B.C.’s tight rental market has landlords asking personal questions: report

Some landlords in British are asking prospective tenants for too much personal information including credit card details, three months worth of bank statements and inquiring whether applicants were born in Canada, says the Office of the Information and Privacy Commissioner.

Acting commissioner Drew McArthur said 1.5 million people live in rental housing, representing about 30 per cent of all households in B.C., but the vacancy rate is so low across much of the province that landlords are taking advantage of the power imbalance.

“Housing is big business in B.C.: In one estimate, residential tenancy generates a greater direct impact on GDP than the mining or forestry industries,” McArthur said in a report released March 22, 2018.

Nationally, the urban centres with the lowest vacancy rates are all in British Columbia, with the province’s overall vacancy rate at 1.3 per cent, he said, adding Vancouver’s rate is 0.9 per cent. The lowest rate is in Abbotsford-Mission and Kelowna at 0.2 per cent.

McArthur said his office is investigating whether a new service complies with the Personal Information Protection Act in its collection of information about tenants from sources including social media platforms, which landlords are not authorized to search.

“In addition, I understand that some of these organizations require prospective tenants to complete behavioural questionnaires to evaluate their character,” McArthur said.

The Human Rights Code also prevents landlords from asking for information about race, religion and family status, McArthur said.

“You also cannot inspect an applicant’s current residence or ask if an applicant may become pregnant in the next 12 months,” he said.

Landlords are authorized to collect a reasonable amount of information, such as references, recent pay stubs, a letter from an employer or permission to call an employer about income, as well as age for rental properties restricted to people over 55.

McArthur said his office receives calls daily from anonymous tenants worried about the over-collection of their personal information though many don’t file complaints because they fear being blacklisted.

In one case, a caller said a landlord asked for copies of their child’s report cards, he said.

“During this investigation, I heard from tenants seeking luxury accommodation as well as basic housing. I heard from young people and from retirees, in urban and rural areas.”

One caller reported a landlord insisted on seeing his T4 slips, even though he had already verified his income by providing a letter from his employer, and another person said a landlord demanded consent to a credit check after an offer to pay one year’s rent in advance.

“A landlord is only authorized to request consent for a credit check where a tenant is not able to provide satisfactory references, or employment and income verification,” the report says. “While it is reasonable to collect a prospective tenant’s credit history in these circumstances, it will not be necessary for most tenants, and a landlord cannot require every applicant to consent to a credit check.”

The report is based on a review of 13 tenancy applications, eight involving for-profit landlords and five that pertain to non-profit organizations. It found 10 of 13 landlords collect information, that, if used, would contravene the Human Rights Code as well as the Personal Information Protection Act.

Information requested included birth date, driver’s licence number, social insurance number, federal tax assessments, whether the applicant speaks English and the name of their bank and how long they’d been a customer there.

The report makes 13 recommendations, including that landlords must state clear, specific purposes for collecting personal information.

Bank of Canada holds interest rate, underlines ‘growing’ trade uncertainty

By Andy Blatchford

THE CANADIAN PRESS

OTTAWA _ A cautious Bank of Canada kept its key interest rate on hold Wednesday as it bought itself more time to monitor mounting trade-related uncertainties out of the United States.

In sticking with its 1.25 per cent overnight target, the central bank blamed recent trade policy changes for the thickening clouds around the economic outlook.

Last week, U.S. President Donald Trump threatened to impose heavy tariffs on Canadian steel and aluminum. The announcement added to an already murky context for Canada that includes concerns over NAFTA’s renegotiation and fears over competitiveness, following corporate tax cuts south of the border.

The prospect of tariffs has created deep concerns in Canada, the No. 1 supplier of both steel and aluminum to the U.S. Ottawa has hinted at retaliatory action, as have the European Union and Mexico, in what could become an all-out trade war.

Trump has said that Canada and Mexico might be spared from his plans for a 25 per cent tariff on steel imports and 10 per cent tariff on aluminum imports if they agree to better terms for the U.S. in talks aimed at revising the North American Free Trade Agreement.

The Bank of Canada noted the widening unease around protectionism, without explicitly mentioning the tariff threat.

“Trade policy developments are an important and growing source of uncertainty for the global and Canadian outlooks,” the bank said in a statement Wednesday that accompanied its latest rate decision.

Many experts now believe the central bank will likely wait until the second half of the year before raising the rate again. Some say the next hike might not come until 2019 and at least one economist said Wednesday that, depending how things evolve, the bank could even lower the rate this year.

“If the worst-case scenario of some kind of trade war goes ahead, well, the chances of a rate cut this year are real,” Sebastien Lavoie, chief economist of Laurentian Bank Securities, said in an interview.

