However, other practices remain legal, inadequately regulated, or subject to loopholes. The following are 15 practices that should be prohibited and/or more strictly regulated, particularly in order to discourage housing bubbles, protect consumers, and improve affordability.
In some provinces some of these things are already illegal or more strictly regulated, but in other provinces they are not. Keep that in mind if you spot anything that is illegal or regulated in your province before sending me nasty hatemail.
Speculation and Housing Bubbles
1. Blind bidding on homes. Buyers should be able to verify competing bids rather than guessing how much to offer. Ontario permits open bidding, but sellers can still choose a blind process.
2. Speculative flipping without substantial improvements. Buying an existing home and quickly reselling it at a higher price without renovating the property or adding meaningful value should face stronger restrictions. Canada already taxes many flips within 365 days, while B.C. has additional rules for sales within 730 days.
3. Bulk purchasing of starter homes by institutional investors. Large investment companies should face limits on purchasing existing affordable homes that could otherwise be bought by owner-occupiers.
4. Repeated speculative assignment sales. Investors should not be able to repeatedly trade pre-construction purchase contracts purely to profit from rising prices. Assignment transactions are already subject to tax and disclosure rules, but are not universally prohibited.
5. Deliberately withholding completed homes from sale to manipulate prices. Developers should not be allowed to coordinate artificial scarcity or use deliberate market manipulation to inflate prices. Existing competition laws already prohibit certain collusive conduct.
Real Estate Agents and Sales Practices
6. Double-ending real estate transactions. AKA, Double Dipping. I have spoken before about how Double Dipping should be illegal. The same agent should not represent both buyer and seller because their interests can conflict. Ontario allows certain forms of multiple representation with informed consent, subject to restrictions.
7. Commission structures that reward inflated sale prices. Percentage-based commissions create incentives to favour higher transaction prices. Flat-fee or independently negotiated compensation could reduce these conflicts.
8. Deliberately underpricing homes to provoke bidding wars. Listing a $1 million property for $799,000 solely to attract excessive bidding should be more tightly regulated. Deliberately misleading advertising is already prohibited, but strategic underpricing is not automatically illegal.
9. Unverified bidding wars. All competing offers should be recorded in an independently auditable system. Fabricating offers is already prohibited; the proposed reform would require stronger verification.
10. Selling homes without standardized disclosure of major defects. Sellers should have to provide a standardized condition disclosure covering known structural, water, electrical, and other significant defects, with appropriate protections for genuinely unknown conditions. Existing disclosure obligations vary by province and circumstance. This is why so many homebuyers insist upon having a Home Inspector see the property before agreeing to make a purchase, but this assumes that the homeowner didn't deliberately hide defects.
Developers, Landlords and Financial Institutions
11. Excessive pre-construction deposit forfeitures. Developers should not automatically retain enormous deposits when buyers cannot close, particularly if the developer resells the property without suffering an equivalent loss. Existing contract and consumer-protection rules can limit some claims.
12. Excessive mortgage penalties. Lenders should face stricter limits on prepayment penalties that make it financially difficult for borrowers to refinance or sell.
13. Allowing newly built homes to remain vacant for speculative purposes. Purpose-built housing should not sit unused for extended periods simply because investors expect prices to rise. Some jurisdictions already impose vacancy taxes.
14. Demolishing affordable rental housing without adequate replacement. Developers should be required to replace lost affordable units and provide meaningful protections for displaced tenants. Some municipalities already impose rental replacement requirements.
15. Converting large numbers of long-term rental homes into short-term tourist accommodations. Residential neighbourhoods should prioritize permanent residents over commercial short-term rental operations. Restrictions already exist in several Canadian municipalities, including Toronto.
No comments:
Post a Comment
Comments containing links will be marked as spam and not approved. We moderate every comment.