Krusty is promising to end "shadow flipping" in BC's real estate market.
Premier Christy Clark promises an end to shadow flipping in BC real estate - NEWS 1130
Premier Christy Clark says she plans to end shadow flipping in BC’s real estate market.
“Shadow flipping” happens before a sale closes, when a sale contract is flipped at a higher price by the realtor — often without the knowledge of the seller.
The process can drive the price up significantly, allowing real estate agents to make much higher commissions and also avoid paying the property transfer tax.
“We are going to require that every seller provide not just consent, but informed consent for an assignment. Second, that any profits… that accrue to the assignee automatically go back to the seller,” says Clark.
“If someone assigns the sale of their home to someone else and the person to whom it is assigned makes an additional profit on the final sale of that home, that profit will go back to the seller.”
The seller will also have to be made aware of changes in contract assignments. Clark says the changes will be implemented soon.
Clark says the practice of shadow flipping has been driven by greed. “Pure, naked greed. The way to end that shady practice for greedy people is take the profit out of it.”
The Real Estate Council is investigating the extent of the problem and what impact it might have on inflated property prices.
The premier says the council is also looking into whether double-enders in real estate should be addressed, adding it is a very complex issue. “In different markets across the province — especially in very small communities — sometimes, it’s more necessary if there are fewer realtors in the community, to move the real estate through that process.”
Finance Minister Michael de Jong and Deputy Premier Rich Coleman are set to meet with Vancouver Mayor Gregor Robertson to discuss steps to improve affordability in the city.
NDP questions timing of the announcement
BC NDP leader John Horgan says Clark’s announcement is a positive step on unethical behaviour, “but the premier could have done this a year ago.
“I’m just curious in her timing. Does it have anything to do with Laura Miller? Does it have anything to do with the fact that the NDP is leading on this issue and they’re coming behind? Or is it just that they’ve run out of liquor announcements?”
Yesterday, the NDP tabled two bills it felt would help address the issue.
The Housing Affordability Fund and Speculator Fee Act aims to create a way for government to collect information about speculators treating the housing market here purely as an investment, leaving properties empty rather than renting them out. It would collect a two per cent tax on the assessed value of the property.
The Property Transfer Tax Fairness Act looks to stop shadow flippers and international property investors who may find loopholes to avoid paying that tax.
Horgan thinks the best approach is a combination of the ideas put forward by his party yesterday and by the premier today.
“Obviously, if we can keep money in the pocket of the initial seller, that’s good news for them. What we’ve been concerned about is the loss of revenue by allowing shadow flipping to take place and not capturing that property transfer tax. If we can meld the two together, I think we’ve got a step in the right direction.”
Horgan insists what people are really concerned about is affordability. “If you can’t get into the market, if you can’t find rental accommodation — that’s a problem.”
“If you can’t get into the market at the bottom end, the top end will just keep on rising. We have a hyper-inflated market here. It’s a disincentive to companies to locate here. They can’t recruit and retain skilled workers because the housing prices are so great. We need to address it with a number of solu
