘Gazumping’.

Gazumping is when the seller raises the contracted price of a property after having informally accepted a lower offer from a potential buyer.

Commission structure for agents is also very different. According to Layton, Agents in Britain think our commission structure is outrageous. The commission in Canada is often five percent, split between the selling agent and buying agent. In the UK, a seller will typically pay their agent 1 to 1.5 percent. Another difference, according to Layton, is that most salespeople are paid by salary.

Realtors in Canada are mostly on a hundred percent commission. They’re “independent contractors”.

China

China recently relaxed restrictions on foreigners buying property in the country. The move enables “qualified foreign institutional and individual investors to buy more properties on the Chinese mainland,” according to ChinaDaily.com.

Previously, foreigners were restricted to buying one property in mainland China and needed to have worked or studied in the country for at least a year.

But as Richard Silver points out, no one actually owns property in the country.

The problem with China is the government owns the property, so you only get a leasehold. You don’t actually buy the property. So even the property owners, as they call them, are really either a 50-year leaseholder or a 70-year leaseholder.

After the lease ends the property reverts back to government ownership.

In larger cities like Beijing and Shanghai, there are also limits on the number of properties an individual can buy. These were put in place to prevent wild speculation after an incident in 2009. A high-end property was launched in central Shanghai, bringing a wave of foreign investors. According to a report by Xinhua, one extended family purchased 48 units at one time. Properties are most sought after in gateway cities like Beijing and Shanghai, but these limits will put the brakes on speculation.

These new rules don’t mean it will necessarily be easier to buy property, though. The usual process is to pay for a property in full. Mortgages can be obtained by foreigners from Chinese banks, but the documentation process is more arduous. In order for a foreign buyer to qualify, you must:

• Have worked or studied in the city you wish to buy in for at least one year.
• Must have a Chinese sponsor who will guarantee you earn enough to repay the loan. Usually an employer.
• Provide many documents for the approval process.

That said while buying property in China might be possible as a foreigner, in might not be a wise investment. As Silver points out, many people in China are parking their money elsewhere in the world.

You have to remember, China’s a communist country. It’s totally autocratic, So that’s one of the reasons people would move their money out of China. Because they’re nervous that the government can come in and just automatically change the rules.

Buying property in different countries can be a very effective way to diversify your investments. It also leaves you free to travel and can offer you extra income. But whether it’s a country like the United States–where the system is relatively similar to Canada–or a country like Britain or China–where the system can be much different–, it’s important to know the facts. 

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Canada and the United Kingdom have a long and storied history with one another. As Canada transitioned from British colony to a sovereign country our relationship has evolved. While we still share the same monarch, our two countries are more closely related thanks to our intimate trade deals and cultural ties.

It was in that spirit that the Canada-United Kingdom Chamber of Commerce was founded in the early 1920’s. Now, amidst global changes, Torontoism joined up with the Chamber in hopes of fostering closer ties and helping anyone who may be making the transition between countries.

Sherille Layton is a member of Torontoism and was born in England. She’s played a big part in the team’s decision to join the Chamber.

We’re just really trying to help a lot of the companies that do a lot of trade between Canada and the UK. Help them when they’ve got their employees transferring, whether it be to the UK or to here. Help them with their real estate needs.

A Little History

The Chamber is a bilateral networking organization that helps representatives of companies in the two countries meet and share ideas. Nigel Bacon, CEO of the Chambers, says Chambers of Commerce generally help in the networking, introduction and referral space, and historically they’ve represented smaller businesses and provided advocacy to the government.

The Chamber, currently in its 96th year, was founded in London in 1921. Since 1998 it’s been housed inside the High Commission of Canada. Currently, they boast 320 members, ranging from multinational corporations to individual businesspeople. Top tier patrons are referred to as “charter members” and they’re given the opportunity to put someone on the board of directors. The board meets five times a year in addition to an annual general meeting.

Functions and Luncheons

The primary function of the Chamber is for networking and referrals, says Bacon. This is achieved by hosting event forums for members, about 40 per year.

