"Shady, greedy" real estate agents will no longer be able to profit from the practice of so-called "shadow flipping" in British Columbia, Premier Christy Clark announced Friday.
Clark said the government is closing a loophole around the practice of contract assignments that will demand sellers not only give consent to any assignment put in place, but must give informed consent.
Once the final sale of the property eventually goes through, any profits accrued from the assignment must return to the seller, Clark said.
She said the "shady practice" of shadow flipping is motivated by "pure, naked greed, and the way to end the practice is to take the profit out of it."
Legislation is not needed to close the loophole, as it is a regulatory change, making it easier for the government to move more quickly on this issue than on others still under review by the Real Estate Council (REC).
Any penalties for breaking the new rules will be set by the REC.
"Those who break the rules, I hope will lose their license," Clark said.
Tackling affordability and other issues
"Double-ending"—where one real estate agent acts as both the seller and the buyer's agent — is a more complex issue, Clark said, because in small communities the practice may be forced by necessity, rather than choice.
She also said she was "disturbed" by news from the FINTRAC investigation that shows real estate agents not following money tracking provisions and failing to disclose.
The premier said that ministers Mike de Jong and Rich Coleman would be sitting down with Vancouver Mayor Gregor Robertson to discuss ways to increase the supply of both affordable housing and rental units.
The government will also be looking at strategies to discourage "irresponsible speculation" in the market.
Clark also noted that, beginning this summer, everyone purchasing property in B.C. will have to disclose their citizenship.
Asked about whether she thought there should be a measure to claw back equity from homes that have risen significantly in value, Clark said that the government would benefit through the Property Transfer Tax, but that she didn't believe homeowners should be penalized for making a good investment.