BC budget includes new real estate taxes and spending commitments
Housing was the dominant issue in the recent provincial budget.
The government released a 30-point housing strategy aimed at reducing housing demand, curbing tax fraud, building affordable housing, and increasing security for renters.
New tax measures include increasing property taxes and property transfer taxes on residential properties valued above $3 million, expanding the foreign buyer tax, and implementing a housing speculation tax.
“We welcome the provincial government’s commitment to address money laundering concerns and increase the supply of affordable, social, and rental housing in our province,” Jill Oudil, Board president said. “We’re concerned, however, about the series of tax measures announced. The budget introduces new taxes, hints at future taxes, and hikes existing taxes on housing. Taxes don’t make homes more affordable.”
Below is a summary of the key real estate measures announced in the February 20 budget. There’s considerable information to go through. We’re analyzing each item to understand the implications to you and your clients and will report back with more information and analysis in future communications.
The province will:
- Invest $6 billion in affordable housing to create 114,000 homes over the next 10 years.
- Enhance local government capacity to build and retain affordable housing.
- Require developers to collect and report comprehensive information about the assignment of pre-sale condo purchases.
- Track beneficial ownership information.
- Collect additional information to increase transparency and strengthen enforcement in real estate.
- The province will implement a new speculation tax on residential properties, targeting foreign and domestic home owners who don’t pay income tax in BC. This includes those who leave their homes vacant.
- The tax will apply to the Metro Vancouver, Fraser Valley, Capital, and Nanaimo Regional districts and in the municipalities of Kelowna and West Kelowna.
- In 2018, the tax rate will be $5 per $1,000 of assessed value. In 2019, the tax rate will rise to $20 per $1,000 of assessed value.
- The province will administer the tax and will collect data to enforce it including, social insurance numbers, household information, and world-wide income information.
Foreign buyer tax
- Effective Feb. 21, 2018, the foreign buyer tax will increase to 20 per cent from 15 per cent and will be extended to the Fraser Valley, Capital, Nanaimo, and Central Okanagan Regional Districts.
- If the property is located in the Capital Regional District, Fraser Valley Regional District, Regional District of Central Okanagan, or Nanaimo Regional District, and the property transfer is registered on or after February 21, 2018, there are transitional rules available here.
Property Transfer Tax
Effective Feb. 21, 2018, the Property Transfer Tax on residential properties above $3 million will increase to five per cent from three per cent.
Provincial School Tax
Beginning in 2019, the provincial school tax will increase on most residential properties in excess of $3 million.
Database on pre-sale condo assignments
The province will require developers to collect and report comprehensive information about the assignment of pre-sale condo purchases. The information will be reported to a designated government office and shared with federal and provincial tax authorities to ensure taxes are paid.
Online accommodation PST and MRDT
Online accommodation platforms are enabled to collect and remit the Provincial Sales Tax and Municipal and Regional District Tax (Hotel Room Tax).
Property tax treatment for ALR land
As part of the Agricultural Land Reserve (ALR) review, the province is examining residential land in the ALR to ensure land is used for farming.
Clarity of property ownership
Compelling access to MLS®
The province plans to enable tax administrators to compel access to information relevant to property transfers, such as information held in a MLS® database. (We’re asking government for clarification.)
Beneficial land ownership registry
The province will require additional information about beneficial ownership on the PTT form.
Administered by the LTSA, the information will be publicly available and shared with federal and provincial tax and law enforcement authorities. Legislation will be introduced to require BC corporations to hold accurate and up to date information on beneficial owners in their own record offices and make it available to law enforcement, tax and other authorities.
Task force on money laundering and tax evasion
The province will work with the federal government to formalize a multi-agency working group on tax evasion, money laundering and housing.
Residential Tenancy Branch
Increased funding to the Residential Tenancy Branch to reduce wait time, improve service and deal with disputes more quickly, as well as strengthening the Residential Tenancy Act and the penalties for those who repeatedly break the law.