‘It seems to us that it’s very unlikely the Bank of Canada will be able to raise rates in the first half of this year. If it happens, it will have to be in the second half of this year and that may not even happen.”

Josh Nye, an economist with RBC Economics Research, said it’s unlikely metals tariffs on their own would drastically change the central bank’s thinking about whether it stays on a rate-hiking path.

“But if tit-for-tat measures escalate into a full-blown trade war _ and to be clear, we aren’t nearly there yet _ the (Bank of Canada) would have to rethink their tightening bias,” Nye wrote in note to clients.

Experts said the Bank of Canada’s statement also raises other arguments to help support a wait-and-see approach with the interest rate.

The statement pointed to weaker-than-expected growth in the fourth quarter, largely due to higher imports, and said that while wage growth had improved, it still remained below where many expect it should be in an economy with no labour-market slack.

The bank also stressed the need for more time to assess the impacts of new housing-market policies, including recent changes to mortgage rules. It said a surge of strong numbers in late 2017 was followed by softer figures early this year, suggesting “some pulling forward of demand ahead of new mortgage guidelines and other policy measures.”

Growth in household borrowing has also slowed for three-straight months, the statement said.

The bank also noted some encouraging economic developments.

It said global growth continued to be solid and broad-based, the economy was running close to its potential and stronger business investment suggested economic capacity could grow even further without lifting the inflation rate. Looking at the U.S., the bank predicted fresh government spending and tax reductions to increase growth in 2018 and 2019.

The bank also reiterated that more interest rate hikes will likely be necessary over time, but that the governing council will remain cautious when considering future decisions. The council will continue to be guided by incoming data, such as the economy’s sensitivity to higher rates, the evolution of economic capacity and changes to wage growth and inflation, it said.

Ahead of the announcement, governor Stephen Poloz was widely expected to hold off moving the rate because of weaker economic numbers in recent weeks and the expanding trade uncertainty.

Statistics Canada released figures earlier Wednesday suggesting the country’s merchandise trade deficit narrowed in January, though economists noted it was driven by a plunge in imports.

The deficit was $1.9 billion compared with a deficit of $3.1 billion in December. Imports totalled $47.7 billion, down 4.3 per cent from a record level in December, while exports fell 2.1 per cent in January to $45.8 billion.

Poloz has introduced three rate hikes since last summer, including an increase in January. The moves came in response to an impressive economic run for Canada that began in late 2016.

The central bank’s next rate announcement is scheduled for April 18, when it will also publish its updated economic projections. The bank said the impacts on inflation and growth from commitments in last month’s federal budget would be incorporated into its April projections.

Federal analysis outlines how extra EI benefit program topped $1.92 billion

A Liberal program to give extra employment insurance benefits to workers in regions hit hard by a drop in natural resource prices will end up costing almost $2 billion _ more than double original estimates.

The government budgeted $827.4 million for the extra payments.

The latest department estimates show the measure will end up costing $1.92 billion, largely the result of changes that allowed more workers to receive extra payments and unemployment rates that stayed higher for longer than the government anticipated.

Further details will come out later this year when the government releases its annual report on the EI system.

The extended benefit program rolled out in 2016 for workers in 12 regions that had seen a sharp and sustained drop in employment as a result of a downturn in energy prices.

Most workers were given an extra five weeks of benefits, while long-tenured workers received an extra 20 weeks.

By July, weekly data revealed that payments had exceeded $1.3 billion and department officials warned Social Development Minister Jean-Yves Duclos in a preliminary assessment that costs were likely to top $1.9 billion.

The assessment obtained by The Canadian Press under the Access to Information Act says costs went up due to the addition of three regions to the program and making payments retroactive to January 2015, which gave workers who had already exhausted benefits an extra couple of weeks of payments.

This was particularly true for long-tenured workers. The department says these workers account for $1.7 billion in payments, despite being only 28 per cent of all recipients of the extra benefits.

The assessment noted about one-quarter of EI claimants usually use up benefits before going back to work, but almost half of workers exhausted their benefits under the Liberal program.

Employment and Social Development Canada said the unemployment rates in those regions also stayed higher for longer than officials expected, increasing “the number of claims and their likelihood of taking advantage of the EI extended benefits.”

The combined result of policy decisions and economic conditions was that 412,000 people qualified for extra benefits, instead of the 235,000 federal officials originally estimated would use the program.

“They failed to estimate just how hard it was going to be for people to get work,” said Frances Woolley, an economics professor at Carleton University in Ottawa.

“I’m kind of surprised that mistake was made.”

Parisa Mahboubi, a senior policy analyst from the C.D. Howe Institute, said extended high unemployment rates would have made it difficult for workers to find jobs, leaving them to stay on the program longer than anticipated.

She said the extended benefits could have also reduced incentives for workers to find new employment.

Woolley said the policy itself appears to have been helpful for workers in need, even though it went well over budget.

