B.C. Premier Christy Clark has put the province’s real-estate industry under government oversight, declaring the industry’s self-regulating body has failed to protect the public from cut-throat and illegal practices and has lost the public’s confidence in its ability to police itself.
The announcement comes a day after an independent advisory panel issued a report that included 28 recommendations for how the Real Estate Council of British Columbia should beef up its oversight ability to adjust to a market fuelled by speculation.
“The point of regulation is to protect people, it is to protect consumers,” Ms. Clark said. “The real-estate sector has had 10 years to get it right on self-regulation, and they haven’t.”
The panel was formed after a Globe and Mail investigation revealed that some realtors in Vancouver’s booming market put their financial interests above those of their clients, and the B.C. Real Estate Council did nothing to stop them.
But Ms. Clark’s government, which faces an election next year, concluded the improvements recommended by the panel would not be enough. The decision to bring realtors under government oversight makes B.C. an outlier: The real-estate industries in most other provinces, including Ontario, Quebec and Alberta, regulate themselves.
The Canadian Real Estate Association said it is reviewing the report. In Ontario, where Toronto’s housing market is also raising concerns about speculation and soaring prices, a senior government official said the province is “looking at many aspects of the real estate sector especially when it comes to the importance of affordability of home ownership,” but would not commit to any moves toward self-regulation.
Ms. Clark’s decision came as a surprise to the B.C. industry, but the outgoing superintendent of real estate, who chaired the advisory panel, said it should not have.
“It usually takes industry a long time to get self-regulation, so they are not going to be happy with it being taken away – but it wasn’t working,” Carolyn Rogers, who is leaving for a new job in Ottawa regulating the banking sector, told The Globe.
“It’s a cautionary tale – because there are other industries out there that self-regulate. It is a privilege, not a right.”
The Premier said her government would adopt all 28 recommendations the advisory group made to improve consumer protection. Those include more educational requirements and screening for aspiring realtors, hefty fines for wrongdoing – a maximum of $250,000 for agents and $500,000 for brokerages – improved consumer education, and more transparency and accountability.
Ms. Clark said the province will appoint a new, dedicated superintendent of real estate who will have authority over the council’s regulations and to implement the report’s recommendations. Currently, the superintendent’s job is part of the duties of the head of Financial Institutions Commission (FICOM). Those duties also include oversight of the pension and financial services sector.
Specifically, Ms. Clark confirmed the province will put an end to “dual agency” – where one realtor represents both buyer and seller – because of the inherent conflict of interest.
The panel’s report, and the Premier’s announcement, followed stories in The Globe that some realtors and brokerage firms were profiting from shadow flipping and other questionable practices. The panel’s report on Tuesday found the Real Estate Council is dominated by industry members who took disciplinary action reluctantly and tentatively.
B.C. real-estate agents have been self-regulated since 2005. The impact of skyrocketing prices and speculation in the housing market are expected to be huge issues in the election campaign. While realtors earn increasingly fat commissions in the Vancouver market, the government is under great pressure to curb any activity that makes buying or selling a home more perilous.
The Liberals have sparred with the City of Vancouver over ways to make housing more affordable, with the province reluctant to intervene in a way that could make things more affordable for buyers, but also cost homeowners some of the equity in their properties.
The BC NDP noted that ending self-regulation will do nothing to make housing in the province more affordable. The Opposition called on the province to create a task force of police, Crown prosecutors and auditors to investigate and prosecute fraud and money laundering.
The Real Estate Council of B.C. posted a brief statement after the Premier’s announcement: “The Council is ready, willing, and able to work with Government to implement the steps announced today,” it said.
Dan Morrison, president of the Real Estate Board of Greater Vancouver told The Globe he expects that most realtors will understand the government’s decision.
“I was a bit surprised – but we will deal with it and move on,” he said. “In hindsight, we all probably should have made more noise to improve our industry faster, and it didn’t happen. But we will just keep working to make it better.”
Don MacKay, a managing broker in Vancouver with 36 years of experience, said his industry got what it deserved.
“We couldn’t handle self-regulation. We should be able to self-regulate, but we couldn’t. I think we were not willing to have more people involved in our business,” Mr. MacKay said.
“Weeding out the bad apples should be pretty easy. All they have to say is, ‘I am sorry, we don’t want you in the business,’ but the council always seemed so reluctant to do that.”