Read the Budget press release
Read the Fiscal Plan (opens a 157-page pdf)
Read the Budget 2018 Speech
President’s message: Government advocacy update
We continue to work with BCREA and the other boards in the province to advocate on behalf of you and your clients.
I’d like to thank everyone who participated in our MLA letter writing campaign. More than 4,000 REALTORS® across BC have sent a letter since it began earlier this month!
Your voice is being heard.
On February 9, the Superintendent of Real Estate moved the implementation date for the ban on limited dual agency from March 15 to June 15 in response to our concerns. With respect to double recusal, his office intends to create “rules that address how licensees should manage conflicts of interest involving competing clients so that they can continue to represent a party to the transaction.”
We’ve now concluded the letter writing campaign. We're meeting with the Superintendent this week to discuss his response and to develop a more proactive approach to rule changes going forward. We want to ensure that any new rules, interpretations, forms, and training reflect how real estate is practiced and don’t inflict unintended harm on the home buying and selling public.
We’ll provide more information as this work continues. I urge all of you to stay engaged. Your support will be critical as these issues evolve.
Real Estate Board of Greater Vancouver
CEO Brad Scott celebrates 40 years at the Board
There’ve been two constants at the Real Estate Board of Greater Vancouver (REBGV) over the past 40 years — change and Brad Scott.
Brad was hired to work in the Board’s print shop in 1978. From there, he worked his way to management, then to the executive office, becoming the Chief Operating Officer in 1991. In 2013, the Board of Directors appointed him Chief Executive Officer.
Brad recently celebrated 40 years since his first day on the job. This makes him the longest serving employee in our nearly 100-year history.
“Brad’s a careful listener, has tremendous patience, and is totally committed to REBGV. I’ve learned so much from him by just watching how he operates. We’ve been so fortunate to have him all these years,” Jake Moldowan, former REBGV president said.
Under Brad’s guidance, the Board has won numerous awards for operational excellence. We achieved Excellence Canada’s Canada Order of Excellence (Quality) in 2010 and again in 2013. In 2016, we earned gold certification in Excellence Canada’s new Excellence, Innovation, and Wellness program.
Founded by Industry Canada, Excellence Canada is a not-for-profit corporation dedicated to advancing leading business practices and enhancing organizational performance across Canada.
“Brad’s been central to some of the most significant and shrewdest leadership decisions in our Board’s history,” Jill Oudil, Board president said. “He’s been a champion and driver of our business excellence program from the beginning. He’s cultivated a customer service culture that benefits all members and stands as a model within the Canadian business community today.”
Brad is a member of the Real Estate Institute of British Columbia and holds the R.I. (B.C.) designation. In Canada, he’s a member of the Association Executives Council and, in the US, the National Association of REALTORS®’ Association Executives Institute.
Please join us in congratulating our CEO Brad Scott on 40 years of service to REBGV and the Realtors of Metro Vancouver!
Paragon moves to Google Maps in March
Paragon’s next system update is on March 6. Here’s a look at some of the enhancements you can expect:
Switch to Google Maps
Paragon will switch from Bing Maps to Google Maps in this update. Google Maps are updated more often than Bing Maps so they present fresher data, and they include a zoom tool for you to widen or narrow your view on the screen.
The switch will also ensure fewer instances where listings are inaccurately located on REALTOR.ca, which switched to Google Maps last year.
New pop-up notification for listing errors
Paragon will display pop-up error notifications to alert users when a new or modified listing hasn’t saved or contains errors.
Send more information to your clients
You’ll be able to send PDF documents to your clients. Whether it’s one feature sheet with other supporting documents, or 20 feature sheets for 20 different properties, you’ll be able to include it all in one email.
Agent images visible
If you’ve uploaded an image to your Paragon profile, it’ll appear in the info pop-up that other users see when they click on your name in reports and listings.
Questions? Contact the Help Desk at 604-730-3020.
