The B.C. government is pledging to end a murky real estate practice that has become known "shadow flipping,” and will work with the mayor of Vancouver how to make housing in the city more affordable.
New provincial rules will require the express consent of the seller and will require that any profits when assignment contracts change hands are returned to the home owner. The B.C. government is promising to put those rules in place within the next few weeks.
Rich Coleman, minster responsible for housing, and Finance Minister Mike de Jong will also meet with Vancouver mayor Gregor Robertson this week to to discuss "collaborative steps governments can take to further improve affordability in Vancouver."
A February investigation by the Globe and Mail showed some Vancouver realtors are using a mechanism called an assignment contract to flip properties before the deals close, without the knowledge of the original property seller. Realtors interviewed for the story said the practice results in a price increase with each flip. B.C.’s property transfer tax does not apply until the sale finally closes.
Today’s announcement comes two days after a packed town hall meeting held by NDP MLA David Eby and Opposition leader John Horgan. At the meeting Eby promised to introduced a bill to close loopholes in assigment contract flipping and another to track whether offshore buyers are purchasing property in order to levy a higher tax on those buyers.
Eby had previously called for property transfer tax to apply every time an assignment contract is flipped before the final sale.