Proposed legislation would require developers to report information on contract flipping
Joanne Lee-Young
The Province
Condo developers will be required by law to collect and report information on buyers who flip sales contracts for a higher price, according to legislation proposed by the B.C. NDP government.
This is a segment of the real estate market that has been exempt from the dampening effect of the foreign-buyers tax and disclosure rules for so-called shadow-flipping.
For now, the Ministry of Finance plans to collect the personal or business identity of all parties in an assignment agreement, including name, social insurance number, contact details and the amount paid by the buyer to the seller. It will not only be asking for details about assignments, but also first contract buyer details.
In recent years, prices for presale condos (condos that can be purchased but haven’t been built yet) across Metro Vancouver have seen high, double-digit price gains of 40 to 60 per cent, and even higher, as other parts of the housing market have cooled or risen more moderately.
“It (would) bring more transparency to that part of the market which currently lacks it,” said Vancouver real estate agent Steve Saretsky, who has been critical of developers selling presale contracts to overseas buyers who then sell them again and again to local buyers at higher prices.
The development industry has been against other housing measures proposed by the NDP, but it supports the curbing of presale assignments.
Realtors, like Vancouver-based Rick Clarke, agree with tracking assignments because he sees hints of the volume. “They should. A lot of people are not reporting and not paying tax and making big gains.”
He says there is “a select group of agents” that have tight relationships with developers who rely on them for being able to sell chunks of pre sale condo units, describing one “known for just having signed 51 contracts in a half-hour.”
By comparison, even though “we are a top one per cent team, we have limited success” in being able to get clients access to any of those units because developers prefer the ease of moving a block of contracts.
Says Clarke: “It’s a different business model. They are order takers whereas we are consultants and take into account a client’s situation. Are they having a baby? Getting a divorce? What do they need?”
The province’s real estate development marketing act says that, unlike in Ontario, for example, developers must have a development permit in hand before they sign presale contracts. But many start “filling up a pipeline” of interested, “VIP clients” long before, in part, to make themselves attractive to developers.
Century 21 real estate agent Mike Stewart — who markets many presale projects long before they launch — didn’t return calls to Postmedia by deadline.
Edgar Sung, a realtor reached via the website AssignCondoNow.com, which lists assignment opportunities across Metro Vancouver, didn’t have a comment on the new rules for developers and what impact it might have on the market.
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