Hello everyone!
Welcome back to ‘Keeping it Real, Edmonton.
In today’s talk, we’re having a conversation with lawyer Anya Zubic – who practices within Alberta, BC, and Ontario – to discuss her perspectives on the differences between the provinces.
Q: How long have you been practicing law and what is your jurisdiction?
[Anya Zubic]: “I’ve been practicing law for approximately five years – not including my articling – that has been almost 10 months I believe. I currently practice in Ontario, British Columbia, and Alberta and I primarily practice in the areas of real estate law, and I work in estates.”
Q: What percentage of your portfolio centers around real estate and corporate law?
[Anya Zubic]: “[Real estate] is approximately 75% of my practice, and then wills and estates is roughly 25% and my wills and estates is currently growing as well.”
Q: How many of your clients are investors?
[Anya Zubic]: “With respect to who my clients are when it comes to recent investors, I would say due to the [changes] in legislation like the foreign buyer ban, anti-flipping tax, and changes now in capital gains, investing has been seen to decrease. Investors are not purchasing [as much] because one, there’s not as many foreign buyers as we used to see in the past. Of course now, investing, they’re losing a lot more money when they go to sell because of the capital gains increase, which is now approximately 66%.
So what I’m currently seeing now is a lot of people [are] private lending. So that’s kind of where I see investing going in – in the private lending institutions, especially because now a lot of people who purchased several years ago when COVID had low interest rates, and needed to get guarantor success with their purchases, are now having issues getting lending. So there’s a lot more private lending happening and that essentially where I’m seeing investors go in that area”.
Q: Can you explain to our audience what a foreign buyer is and why things have changed?
[Anya Zubic]: “A foreign buyer is someone who lives out of the country. We used to have a lot of foreign buyers, but currently no longer because of the ban. It’s been extended, I believe, until 2028 now. So it’s only investors within Canada that can purchase unless they’re Canadians and permanent residents that can purchase. Essentially, right now with the changes in capital gains, everyone’s now changing their minds if it’s worth investing”.
Q: What types of properties are your clients (real estate investors) currently buying?
[Anya Zubic]: “So, right now, it would be more freehold homes and vacant lots. The condo market has now decreased, as well as the new condominiums – it’s just not booming, and it’s too expensive to actually have a condo. Particularly, those investors who require a mortgage in order to invest in those properties – they’re not able to cover the cost with respect to high mortgage rates and maintenance fees. They would be losing money. So investing in condos right now is not the best idea, and they’re not selling for a high rate now, whereas a couple of years ago they were a very good investment. [They’re] just staying away from condos and purchasing more commercial properties, or vacant lands where they can subdivide the properties and not like a subdivision to builders or freehold homes.”
Q: Is this change in the types of properties being purchased specific to Alberta or Ontario? Or is it across the board?
[Anya Zubic]: “It’s [happening] across Canada, across the board. I’ve seen [it happen] in BC, Alberta, and in Ontario. I would say it’s more booming in Alberta – the market there is a little bit better than it is in Ontario because of the pricing […] So this is, I would say, more towards BC and Ontario where you see them not really purchasing condominiums.”
Q: What market trends have you noticed over the last couple of years?
[Anya Zubic]: “I mostly deal with investors on the lending side more than I do on the purchasing side currently in this market. What I’ve noticed is that the interest rates are much higher than many private lenders right now. So no longer people are lending on these kinds of properties. If they are lending, the loan to value [ratio] right now is going to be 65% to 70%, because they’re finding it to be a higher risk to lend more funds to individuals because they are finding that they’re not able to sell the properties for the amount that they’re paying their mortgages. So what happens is, whatever they have not been able to cover the costs on judgments registered against the client’s name. Essentially, if and when that time comes to purchase a property or sell a property, that’s when they will get paid out. So they don’t have a guaranteed paid out time on their investment.