Bank of Canada hikes interest rate to 1.25%, cites strong economic data

By Andy Blatchford

THE CANADIAN PRESS

OTTAWA _ The economy’s impressive run prompted the Bank of Canada to raise its trend-setting interest rate Wednesday for the third time since last summer but looking ahead it warned of growing uncertainties about NAFTA.

The central bank pointed to unexpectedly solid economic numbers as key drivers behind its decision to hike the rate to 1.25 per cent, up from one per cent. The increase followed hikes in July and September.

While the central bank signalled more rate increases are likely over time, it noted the unknowns surrounding the future of the North American Free Trade Agreement and the potential negatives for Canada were casting a widening shadow over its outlook.

The bank said ‘some continued monetary policy accommodation will likely be needed” to keep the economy operating close to its full potential.

Governing council, it added, would remain cautious when considering future hikes by assessing incoming data such as the economy’s sensitivity to the higher borrowing rates.

For the move Wednesday, the bank couldn’t ignore the 2017 data, even as it acknowledged the risks about NAFTA’s renegotiation.

“Recent data have been strong, inflation is close to target, and the economy is operating roughly at capacity,” the bank said in a statement.

“Consumption and residential investment have been stronger than anticipated, reflecting strong employment growth. Business investment has been increasing at a solid pace, and investment intentions remain positive.”

Moving forward, the bank predicted household spending and investment to gradually contribute less to economic growth, given the higher interest rates and stricter mortgage rules. It predicted Canada’s high levels of household debt would amplify the effects of higher interest rates on consumption.

The rate increase by the Bank of Canada is expected to prompt Canada’s large banks to raise their prime lending rates, a move that will drive up the cost of variable-rate mortgages and other variable-interest rate loans.

Exports have been weaker than anticipated, but are still expected to contribute a larger share of Canada’s growth, the bank said. It also noted that government infrastructure spending has helped lift economic activity.

The Bank of Canada said the unknowns of the NAFTA’s renegotiation are continuing to weigh on its forecast and have created a drag on investment and exports.

“Today’s rate hike was a rear-view mirror move, but the Bank of Canada hints that the view out the front window isn’t quite as sunny,” CIBC chief economist Avery Shenfeld wrote in a research note to clients after the rate announcement.

“We share the Bank of Canada’s view that higher rates will be needed over time. But perhaps not as fast and furious as the market was starting to think. The bank’s statement put NAFTA uncertainties right up front.”

The Bank of Canada warned that lower corporate taxes in the U.S. could encourage firms to redirect some of their business investments south of the border. On the other hand, it predicted that Canada will see a small benefit from the recent U.S. tax changes thanks to increased demand.

The bank also released new economic projections Wednesday in its latest monetary policy report.

For 2017, it’s now predicting three per cent growth, as measured by real gross domestic product, compared with its 3.1 per cent prediction in October.

The bank slightly increased its predictions for 2018, up to 2.2 per cent from 2.1 per cent. It expects the economy to expand by 1.6 per cent in 2019, up from its previous call of 1.5 per cent.

The fourth quarter of 2017 and the first quarter of 2018 are each expected to see annualized growth of 2.5 per cent.

Governor Stephen Poloz raised rates in July and September in response to a surprisingly strong economic run that began in late 2016. The hikes took back the two rate cuts he introduced in 2015 to help cushion, and stimulate, the economy from the collapse in oil prices.

Up until a couple of weeks ago, many forecasters still had doubts that Poloz would raise the rate Wednesday. However, two strong reports _ the December jobs data and the bank’s business outlook survey led many experts to change their calls.

Heading into the decision Wednesday, Scotiabank Economics forecasted three hikes totalling 75 basis points throughout 2018 and three more in 2019. TD Economics expected a gradual pace of tightening over the next two years of about 25 basis points every six months.

B.C. sets minimum age of 19 to consume marijuana, plans mix of retail sales

British Columbia has become the latest province to lay out its plan for regulating recreational marijuana, announcing that pot sales will be allowed through both public and private stores to buyers who are at least 19 years old.

B.C. is following other provinces in keeping the age of consumption, purchase and possession of marijuana consistent with alcohol and tobacco laws, which Solicitor General Mike Farnworth said Tuesday will more effectively protect young people and eliminate the black market.

“We know that the largest consumers of cannabis are young people,” Farnworth said when asked about evidence from health experts on the danger of cannabis on the developing brains of people older than 19.

“If you set it too high, for example at 25, you’re not going to get rid of the black market because they’re going to go and get it elsewhere.”

The federal government intends to legalize non-medical cannabis in July. B.C.’s announcement follows a public consultation period that received submissions from nearly 50,000 residents and 141 local and Indigenous governments.