What we say to prospective members is we offer [business-to-business] opportunity to them. To help get their brand out, particularly here in the UK.

Layton says the topics at the events can range widely.

It’s all various. It’s all networking. They cover different subjects over networking cocktail and lunch receptions.

High profile speakers have included Stephen Poloz, Governor of the Bank of Canada, former Canadian Prime Minister Stephen Harper, and former federal Minister of Finance, Jim Flaherty.

A Reason To Join

Bacon explains that people join the Chamber for any number of reasons.

We’re dealing with global talent. They may be Canadian businesses but their representatives may not be Canadian at all. They want to get involved. They want to meet people and find help getting settled.

Richard Silver sees the Chamber as an opportunity to help people who may be transitioning from one country to another, especially after Britain’s recent vote to leave the European Union.

We just wanted to make sure we had a foot in the door in case there were people in the UK who wanted information on Canada or were thinking of moving. And there has been quite a move.

Bacon doesn’t believe Brexit will impact the Chamber’s role too substantially.

We’re not a Canada-Europe Chamber, we’re a Canada-UK Chamber. So whatever that relationship is in the future, we’re here for that relationship. That business relationship. So, if our working environment is changing just like everybody else’s is, then we have to adapt.

For her part, Layton points out there has been a lot of activity between the two countries lately. A lot of immigration lawyers have joined the Chamber, and that’s because the uncertainty is making Canada look like an increasingly stable option.

Strengthening Ties

The ties between the two countries are very strong. But it seems as though they’re growing even closer of late. Bacon says Canada’s mentioned every single day in the news in some way.

I’ve been involved with the Chamber for 12 years and I think, certainly in the last five years, I’ve seen headlines around Canada every day.

It seems as though Britain can’t get enough of Canada lately.

We have a Canadian running our Central Bank, we have a Canadian running our lawn tennis association, we have somebody running one of our postal services. There are examples everywhere of Canadians doing very well in the UK.

And joining the Canada-United Kingdom Chamber of Commerce looks to be a good opportunity for Torontoism.

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What do you call a cultured American? A Canadian.

All right, I know. It’s easy to make fun our neighbours to the south – especially now, in this era of fake news, loud hair, and belligerent patriotism – so perhaps we should take some time to exercise our somewhat flabby appreciation muscles by acknowledging some of the truly great ideas that have come to us from the U.S.

One really quite good idea hopped the border back in 1985 when Habitat for Humanity built its first Canadian home in Winkler Manitoba. Founded by Americans Linda and Millard Fuller in 1976, Habitat for Humanity’s mission was to provide safe yet affordable homes for low-income families.

With a strong foundation in Christian ministry, the organization enlisted teams of volunteers to build its houses, which were then mortgaged to selected families at no interest or profit. Now, 100 different countries across the world play host to their own local Habitat affiliates – 56 of which can be found in Canada. Recently, I chatted with Danielle Mandell, the VP of People for Habitat for Humanity GTA, about her organization and the people it works with.

Hainford Home

As VP I oversee Habitat for Humanity GTA’s Human Resources; the more than 8,000 volunteers who work with us every year on our build sites, in our Habitat ReStores across the GTA and in our offices; and the families we partner with to build homes.

That word ‘partner’ is an important one. A central tenant of the Habitat philosophy is the belief that the people they house are equals, deserving of respectful assistance rather than charitable pity. Families who apply for a Habitat home must be willing to put in 500 hours of work for the organization – often in the construction of their own future homes.

“This is absolutely one of the most important features of the Habitat model” Mandell assured me ”The 500 hours of sweat equity a family puts into building their home or the homes of other families is their down payment on the home.”

This way, continues Mandell, families don’t lose their dignity and pride. It strengthens the commitment to Habitat’s model. 

Commitment isn’t all that’s required to get into a Habitat GTA home. In order to qualify, a family must also consist of Canadian citizens or permanent residents, demonstrate a clear lack of safe and affordable housing, as well as an ability to pay off their Habitat mortgage (apparently, defaults are extremely rare).

