The British Columbia government is cracking down on assignment flipping, which it says contributes to price escalation and tax evasion, but after a series intrusive policies brokers are sceptical.
“It addresses a loophole in taxation that I don’t disagree with—and that should be closed because if you profit from flipping a property, it should be deemed income or capital gains—but having said that the government has essentially come out and said it’s addressing a housing shortage when the housing shortage isn’t derived from that scenario,” said Nick Douce, VP of Tango Financial and VP and managing broker of Paragon Mortgage Group.
“It’s political pandering and BS because it’s not going to address the housing shortage.”
British Columbia’s Finance Minister Carole James announced the Condo and Strata Assignment Integrity Register on Monday, stating that it will help the provincial government track property sales.
“We said when we were elected we'd be bold about addressing the housing crisis,'' James is quoted in The Canadian Press. “This is another of those steps that we're taking to make sure that there's transparency and that people are paying their fair share.”
But Douce counters that the NDP is simply playing politics.
“They want to see transparency and that people pay their fair share,” he said, “but the NDP here is waging class warfare. Having said that, I believe there should be a tax, however, the government’s verbiage makes it sound like political posturing to me, and whether anything comes from it—I doubt it.”
Douce also doubts the government’s claim that assignment flipping has a contributed to Vancouver’s sharp price escalation.
Shannon Patterson, regional director of the Vine Group with Mortgage Alliance, concurs, in particular because Vancouver’s housing market is freefalling and assignments are flipping for losses, not profits.
“Up until the last 12 months or so, it might have been a valuable initiative, but with all the changes in mortgage lending and new tax initiatives the government has put into place, do we need yet another measure to cool down the housing market?”
She added that in Langley alone, she’s overseeing three flips that won’t turn profits.
“I disagree that flippers have driven up purchase prices.”