Honest advertising for condo projects

Transparency key to longevity of industry
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Friday, June 14, 2013
By Daniel Viola & Michelle Ervin
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Toronto condo developers may soon have to adhere to stricter advertising rules.

On April 4, city councillor Josh Matlow brought forward a motion that, if agreed to by the Ontario Ministry of Consumer Services (OMCS), would require developers to ensure that advertisements for proposed condominium projects highlight the fact that the buildings are subject to approval by the City, and could be rejected or altered. The motion passed almost unanimously, with only one dissenting vote.

The city manager has since requested the OMCS enforce the following regulations:

  • Developers must state that development applications require the City’s approval on all advertising – on-site, billboard, print, television and radio – until they receive a building permit; and
  • Developers must utilize 25 per cent of the advertisement space to state, “Application is subject to approval by the City of Toronto.”

The goal of the motion, Matlow says, is to promote transparency in the condo industry.

“There are some condo developers who put up large billboards suggesting to the public that a building is coming soon,” he says. “It leaves the average person under the impression it’s a done deal and on its way.”

Matlow says this is a problem since local residents may feel it’s futile to show up to meetings about a development and voice their complaints.

Linda Pinizzotto, founder of the Condo Owners Association (COA) of Ontario, says promoting transparency among the condo industry has been an ongoing struggle.

“It has been the biggest challenge of my life,” she says.

Pinizzotto says transparency can help both the industry and the public, arguing that honest dialogue can create longevity and sustainability in the market. But if the public does not put pressure on the industry, then developers will do whatever is in their own best interest.

“There’s too much apathy with the public,” Pinizzotto says about the consultation process.

If a proposed property is affecting a neighbourhood, she continues, residents should make their voices heard by their representatives, no matter what stage of development the project is in.

While her group was not consulted during the drafting of Matlow’s motion – municipalities have not been engaging with COA on the same level that the province has been – Pinizzotto believes it is a step in the right direction. She says similar motions should be brought forward across the province to create open and honest dialogue between the condo industry, government and the public.

As it stands now, buyers can put down cash on a condo that has not been approved by the City. As a result, many aspects of the building – including the number of units, which ultimately impact condo fees – are subject to change.

Councillor Matlow says this is something government should not allow.

“(Customers) believe they’re buying a unit that in reality doesn’t exist yet or (has not) been approved to exist yet,” he argues. “We (just) want potential buyers to have all the facts, along with the greater community.”

If Roman Bodnarchuk’s perspective is reflective of broader sentiment, the proposed rules may not be met with much pushback from industry. In fact, the CEO of N5R, a Toronto-based condominium sales and marketing consulting agency, welcomes the move.

“It’s the right thing to do because consumers need to understand the reality of where these projects are so they’re not misled in any way,” he says.

Bodnarchuk adds that he sees the proposed rules hastening the transition from traditional to digital advertising for condo developers. As more information moves online, he says, consumers will become even savvier about condo buying and the stricter advertising requirements won’t likely hinder condo sales.

“We’ve got a lot of creative talent in Toronto, and I think we’ll find creative ways to work around (the proposed rules).”

Daniel Viola is the editor of Property Management Report. Michelle Ervin is the editor of CondoBusiness magazine.

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