Investors are not taking risks currently just because they cannot guarantee their investments, and the market is really now saturated with properties that are on sale – but there’s no buyers because they’re still hoping for the interest to drop. We’ve seen some drops in interest rates, however, [it’s] not enough to really pursue the buyers to go into purchasing right now. So really, all investments are at a standstill.
What I see currently, however, is investors are quite smart. They know that if they can afford to purchase homes now, they will be able to actually gain an investment from that property. However, it’s a long game, not a short game. So the investment environment right now is quite different from what it was [a few] years ago.
Q: Edmonton is a hot market for single-family homes. Why do you think that is?
[Anya Zubic]: “Properties in Alberta are cost far less than they do in Ontario. In Ontario, you can purchase a home for, let’s say, $800,000 which could be your standard three to four bedroom home in a good community. You can purchase, in Alberta depending on the city, anywhere between $400,000 - $500,000. So you’re already saving $300,000 right there. Further, in Ontario, you have a ‘land transfer tax’ every time you purchase a property you have to pay a ‘land transfer tax’ to the Ministry of Finance based on your purchase price. In Alberta, there is no land transfer tax so you’re saving anywhere between $5,000 to $20,000 just on your purchase right there. Property taxes are also lower, because properties are worth less – if you gore more rural, you have [more of] those options as well.”
Q: Can you explain some of the key differences between landlord rights and tenant rights in Alberta compared to Ontario, and how might this affect landlords and, separately, tenants?
[Anya Zubic]: “To be frank, I don’t specialize in that field. However, what I can tell you is that landlord and tenant rights are not always favourable for the landlord and that’s evident in Toronto, or in Ontario in general. […] However, what can be done really for any future investors is to seek out your landlord rights within that respective province. Make sure that you know what you’re getting into, do your due diligence. Don’t just accept any tenant that comes in first, make sure that you do a credit or a background, employment checks. Any information that you feel relevant – I strongly recommend doing referrals and speaking to the previous landlords just to kind of see where they stand on their clients because sometimes not everyone is who they claim to be. You want to make sure that you’re doing your due diligence. Maybe even investing in a property management company to maintain that property especially if you’re a foreign investor or outside of the province. It’s a great way to make sure that you’re protecting yourself and your [investment] interests.
Q: Can you tell our readers about different zoning laws and how to ensure you can do what you want with a property?
[Anya Zubic]: For zoning laws, it’s dependent on the city itself. Each city has their own bylaws and zoning laws, and you really need to do your own due diligence when it comes to zoning. If you have any particular thing you want to do – let’s say make a single family residential property – and you want to make a multiplex, for example, you need to contact the city itself and do a zoning search to see whether or not it is something you can do. […] Essentially, what you need to do as an investor when you decide to purchase a property, you need to make it conditional on doing your necessary searches. Are you looking to make a commercial property, a condominium? What are you seeking? You need to do your off-title searches such as zoning, fire, environmental, tax searches. You want to make sure that you put yourself in the best situation to make an informed decision.
Q: If you were to give advice to families and/or investors entering the market, and is there anything specific people should watch out for?
[Anya Zubic]: My advice would be do your due diligence – that is key. If you’re purchasing, your realtors will have really good information for you. They’ll be able to tell you the schools, your community, the area itself, commuting [information], they’ll have the right information. Investors – you want to make sure you have your professional opinions and you do your searches. Don’t feel pressured to buy something just because you feel you have to – you’ll be shocked to see how many people have buyer’s remorse. […] Be informed before you make any decision – this is the largest purchase most people will be making for the rest of their [lives], and you don’t want to make a rash decision. You want to make sure you have the information you need to make an informed decision.
Q: Where can our readers find you?
[Anya Zubic]: My name is Anya Zubic, I’m a lawyer and my Ontario law firm is Zubic Law Professional Corporation, however in the west in BC/Alberta I practice under Anya Zubic Professional Law Corporation. We operate under one umbrella, however, due to lawcet rules you have specific rules that you need to follow in order to name your corporations. […] However, they can contact me at my email address which is anya@zubiclaw.com and my phone number is (289) 248-2772.
Comments