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.

Affordable housing

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.

Tax measures

Speculation tax

• 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 Homes for BC 30-point plan for housing affordability

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.

Jill Oudil
President
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.

What’s Happening in Real Estate — February 2018

Watch our new video that looks at the latest news affecting real estate in Metro Vancouver.