B.C. Housing sues condo buyers
Investors allegedly lied to buy homes at below-market rates
B.C. Housing is suing 13 people who are accused of lying in order to purchase taxpayer subsidized, below-market rate condos in Victoria, raising fears that similar fraudulent behaviour could be used to benefit from income-based housing programs.
The 135-unit Vivid condominium in Victoria was built using a $53-million low-interest loan from the B.C. government. The units would sell at below-market rates to middle-income British Columbians with a household income of less than $150,000 per year.
But some buyers were not middle income and turned out to be real estate investors with multiple properties.
One of the purchasers was a Victoria real estate agent, Janet Yu of Sutton Group West Coast Realty. Court documents allege she purchased a Vivid unit in 2018 for $451,720 and then made more than $52,000 commission on 11 other units she helped sell to buyers who also shouldn't have qualified for the program.
“Nearly all the purchasers for whom the defendant represented as a real estate agent have also failed to comply with the terms of the affordable home ownership covenant,” the notice of civil claim read.
Yu is accused of giving clients incorrect advice regarding their obligation to purchase agreements, according to the civil suit.
Yu did not live in the condo as her primary residence and she owns four other properties, the claim states. The allegations have not been proven in court. Postmedia reached out to Yu for comment, but did not hear back.
B.C.'s Housing Minister Ravi Kahlon said “it's outrageous that people — investors — would take advantage of housing that's being made available to people who are struggling to find housing in our community.”
Kahlon said since the province started its investigation in 2021, more safeguards have been put in place to prevent people from accessing below-market housing programs despite being above the income threshold.
For example, the potential purchaser must be a B.C. resident and they must not own other property.
Five of the owners have returned the condos to the province and five others are being pursued in court, Kahlon said.
“These are private investors who are accused of abusing the system,” he said.
The Housing Ministry said the project was initiated in 2017 by the previous B.C. Liberal government under a program called the Community Partnership Initiative. Potential homebuyers were vetted at the time of purchase by the developer, Chard Development Ltd., and an independent third party appointed by Chard to monitor compliance.
President and CEO of Chard Development, Byron Chard, said in a statement: “At the time of purchase, buyers committed to living in the building for two full years after completion as their primary residence. As this matter is before the courts, it would not be appropriate to comment further.”
When the NDP government and B.C. Housing launched the Housing Hub program in 2018 — which provided low-interest loans to developers to build housing for middle-income families — more robust criteria were added to make sure people who already owned other properties were not able to purchase units.
Those include a requirement for the unit to be the buyer's primary residence, that the buyer cannot own other residential properties, the buyer can only purchase one unit and must live in the property for at least five years.
B.C. United finance critic Peter Milobar said despite the NDP trying to off-load the blame to the former B.C. Liberal government, the NDP dropped the ball by not ensuring proper oversight of the potential buyers.
“The fact that there was such little oversight and double checking people's applications is shocking,” Milobar said, adding that the
Housing Hub was a program that was cited by auditors from Ernst and Young tasked with looking into B.C. Housing's finances amid concerns of a lack of due diligence.
Postmedia asked Kahlon whether similar fraudulent tactics can be used by people looking to qualify for below-market rentals offered through the NDP government's new B.C. Builds program. To qualify for a below-market rental through that program, people must have a household income of no more than $131,950 for a studio or one-bedroom home, or $191,910 for a two-bedroom home or larger.
“We know that when we roll out more home ownership opportunities, we need to have the accountability measures in place,” Kahlon said, adding those accountability measures are now in place for the below-market ownership program.