Hon. Bill Morneau, P.C., M.P.
Minister of Finance Jim Flaherty Building
90 Elgin Street,
Ottawa, Ontario, K1P 5E9
May 14, 2020
Dear Minister:
On behalf of the Ontario Real Estate Association (OREA) and our 80,000 REALTOR® Members, I want to take a moment to commend your government for the steps that you have taken to slow the COVID-19 pandemic while limiting the impact on the economy. Our Members deeply appreciate the swift movement of our Federal Government in offering assistance to independent contractors and small business owners who have seen a dramatic loss of income due to COVID-19. While these programs are welcomed, we have concerns that in some instances, REALTORS®, brokers and real estate team leaders are unable to access the programs meant for all Canadians who qualify. Specifically, the current criteria established for the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Business Account (CEBA) unintentionally and unfairly disqualify many of our Members from accessing the programs.
We understand that you are trying to support as many sectors of the economy as possible with these support programs. Unfortunately, the current criteria established for the aforementioned programs has left many of our Members unable to qualify for them. We are committed to working with you and your team to ensure that our Members are considered as further decisions about these programs are made.
CEWS and Real Estate Businesses
COVID-19 has had a dramatic impact on Ontario’s real estate market. In some areas, transactions are down by as much as 70 per cent. This is in part because our Members have adhered to the stay-at-home orders from the government in an effort to curb the spread of COVID-19. Despite being an essential service, many of our Members are only transacting virtually or have shut down their business entirely. Others are working with their clients on an emergency basis only.
According to a survey we conducted with our Members, 77 per cent have reported a significant decline in business and 83 per cent have reported that their financial situation has deteriorated in the last two months. We estimate that between 60,000-65,000 of our Members, who are small business owners, are in financial distress due to COVID-19. Like many Canadians, they need the government to help.
Unfortunately, rigid rules and timelines with respect to the CEWS and CEBA programs are preventing our Members from accessing them. As you may know, REALTORS® and brokerages usually collect revenue for their work 60 to 90 days after a transaction closes. When the pandemic peaked in March, most Members were collecting revenue that was coming in for transactions completed in December and January. With the real estate market effectively shut down, we expect many of our Member brokerages to begin to experience significant cashflow problems in September.
We understand that the government is not in a fiscal position to carry a substantial program, such as the CEWS, indefinitely. However, in the current form of the CEWS, our Member brokers cannot qualify because they are receiving revenue from deals completed months ago. With that in mind, we are asking that the government extend the CEWS program into September to ensure that sectors like ours are not negatively impacted and our Members can access financial assistance when they need it most.
CEBA Eligibility Requirements and REALTOR® Business Models
With the challenges our Members are facing accessing the CEWS program, many of them are turning to the CEBA for assistance. Unfortunately, the majority of our Members are being turned away from their financial institution because they do not have an existing business account. The existing regulatory framework in Ontario does not allow Ontario REALTORS® to incorporate, meaning many real estate professionals use personal accounts as opposed to business accounts, which then disqualifies them from taking advantage of this program. This is predominately impacting our Members who employ Executive Assistants and support staff in their offices. Without being eligible for the CEWS or CEBA programs, and with no new revenue being generated, our Member brokerages are being put in a difficult position. They are having to contemplate laying off staff so their staff members can collect the Canada Emergency Response Benefit (CERB). To keep people employed in order to avoid additional pressure on the CERB program, we are calling on the Federal Government to amend the criteria for the CEBA. Any business that can provide proof of employment (T4SUM) and meet the necessary payroll criteria should be able to access the program regardless of whether they use a business or a personal bank account.
By amending the parameters of the CEWS program and making it more flexible for the real estate sector, our Members will be in a better position to assist all three levels of government during the economic recovery period following this pandemic. Resale housing transactions across Canada generate significant economic activity. It is estimated that $61,600 in ancillary spending, totalling more than $31 billion per year, is generated by the purchase and sale of homes across Canada. Of that, 48 per cent is generated in Ontario alone, where homebuyers contribute an estimated $14.9 billion to the economy. There is also significant direct and indirect employment generated as a result of housing sales. The annual resale activity reported by MLS® Systems across Canada is estimated to generate 220,065 jobs each year.
If you or your staff have any questions, please do not hesitate to contact Matthew Thornton, OREA’s Vice President of Public Affairs and Communications, at 416-385-6624 or mthornton@orea.com.
Sincerely,
Tim Hudak
CEO, Ontario Real Estate Association