“We partner with a range of families, explains Mandell. “They all have different stories, but many have in common the fact that they have experienced hardship and have lived in very difficult unsafe, overcrowded living conditions.”

The impact of owning their own home is transformational for these families.

Every $1 spent on building Habitat homes generates $4 of social benefit to the community. This comes in the form of improved family health, equity, increased property tax revenue for municipalities and reduced costs for rent supplements.

Families pay Habitat a no-interest mortgage over 20 years that is capped at 30 per cent of a family’s household income, explains Mandell. This helps to break what is often a generational cycle of poverty because it enables families to build equity over time. 

It also has tremendous physical and mental health benefits for the families, who report that they see significant improvements in health and school performance in their children, due to an increased sense of security, well-being and safety at home.

Consider the Botchways

I asked Mandell about her clients and she told me about the Botchway family. Jacqueline Botchway and her husband Kojo met after they’ve immigrated to Canada from Gana in 1992 and started a family.

For years, they struggled to make ends meet as they raised their four children. Unable to afford an adequate sized rental, they were forced to live in overcrowded conditions. So overcrowded, that Kojo and Jacquie had to share a bedroom with their daughter.

The Botchways were living in a very dangerous neighbourhood at the time, where there were at least two murders in the broad daylight. Jacqueline was very worried about the family and she was trying to find a way to get them out of that neighbourhood, so she applied for Habitat homeownership.

The Botchways have been living in their Habitat home in Brampton since May 2016. Jacqueline says the main difference it has made for their family is that she and her children are far less stressed. They have their own rooms and a peaceful place to do homework and to live without fear of being hurt or worse.

When I asked Mandell for a story about one of Habitat’s volunteers, she told me about Miah Kortekaas, a civil engineering student at Queen’s University who spent 3 days a week volunteering with Habitat in the summer of 2016.

She was respected and trusted to work independently to do estimations and invoicing and made to feel that she was part of the staff team at Habitat. Miah tells us that working with Habitat last summer has changed her plans for her future. She no longer wants to be a civil engineer who sits behind a desk doing calculations all day. She wants to be in a position where she’s managing and dealing with people, problem-solving, rather than just dealing with numbers all day.

Hainford Home Kitchen

Do You Want to Help?

Although they’re best known for building houses (now utilizing energy efficient building techniques and appliances), Habitat volunteers also take part in small-scale ‘Deconstruction’ projects; removing unwanted items such as furniture, appliances, and bathroom and kitchen fixtures at no charge to divert waste and help stock Habitat’s retail outlets – of which there are 9 in the GTA. Called ReStores, these hybrids of Value Village and Canadian Tire sell re-used, remaindered, and salvaged furniture, fixtures, and building supplies at greatly reduced prices to help fund Habitat’s endeavours (while also offering the rest of us the chance for a bargain DIY project or two).

For anyone out there hoping to fill up the requisite 40 hours of community service for high school, Habitat does indeed welcome both the youthful and the non-expert. One solitary person with no building experience can help on a building site, while options also exist for student groups and corporate team-building events. There are even the annual female-only Women Build events – now in their eighth year.

All different types of people volunteer with Habitat GTA. Former professional trades people, retirees, students and everyone in between. It’s a really rewarding volunteer experience to help build a home for a family and our mission keeps people engaged and wanting to do more. Having said that, we always need more volunteers, as we continue to build more homes for families in need of affordable housing.

If you’re feeling adventurous, there are always Habitat for Humanity’s Global Village projects, which sends teams of volunteers to building sites all over the world. When I last checked, Canadian Habitat expeditions were collecting volunteers to go to over 20 different locations around the world, including Malawi, China, Portugal, and Hawaii.

Why not grab a hammer and join in?

In 2012, as TREB president, I got to participate in many projects. One of the most memorable ones was by far Habitat for Humanity.

Getting dirty is part of any job and no one should be afraid of it. It’s a wonderful experience to see something grow under your hands. Together with REALTORS Care Foundation, TREB REALTOR® Members, local politicians and volunteers (closes to 100 people!) built a new home for the Matin family. They would in return give 500 hours of volunteer work to Habitat for Humanity.