The B.C. Liberals pressed the government to act quickly on the questions that remain about how pot will be sold and where.

“This should not be seen as a profit centre for government and any extra revenue should be redirected to enforcement and addiction services,” Liberal legislature member Mike Morris said in a statement,

Farnworth released few details about retail sales, beyond saying both public and private vendors will be allowed. He was unable to comment on online sales or whether current marijuana dispensaries would be able to apply for licences to continue operating after legalization.

The government expects to release details of its retail model towards the end January or the beginning of February, he said.

Work also remains to be done on whether people will be allowed to grow plants at home for personal use, a practice that has been banned by Manitoba over concerns about enforcement. Manitoba also released its plans for overseeing marijuana sales on Tuesday.

B.C.’s public consultation produced a report that was released alongside its announcement Tuesday. It revealed polarized views on drug-impaired driving, showing that some want zero tolerance while others said cannabis doesn’t impact the ability to drive.

The report also says there was some confusion among consultation participants on the distribution and retails sales of marijuana, but many opposed Ontario’s model. Ontario intends to sell the drug in up to 150 stores run by the Liquor Control Board of Ontario and ban consumption in public spaces or workplaces.

“Most of these individuals preferred to see the existing dispensaries and their supply chain legitimized, licensed and regulated,” the report says.

It also says two points emerged on public consumption: People don’t want to be subjected to second-hand smoke in public places and they want cannabis consumption limited to indoor use at a private residence or a designated space.

 

47% decrease in mortgage loan insurance business ‘new normal’: CMHC

Canada’s national housing agency said Wednesday that the 47 per cent decline in the country’s insured mortgage market year-over-year in the third quarter is the “new normal level.”

The Canada Mortgage and Housing Corp. said in its latest financial report that it provided mortgage loan insurance to 67,915 units for the three-month period ended Sept. 30 compared to 127,991 units during the same period a year ago.

Steve Mennill, CMHC’s senior vice-president of insurance, said decreased volumes have been steady throughout the year as a result of the new mortgage rules announced by the federal government in the fourth quarter of 2016.

The rules require all home buyers with less than a 20 per cent down payment to undergo a stress test to ensure the borrower can still service their loan should interest rates rise, or their personal finances fall. This cut into the purchasing power of some first-time homebuyers.

“We think we’ve found the new kind of level following those changes that were made close to a year ago,” Mennill said during a conference call Wednesday, November 29, 2017.

“So we’re fairly confident that the level of volume that we’re seeing now is the new normal level.”

CMHC said the 47 per cent drop in total insured volumes in the third quarter was primarily due to decreases in transactional homeowner and portfolio volumes. The agency reported that transactional homeowner volumes decreased by 13,966 units, or 30 per cent, due to lower purchase and refinance volumes, while portfolio volumes decreased by 50,388 units, or 90 per cent, mainly due to the market adjusting to new pricing as a result of the increased capital requirements.

Partially offsetting those decreases was an increase in multi-unit residential volumes of 4,278 units, or 17 per cent, primarily due to an increase in multi-unit residential refinance transactions mainly resulting from a continued low interest rate environment.

In the first three quarters of 2017, total insured mortgage volumes were 211,891 compared to 345,716 in the third quarter last year.

As a result of the lower volumes, CMHC said its total insurance-in-force decreased to $484 billion as of Sept. 30 of this year, a decrease of $28 billion from the end of 2016.

Mennill said during the conference call that lower mortgage loan volumes have impacted staffing requirements within CMHC’s homeowner underwriting group but that increased volumes in multi-unit residential have offset these impacts.

Charlie MacArthur, CMHC’s senior vice-president of regional operations and assisted housing, added that the National Housing Strategy will also require homeowner underwriters at the agency to work in assisted housing.

“There will be similar skills required in the assisted housing side of the business as that business grows with the announcement of the National Housing Strategy,” he said.

Prime Minister Justin Trudeau unveiled the $40-billion plan on Nov. 22, which includes a promise to introduce legislation to make housing a fundamental right. He also promised a new, portable housing benefit for low-income households, and to prioritize funding for the most vulnerable populations like women fleeing domestic violence.

CMHC said that Budget 2017 proposes new federal investments in excess of $11.2 billion over 11 years, as well as preservation of funding for social housing and new low-cost loans to support affordable housing under the new plan. The agency said these figures will build on additional federal funding of $5 billion made available through Budget 2016, a portion of which is reflected in CMHC’s 2017 expenditures for housing programs. CMHC said it will deliver $9.1 billion of this incremental federal funding investment.

In its quarterly report the agency also said that it has seen an improvement in the quality of its mortgage loan insurance portfolio compared to a year ago.

The agency said its overall arrears rate was 0.30 per cent in the third quarter, which is down from 0.32 per cent a year ago.

 

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