The BC government is announcing the creation what appears to be yet another make work project to create needless government jobs (doubtless for NDP supporters).
It’s called “The Condo and Strata Assignment Integrity Register.”
Even the name is odd. It implies that there is a difference between condos and stratas.
However, in common parlance, a condo is a strata and vice versa.
Furthermore the BC Condominium Property Act (which used the term “condominium”) was replaced with the Strata Property Act over 20 years ago and the new act uses the term “strata” (and no mention of the term “condo” or “condominium” is made in its definition section).
While there are still some condominiums that exist (built pre-1998), they certainly are not going to be flipped by way of contract assignments.
Moreover, the misleading headline put out by the government says that the new assignments register will “crack down on flipping.”
With respect, it will do no such thing. It is simply a registry whereby data on assignments is collected.
“It is widely acknowledged that the practice of pre-sale flipping has been a factor in driving up real estate prices while facilitating tax evasion. Because of a lack of transparency regarding these transactions, it is unknown exactly how many assignment flips occur each year. This new register will put an end to this lack of information.” (emphasis mine)
Rather than putting an end to the lack of information, how about putting an end to the practice!
If the government was serious in its assertion that pre-sale flipping is driving up the price of real estate it could easily pass a regulation under the Real Estate Development and Marketing Act (“REDMA”) prohibiting assignments of pre-sale contracts.
In fact, I wrote to the BC housing minister before this registry was proposed suggesting just that.
If assignments were prohibited, a buyer would have to complete the pre-sale purchase, pay the GST and PST (thus ensuring that the federal and provincial governments got their slice of the pie) and then, if the buyer chose to do so, he could re-sell the property to someone else. There would be no need for another wasteful bureaucracy to track meaningless information, as there would be no assignments to be concerned about.
Exceptions could be made for special circumstances (such as a job loss, divorce, accident, death or other unforeseen circumstance that could befall a genuine purchaser), but by and large a prohibition on condo flipping would work far better than a registry to merely record the details.
Speculators, both local and foreign have made billions of dollars buying and re-selling pre-sale contracts in BC over the past 15 years.
Instead of putting an end to this highly SPECULATIVE practice, the government will simply record the details, which will in no way decrease condo flipping when the market starts to rise again.
Ironically, the NDP government just recently enacted the SPECULATION and VACANCY TAX which retroactively targets both local and foreign homeowners who happen to own a second property (or interest therein) in designated parts of BC. There is little to suggest that this poorly drafted piece of legislation will penalize any speculator, but a great many of ordinary homeowners who find themselves on the title to a property that they don’t reside in, will be definitely be unfairly penalized.
More on the Spec Tax later, but for now, suffice it to say that the Condo and Strata Assignment Integrity Register is both a waste of time and tax payers’ money.
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