I encourage everyone to ask if there is anything you can do to bring others joy and happiness, and then go out and do it! Even if you can only help affect the life of one, it will be worth it!

JN00ML

I joined an interesting panel discussion at Banff Western Connection 2017. The debate question was are baby boomers salesmen pushed out? Here’s my ‘against’ argument.

I am a boomer, senior citizen, and I have been selling property since before my colleague Amie was born!

In my business life, I have been involved in technology and social media. They are major parts of my business. Constant change is also part of our business. The question is, whether you are engaging in the change or running from it.

The cohort you were born in has nothing to do with your engagement.

We need each other. Millennials need baby boomers and vice versa. We have the experience and skill and, hopefully, have developed “patience”. We compliment each other.

I Am Too Old to Change

Is it real or fear of the unknown? Is it an easy excuse that I can use for not succeeding? Agents don’t age they just grow LIST-less.

Entrepreneurial agents continue to innovate, looking for new opportunities. Millennials in your office or on your team can provide access to a younger marketplace. Use their skills.

My tips to stay on top regardless of age:

• Do what you do best and what you don’t…OUTSOURCE!

• Bring in millennials and get to know them. Learn what drives them to buy or sell.

• Develop a Team approach: If you know your strengths you can fill service gaps.

• Develop a strong niche to set yourself apart.

• Decide that if the pie is getting smaller, you need a bigger piece.

• Expand your activities if your client base is dwindling.

• Always be relevant and ENGAGED in life at any time.

• Choose to engage: it is the choice that we make at any age or any stage. The cohort is not the issue!

MANSION GLOBAL QUOTED JIM BURTNICK IN ONE OF THEIR RECENT ARTICLES ABOUT BUYING A PROPERTY IN TORONTO.

Originally published on February 18, 2017. By Ariel Ramchandani

Toronto, a diverse and cosmopolitan city, is popular with buyers from all over the world.

“Toronto is known as the most multilingual and multicultural city [in Canada],” said Jim Burtnick, of the Torontoism team of Sotheby’s International Realty. “There are six Chinatowns and everybody and anybody coming here will feel pretty absorbed into the community.”

“Toronto is Canada’s largest city, with a well-deserved reputation for a high quality of living, low crime, generally favorable weather, vibrant arts and cultural institutions and a multitude of ethnically-diverse neighborhoods,” said Paul Johnston, a Toronto broker with Right at Home Realty.

The city has many perks to offer an international audience, according to Mr. Burtnick.

A lot of people are coming here for the stability of the banking system and for the education. Luxury real estate is taking off here and international high-net-worth individuals have it on their radar as a safe, stable, welcoming country in a world that is much more volatile.

International interest in Canada as a whole is so high that the country’s other major international city, Vancouver, cracked down on foreign buyers by imposing a 15 per cent tax on them last year. 

Here’s How to Buy

Mr. Burtnick describes the process of a foreigner buying in Toronto as being “pretty straightforward.”

You don’t have to be a citizen here but you have to have your money here, and it is easily transferable in today’s global economy,

Mr. Burtnick said. Funds should be available in North America for when you are ready to make a purchase. (Note: Many Canadian banks have branches in the U.S.)

Once you choose a home, you can expect to pay a 10% deposit. Deposits are generally staggered, usually over the course of 18 to 24 months (for example 5% on signing a deal, 5% in 60 days, 5% in 180 days, 5% in 365 days, and so on), Mr. Burtnick said.

These deposits are held “in trust” and are guaranteed 100% refundable should a project not proceed.

If you need financing, make sure you are already pre-approved by a bank that has branch locations in Canada. “For properties valued at over $1 million Canadian dollars, domestic purchasers are required to have at least 20% equity in the property,” said Mr. Johnston. “ A foreign purchaser will usually [need] 35% equity.”

He cautions that lenders are a bit more conservative in Canada. “Canadian banks have historically been much more cautious lenders than our American counterparts, and the federal government has maintained oversight and instituted minimum lending standards to reduce the risk of correction across Canada,” Mr. Johnston said.

