February Stats and Activity
February 2016 Market Update
Hi everyone. I’m sure that many of you have been reading the articles on the various news outlets regarding a number of issues and concerns relating to Vancouver real estate.
A host of issues have come to our attention in the last few weeks, covered extensively in the media (and coming directly to realtors from the Real Estate Board and the Real Estate Council). Principal among them are the following:
1) Allegations of “insider trading” on the part of realtors involved in assignment sales
2) Buyers avoiding paying Property Transfer Tax through assignments
3) Continuing concerns over foreign investment, its inflationary effect on west side prices, and the possible long term consequences for Vancouver real estate
4) Increasing concerns over the unaffordability of both condos and houses for local buyers
5) The federal government’s new requirements (effective February 15th) for down payments, with a view to cooling hot markets (particularly Toronto and Vancouver)
6) New construction being advertised as “owner-occupied” when it isn’t, in an attempt by the seller to avoid paying GST and Capital Gains Tax on the sale.
7) Homeowners’ concerns that the new heritage/character home designations will devalue their property, if the designation prevents the home from being torn down (although the rules have recently been somewhat relaxed).
8) Conversely, the public’s concern that houses that were built within the last 20 years or so and have even been renovated are slated to be demolished so a newer, larger home can be put in its place, thus changing the character of the neighbourhood.
Those are some of the major concerns. Below are the Provincial Budget items that concern real estate:
1) Property Transfer Tax (PTT) will be exempt on new homes or new subdivided units priced up to $750,000;
2) A 3% PTT will now apply to the portion of a home sale that exceeds $2 million. Right now the PTT is 1% on the 1st 200K and 2% on the remainder.
Both these changes are effective February 17, 2016.
3) Beginning this summer, individuals and corporations purchasing property must disclose if they are Canadian citizens or permanent residents, and if not, their country of citizenship. This will allow the government to track foreign ownership in BC.
4) The Home Owner Grant threshold will increase from $1.1 million to $1.2 million.
5) The BC government will invest $355 million for affordable housing units for low to moderate income residents.
With so much to discuss, it is difficult to know where to start. Like you, I have a vested interest in all of these issues, as a realtor, a homeowner, and as a Vancouverite. Today, I will conclude with a few personal comments regarding assignments.
I was frankly shocked and disgusted, but regrettably not surprised, to read that some realtors are receiving a kickback for helping a buyer assign a property before completion to avoid PTT, and/or purchasing a property alone or with a client, concealing that purchase by buying as a corporation, and then assigning the property, to make a profit and, again, avoid PTT.
Assignments are legal and not unusual, but if the seller does not wish to have the contract assigned, their realtor should inform them that they can have a clause in the contract that prevents it. It’s worth noting that a “no assignment” clause may discourage purchasers, reduce interest in the property and result in a lower sale price than if that clause had not been included.
For a realtor to conceal their position as buyer, however, violates Real Estate Council rules, as does concealing any benefit acquired as a result of assisting a buyer or a seller. I believe we need to re-examine the rules respecting assignments to make the whole process more transparent, and we definitely need to ensure that any realtors violating the code of ethics and Council rules are dealt with swiftly.
Stay tuned for our March update (for February market activity) soon!