This is me, not giving you advice about the new rules
The Real Estate Council of BC has said we shouldn’t give advice about the superintendent’s new rules. Perish the thought. So, this is me not giving you advice about the new rules.
The heavy hand of the regulator is now firmly on our shoulders. Perhaps, understandably, the Council wants to be the sole oracle of truth regarding the new rules. I say “perhaps” because the magnitude of the impending new rule changes will undoubtedly generate an avalanche of questions — and even more questions about those questions.
The staff at Council, as efficient and well meaning as they are, will be hard-pressed to deal with what’s coming from 23,000 licensees province-wide. The new rules will affect their day-to-day business practices as well as the relationships they have with buyers, sellers, and anyone else who has even the faintest interest in real estate. As well, there’ll be new forms for every transaction, including those that never happened. (Even these must be kept on file, although since I haven’t yet seen the new forms, I can’t help you understand how to use them.)
Recently, there’s been a welcomed softening of the superintendent’s attitude about the implementation date of the new rules. June 15, 2018 is now the date to remember. The 4,000 letters BC REALTORS® sent to the superintendent, Minister of Finance, MLAs, and others might have had something to do with this. No matter what the reason, I’m thankful the superintendent is giving us more time.
Notwithstanding this time extension, we’re still stuck with both the rules and a regulator who seems to have turned the risk-tolerance dial down to zero. We can no longer have two clients with opposing interests in the same transaction, and therefore we have to structure our business accordingly. At least now we have a bit of extra time to plan for the change.
I suppose we shouldn’t be surprised by the government order to toughen up the rules. With government having been quoted in countless media articles about the need for greater regulation in the real estate industry in 2016, it was to be expected. It isn’t fun being in the centre of a media fire storm, and we’re stuck with the result. It’s time to start thinking about how we’re going to deal with it.
Readying for change
For starters, be sure to book a spot for the new course on the rules and agency once the Council announces its availability. Meanwhile, be sure to stay up-to-date with FAQ releases from Council. Those Real Advice email messages constitute a solid attempt by Council to help you understand what the rules mean to you and the people you deal with.
But there’s more you can do, too. Start thinking about all the second-nature scripts you now use in your business. Some will have to go, while others will need to be tweaked. For example:
- How will you now set the stage with your sellers in advance to prepare them for what’ll happen when a former client or close friend wants to buy their property? Think about all those names in your virtual Rolodex — names of potential buyers that you currently tell sellers that you’ll contact. Under the new rules, what’ll you tell sellers about these potential buyers?
- If you have multiple buyers interested in a new Yaletown condo development, what’ll you do if all of them want to see it at the grand opening?
- Are you developing arm’s-length referral networks to refer conflicted former clients and friends? Have you developed scripts to easily explain and give comfort about what’ll happen next in a relationship?
- If you have a team, are you thinking about how the new rules will affect how you do business?
There’s a lot to consider. So, read the FAQs, take the course, listen to your broker, stay calm, and carry on.
Here’s the advice I’m not giving you
This advice is intended to give you a big-picture idea of what your business will look like on June 15. For the specifics, please talk to your managing broker, our harried friends at the Council and, of course, to your lawyers.
- When a new relationship is about to be established, make sure you explain whether you’ll be giving agency or the party will be unrepresented. Get informed consent to the relationship early. Document the relationship by having the appropriate form signed and filed. Act strictly in accordance with that relationship. Don’t, for example, inadvertently turn an unrepresented party into a client by giving them advice. We’re helpful people who like to solve problems, but, if you cross the line and give advice to get the deal done, it won’t matter what the form says. If it walks like a duck, and talks like a duck, it likely is a duck.
