Re: Amendments to the Strata Property Act Concerning Rentals Announcement

There has been a shortage of rental units for years in British Columbia. In order to address this, the Provincial Government recently passed legislation dealing with the rental provisions of the Strata Property Act (“SPA”).

Under the old section 143 of the SPA, a rental restriction bylaw passed by a Strata Corporation did not apply to that strata lot until the strata lot was conveyed by the first owner after the developer or until the date that the rental period disclosed in the Rental Disclosure Statement expired, whichever was earlier. Essentially the first owner was always able to rent out the strata unit until the expiration of the rental period disclosed in the RDS, but not subsequent owners.

Pursuant to the amended Section 143 of the SPA, for a new RDS filed after December 31, 2009, a rental restriction bylaw will not apply to that strata lot until the date that the rental period disclosed in the RDS expires. This expiration is usually a long time away: perhaps 99 years or even indefinite.

Therefore, practically speaking, starting January 1, 2010, a new RDS will benefit every subsequent owner of that strata lot rather than just the first owner after the developer. All future owners will be able to rent the strata lot without being subject to any rental restriction bylaw for as long as the rental period disclosed in the new RDS allows them to.

This does not apply to strata buildings where the RDS was filed prior to Dec. 31, 2009.

COMMON QUESTIONS

Several questions regarding the recent changes to the Strata Property Act and rental units. Below is a summary of the questions and answers.

What is a “RDS”? -
“RDS” is the Rental Disclosure Statement that is filed as part of the Disclosure Statement. Developers are required to provide a Disclosure Statement every time they sell 5 or more units, and a Rental Disclosure Statement is part of the Disclosure Statement.

How does this affect a buyer acquiring property already tenanted from original owner –
It does not. The recent changes to the Strata Property Act only apply to Disclosure Statements filed after Dec. 31, 2009. There is no change for units in which the Disclosure Statement was filed prior to that time.

Does this mean that any new strata filed after January 1st of 2010, does not have the power to enforce rental restrictions?
This is correct only if the Rental Disclosure Statement reserves the right to rent for a period of time (which most do).

Developers may choose to file a RDS that prohibits rentals and in such a case, rentals shall not be allowed.

Does this apply only to No Rental restrictions or what about where strata set up a maximum number of units to be rented?
As stated above, the changes have nothing to do with existing units, so current No Rental Restrictions are in effect and
remain so.

Most every form ‘B’ says nothing about a date?

It is the Rental Disclosure Statement that is relevant, not the Form B.

Mark Fidgett | 604-273-2002

“Your Personal Mortgage Consultant….For Life!”

PS – Please Don’t Keep Me a Secret

A REFERRAL is when you INTRODUCE someone you care about to someone you TRUST!

T 604.273.2002 | F 604.522.2072

W http://www.notapennydown.com

An independent Mortgage Specialist associated with the Verico Mortgage Network.

To do:

1. Once you buy the property, immediately file a form called the NR6 in advance of the first day of rental income. Attach a pro forma rental statement, for example: “I expect $2,000 a month, my expenses are $1,900. My net rental income is expected to be only $100.” Then you only need to pay $25 per month to the (less) happy taxman. You have to file that form every December.
2. You need a tax agent in Canada who represents you – could be a realtor, property manager or tax accountant. Your agent must file form NR4 with Revenue Canada before March 31 to state how much rent actually was collected.
3. He or she must file a tax return on your behalf every year by June 30.
4. When you sell with a profit you file form T2062 (say you paid $800,000 and sold for a million – of the $200,000 profit the taxman will grab happily $50,000).
5. If you made your euros growing the “wacky tobaccy” and you wish to pay cash, your rental agent, by law is required to report your cash down payment ($10,000 plus).

That’s it. But please note: Just because it is easy, legal and safe to own property in canada, it does not mean that all property is a good investment – just as in the place you come from. There are good and bad deals, good and bad agents and it is up to you to do some research, find an experienced agent, and if what you are buying sounds too good to be true – it is.

Need help? Contact me at 604-273-2002 or www.NotaPennyDown.com

Mark Fidgett | 604-273-2002

“Your Personal Mortgage Consultant….For Life!”

PS – Please Don’t Keep Me a Secret
A REFERRAL is when you INTRODUCE someone you care about to someone you TRUST!

T 604.273.2002 | F 604.522.2072
W http://www.notapennydown.com

An independent Mortgage Specialist associated with the Verico Mortgage Network.