The British Columbia government has introduced significant changes to the province’s real estate industry.
The British Columbia government is in the process of introducing major reforms to the province’s real estate industry. As CBC News reports, the centrepiece of the reforms is the new tax on foreign buyers of real estate in the Metro Vancouver area. While that tax has generated plenty of controversy, it is important to understand that the province’s real estate reforms go beyond taxation and will impact non-foreign buyers as well. Below is a quick look at some of the biggest changes coming to the province’s real estate industry.
Foreign buyers tax
The most contentious piece of the reforms is undoubtedly the foreign home buyers tax. The new one-time tax of 15 percent will apply to homes in the Metro Vancouver area that are sold to foreign buyers. The tax applies to buyers who are neither Canadian citizens nor permanent residents, as well as to foreign-registered corporations and even companies registered in Canada but which are controlled in part or in whole by a foreign entity. The City of Vancouver is also looking into the possibility of introducing a tax on vacant properties, but that tax has yet to become a reality.
End of self-regulation
As the Globe and Mail reports, one of the biggest changes in the reforms will be the end of the real estate industry’s self-regulation. The Real Estate Council of B.C., which is responsible for licensing and disciplining realtors in the province, will be significantly restructured. A new superintendent will now be responsible for regulation and rule-making duties previously controlled by the council. Furthermore, a majority of the council’s members will now be made up of individuals outside of the real estate industry.
New rules and penalties
Real estate agents also face increased penalties for violating rules and regulations. Fines will go from $10,000 to $250,000 for real estate agents and up to a maximum of $500,000 for brokerages. Furthermore, agents will now have to return any commissions they made as a result of misconduct back to their victims. The reforms also prohibit agents from representing both the buyer and seller in a single real estate transaction. The provincial government has also taken steps to end the process known as “shadow flipping,” which involves buyers flipping a property after the purchase contract has been signed but prior to the deal closing. The controversial practice often results in the realtor enjoying multiple commissions from the markups, while the original seller sees none of the profit and the final buyer is responsible for paying the tax on the purchase.
The new rules in place represent a significant overhaul of British Columbia’s real estate industry and should serve as a reminder to buyers and sellers of the importance of having a real estate lawyer on hand when they are in the market to buy or sell a property. An experienced lawyer can advise those involved in a real estate transaction by making sure all necessary documentation and legal issues have been dealt with so that the transaction can proceed in a smooth and orderly fashion.