- Once the relationship is established, be vigilant for potential conflicts of interest or situations triggering further disclosures and consent. Retroactive permission won’t pass with a zero-tolerance regulator. If a conflict reveals itself, remind yourself who your client is and then consider your duty of loyalty, disclosure, and confidentiality. One potential conflict is receiving a referral fee from a referred former client’s agent. We’ll have to wait and see what the forms say, but you may be able to deal with this scenario by using a disclosure form, and, of course, by getting informed consent from your client. Bigger conflicts may require more than just a disclosure. Think about what these may be and how you’ll handle them.
- It may be tempting to do the deal now and worry about the paperwork later. Don’t give into such temptation; it’s very risky. I’m fond of the saying, “It’s all fine until it’s not.” Any deal you put together first with the paperwork being done later, possibly with the paperwork not matching your actions and the representation (or non-representation) being given, will always be closely reviewed if there’s a complaint. Or the file may get pulled for review in a Council audit. It’s just not worth the risk, so think about the workflow, the conversations you need to have about the things that can crop up, and the paperwork necessary to satisfy the new standard as of June 15.
These are big changes. Maybe there’ll be some tweaking of the new rules here and there. We’re hoping for reinterpretations of some of them, but I doubt the substance will change much. Again, be sure to read the Council’s FAQs.
Our AGM is March 27 — register today!
On Tuesday, March 27, we’ll hold our Annual General Meeting (AGM) at the Delta Burnaby Hotel and Conference Centre by Marriott in the Grand Villa Ballroom, 4331 Dominion Street, Burnaby. We encourage you to attend.
The AGM is an opportunity for members to hear reports from CEO Brad Scott and President Jill Oudil on the key initiatives we’re working on. They’ll also discuss the challenges and opportunities that lie ahead in 2018 for your Board and profession.
The meeting is free to attend and includes a continental breakfast, but you must confirm your attendance with Member Services by calling 604-730-3090 or emailing email@example.com. You can also register online here.
Registration and breakfast starts at 9 a.m., and the meeting begins at 10 a.m.
We’ll email the AGM package to all members in the coming weeks. If you have questions, contact Tina Creed at firstname.lastname@example.org.
Boards to vote on Three-Way Agreement changes at CREA’s AGM
Representatives from real estate boards and associations across Canada will vote in April on whether local boards can become direct members of the Canadian Real Estate Association (CREA) without also having to belong to their provincial association.
At issue is something called the Three-Way Agreement. This Canada-wide agreement was signed in 1974. It requires that, to be a REALTOR® in Canada, you must belong to the local, provincial, and national levels of organized real estate.
Your Board has been working with the Toronto, Montreal, Calgary, and Edmonton boards to create a process for boards to not belong to their provincial associations and still belong to CREA should they, and their members, vote to do so.
At CREA’s AGM on April 16, representatives from the more than 100 real estate boards and associations in Canada will vote on this amendment. CREA’s Board of Directors supports the proposed change.
“Opportunities to modernize the structure of our profession have been inhibited over the years, in part, because of the inflexibility of the Three-Way Agreement,” Jill Oudil, Board president said. “This vote is about building greater accountability and choice into the structure of organized real estate in our country.”
Some associations are concerned this change would result in boards immediately leaving their provincial associations. Not so, according to Board CEO Brad Scott.
“The driving force behind this change is not to withdraw from our provincial associations,” Scott said. “We believe organized real estate is stronger together so long as Realtors are receiving sufficient value from the associations created to serve them. If this isn’t the case, there should be a mechanism for accountability and change. This is what we’re striving to achieve.”
The proposed amendment includes a process for boards to apply to CREA for direct membership.
The process would require that:
- The membership of the applicant board in CREA and the provincial association be in good standing.
- The applicant board can satisfy CREA that it’s been in compliance with CREA’s Core Standards for at least three years prior to the application, and can continue to be in compliance if it were to withdraw from the provincial association.
- The board must have provided its members with a business plan setting out all relevant information the members would need to make an informed decision in terms of withdrawal from the provincial association.
- The membership of the applicant board must vote to withdraw. That vote must pass by at least a two-thirds majority.