Tax Talk

Be prepared to pay the land transfer tax, which ranges depending on the purchase price:

“Land transfer tax is punishing, as in Toronto we are taxed twice: provincially and municipally,” Mr. Johnston said.

In Toronto, the tax is paid to the city and to the province of Ontario, on closing. The Toronto Real Estate Board provides a calculator for assessing your land transfer tax.

There is also a 1% annual tax based on 1% of the value of the property. If you are selling, there is a withholding tax paid on closing, according to Mr. Burtnick.

If you are planning on renting your property out, there is a withholding tax on rental earnings. “That withholding is generally 25%, although it can be minimized or recouped depending on an individual’s specific tax position,” said Mr. Johnston.

Parting Advice

Mr. Burtnick stressed that unlike other countries, like England, where buyers are often leasing the land from the government, in Canada, “you own your property outright.” The agreement of purchase is a binding contract.

Both brokers stress the importance of working with a professional. “As with any transaction, surrounding yourself with the right team is essential when buying real estate in Toronto,” said Mr. Johnston. “In addition to tax advice, the expertise of a qualified real estate lawyer is very important, and engaging the services of an agent who is actively engaged in the market—and the type of property you are seeking out —will put you ahead of the game.”
 

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Mansion Global quoted Richard Silver in one of their recent articles about Toronto’s luxury housing market. Here are a few of the most important points from the article. And you can find the full version here. 

By Becky Strum. Originally posted on Mansion Global, February 15, 2017

Toronto’s housing market has been experiencing a strong price growth over the last few years, thanks to tight inventory, population growth and low interest rate. According to TREB, Toronto saw the strongest sales increase of any other Canadian city in 2016. And while the average price was 20 per cent higher in December 2016 than the year before, the luxury market experienced a 32 per cent increase in prices. 

“We have a lack of inventory, and like a lot of cities, like New York and Chicago, there’s only so much space for new developments,” Richard said. “There are a lot more people coming into the market than there are people leaving the market.”

What neighbourhoods are considered to be Toronto’s luxury market?  

Well, there C02, also known as Toronto’s “posh” district, located north of Queen’s Park and the beautiful 19th-century building housing Toronto’s legislative assembly, and includes Yorkville. Then there is the Annex, Rosedale and Moore Park. And outside the city centre, you have

the C12 – the most expensive district in the Greater Toronto Area, with an average sales price of $2.5 million, according to TREB. It includes posh neighborhoods like Lawrence Park, Windfields and a collection of estate-lined blocks called the Bridle Path, residents of which have included late singer Prince and former newspaper mogul Conrad Black. The neighborhood was also used to film the home of “Mean Girls” queen bee Regina George. 

“In that area there are massive houses selling for huge prices. That seems to be very popular for those who want an acre or two-acre estates,” said Richard.

This is the district with the fastest growing prices. The average sale price has increased by 31 per cent since 2014, and the median sales price has jumped by 40 per cent, according to TREB.

Local buyers are fueling the growth 

Taimur Khan, a senior analyst at Knight Frank says that “local buyers have fueled most of the growth thus far, though foreign investors have played a role at the top of the market—particularly those taking advantage of the weaker Canadian dollar against the U.S. dollar and dollar-backed currencies.”

In 2016, 55 per cent of sales to non-resident foreign buyers in the GTA, including suburbs, were sales of a primary residence for a family member. A lot of parents from China or Saudi Arabia for example, invested in properties for their kids who attend universities in the GTA, or bought them as second homes for themselves.

However, the Mansion Global writes that “the significance of foreign buyers in Toronto is much more limited than in fellow cosmopolitan, luxury hubs like New York or London, experts said. Foreigners accounted for only 5% of the city’s home buyers in 2016, with the average home costing them just under $1 million, according to TREB.”

When Vancouver’s Foreigners’ Tax was implemented at the end of 2016, some suggested it will bring more foreign investors to Toronto. TREB says there is no evidence to support these suggestions, but it’s actually local buyers who have driven Toronto’s strong price growth, thank’s to city’s strong economy, low levels of unemployment and low interest rates.

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