- The board must satisfy CREA that it has made reasonable efforts to resolve any outstanding issues with the provincial association.
- Once a decision has been approved by CREA’s board, the withdrawing board will provide one year’s notice to the provincial association and pay full dues for the following 12 months.
If you have feedback, email us at email@example.com.
GR Voice: BC Budget and Throne Speech, alternative mortgage lenders, and non-medical cannabis in stratas and rentals
The NDP’s first budget since 2000 delivered a range of measures to make home ownership and renting more affordable. These changes were accompanied by a series of real estate tax measures.
What happens when a home buyer, with a decent down payment and poor credit history, is turned down by a bank or trust company for a mortgage? Enter the alternative lenders.
The federal government will vote to legalize the use and possession of non-medical cannabis in June 2018. What will this mean for landlords and strata councils?
Arbitration and Professional Conduct Committees need volunteers
Do you value ethics and professionalism? Do you take an interest in the REALTOR® Code and the Rules of Cooperation?
If you answered yes, please consider volunteering for our Arbitration Committee or Professional Conduct Committee. These committees need members who are licensed as managing brokers.
The current committee terms end in May and new volunteers are needed. This could be your opportunity to put your years of experience to use while helping promote and strengthen our profession.
The Arbitration Committee oversees and, when necessary, adjudicates all arbitration disputes between members. The Professional Conduct Committee upholds and enforces the Board’s bylaws, regulations, Realtor Code, and Rules of Cooperation.
RealtyToGo is now GoMLS
The makers of RealtyToGo recently changed the app’s name to GoMLS. You’ll be prompted to download the new app the next time you try to use RealtyToGo.
The rebranded app is identical to RealtyToGo, but it now allows you to access multiple MLS® systems if you are a member of multiple real estate boards that use this product.
Questions? Contact our Help Desk at 604-730-3020.
Market valuation and adjustments course coming in March
Sellers expect to get, and buyers want to pay, fair market value for their homes. REALTORS® use a comparative market analysis (CMA) to help their clients determine a home’s value.
The CMA helps the seller set a realistic listing price and/or helps the buyer make an offer. However, estimating fair value in today’s market can be a challenge. The market is constantly changing, and it may be difficult to find a suitable comparable property.
This is where comparable adjustments must be made. How you do this? What do you need to consider? Our market valuation and adjustments course will answer these questions for you.
In this course, you’ll learn to identify the most suitable criteria for creating a CMA and apply the concepts and principles behind adjustments.
The first offering for this new course is March 26. Visit our Course Catalogue to learn more and register.
Old listing documents to be purged after six months
To keep in line with best practices concerning privacy, we’ll remove documents associated with listings that have been sold or inactive for six months. We’ll begin this practice in early April.
If you have questions about this change, contact Ian Abbott at firstname.lastname@example.org.
Congratulations to Tim Neame, Royal LePage Sussex, West Vancouver. Christy Laniado, Royal LePage, Sussex, West Vancouver is sending you a bouquet. Here’s what she told us:
“I recently sold a townhome in two weeks for above asking. Two months later, someone in the same complex asked me to list their home. I listed it below the previous one because the market had slightly changed, and the unit wasn’t quite as well situated.
“A few weeks later the sellers wanted to change agents because they didn’t think I was working hard enough. I asked my clients to come and speak to me at the office. I told Tim Neame, another agent from the office, that if I couldn’t save the listing I would recommend him.
“During the meeting I realized I couldn’t save the listing. I asked if I could bring in Tim. The clients agreed and talked. Tim intently listened and then said, ‘Christy is an esteemed agent and there isn’t a thing I would have done differently than she did. She’s recommending a price change, which I would also do.’
“Tim had my back. I thought he was going to talk about himself and what he could do for them to get their house sold. I would have gratefully handed them to Tim. I don’t think I told him, but I drove home from work that day quite choked up because I work side by side with wonderful, ethical professionals like this. Thank you Tim! I will never forget your kindness.”