Foreign buyers purchasing pre-sale condos and then selling them before construction has commonly occurred for years. The NDP’s housing plan includes measures to make it harder for foreign buyers to purchase property by increasing foreign buyers tax from 15% to 20%, and requiring assignment sales to be disclosed in order to pay capital gains tax.
In the 14th edition of Demographia International’s annual Housing Affordability Survey, Vancouver was ranked third most expensive housing market, only behind Hong Kong and Sydney.
Click on the link above for the statistics graph. It shows price per square foot for apartments that were sold in the past 3 years in Kitsilano.
As is noticeable, the price per square foot is the lowest in the winter time. That is the opportune time for buyers to get the best deals.
Properties sold for less in the winter are not necessarily bad properties. People sell property when they need to.
This time vacationing to Taiwan, I was checking out the hotels and AirBnBs available to rent for several days’ time in Taichung and Taipei. The AirBnbs available are not impressive because you can rent cheap hotel rooms that are better. When I arrived at my hotel I saw how it was set up. The large apartment unit was rebuilt into nine small rooms, each with a bed, a wall mounted TV, and a shower room; with a Wifi hub, water tank machine and clothes washer in the common area. The hotel is advertised on hotels.com and expedia.com. A large apartment unit was turned into a hotel, complete with 8 rooms. Each room had its own key-code door lock and FOBs were required to enter the building and the apartment. Owning and managing this hotel would be a part time job with full time income.
Over the past three years, the Government of Canada has had to cut $5.2 billion dollars in spending and eliminate 19,200 jobs in the federal public service. If your position had the title ‘scientist’ and you worked in ‘research,’ you were at greater risk of being put on the chopping block.
My husband was a prime candidate for cutbacks, but he was saved from these rounds of layoffs. As an ex-federal government employee myself (I decided to leave on my own terms rather than waiting for the golden handshake), it has re-emphasized for me how important it is to not have all your eggs in one basket (i.e., your corporate job).
The time and effort it takes to build up a real estate portfolio can test your will, but when you stick with it, the benefits are worthwhile.
Here is my list of the six benefits of investing in real estate:
1. The courage to walk away
The headaches of the corporate world: endless meetings, business travel, red tape, bureaucracy at its fullest, reorganization, hiring freezes, more cutbacks, the impact on your health.
Putting up with this for years and years isn’t always worth the upside and perks a job might offer. Even if you don’t like your job, having real estate investments to fall back on can give you the courage to walk away from it all, like I did.
I decided to walk away from that job and from higher-level positions that would have sucked up more of my time so that I could balance what’s important in my life. I think Frank (played by John Goodman) in The Gambler said it best (although with a few more curse words):
“… You get a house with a 25-year roof… you put the rest into the system at 3-5% to pay your taxes and that’s your base, get me? That’s your fortress of [f—king] solitude. That puts you, for the rest of your life, at a level of f— you. Somebody wants you to do something, f— you. Boss pisses you off, f— you!”
2. The time to get healthy
You know that getting in shape and eating healthy is very important, but you constantly have other commitments in life that take up all your free time. You know that’s bad for your health in the long term. Even if your life isn’t stressful, you probably could benefit from more free time.
As you develop an income from real estate, it becomes easier to balance everything in life because it’s possible to be less reliant on a salary, and to be able to afford more time off. Examples include stepping back from your day job, building healthy habits, and placing health as a top priority. I decided to do all that, by taking extended time off to repair my 18-year-old shoulder injury and committing more time to dance and sports, rather than work.
3. The opportunity to take a sabbatical
Imagine a big dream vacation, one that takes you away for several months. It’s difficult, isn’t it, because you don’t have limited vacation time or the funds to pay for it? Having a real estate portfolio that pays you might be the push you need to take a break from work and go on a sabbatical. You might want to travel for an extended period of time, experience other cultures, and naturally wake up without an alarm clock, an agenda or a plan.
After enjoying a sabbatical where I was able to recharge, travel and spend more time with family, I decided to permanently leave my engineering career with the government.
4. Time to pursue interest-based work
Maybe you’ve wondered what it would be like to do something different, like going back to school, trying a new career or starting up your own business. It’s very liberating to know that you have options and you can choose work that balances with your values/beliefs, such as family and personal goals, rather than work that is driven by money.
I left engineering for good more than a year ago and decided to pursue interest-based work. My motto is to work as long as it is fun, rather than work because of the security, benefits or pension.
5. Early retirement
Dedicating time to building a nice nest egg in real estate can afford you extra time later in life. The best thing about early retirement is having more time to do what you want to do. You can afford a less structured life, such as waking up without an alarm clock and penciling in more fun activities, like volunteering or staying at home with the kids.
I haven’t gotten to this point (yet) but I’m actively working towards it. Life is too short to spend 40 years at your peak working so that you can ‘retire’ for the last 30 years.
6. The ability to pay for your kids’ education
If you are one of those people who hates volatility (as experienced in the stock markets) and likes steady returns and lower levels of risk, then investing a bit of capital to buy a property might be the easiest and most stable solution. It is almost impossible to get significant returns without taking a significant risk in paper assets. However, buying property works best when you have time to wait while a tenant pays down a mortgage.
I bought a few properties before my kids were born and now I’m patiently sitting back so that 20 years later, when there are no more mortgages, the rental income can go towards their education.
I’m happy to say that I’ve personally experienced the first four benefits of owning real estate and am on my way to experiencing the rest. I know that real estate is not for everyone and building a portfolio can be a difficult journey, but I’ve been able to survive the ups and downs, and I can safely say that real estate is my favourite way to create financial security for myself and my family.
Tracy Ma is a mother of twins and a real estate investor in Ottawa, Ontario. Connect with her at Financial Nirvana Mama where she shares free tools, videos and articles on managing your real estate portfolio. Her mission is to empower women about investing and help them to reach their financial nirvana.
Websites such as Airbnb and Vacation Rentals By Owner (VRBO) help property owners “share” their extra space by renting homes, apartments, and spare rooms.
Known as part of the “sharing economy,” property owners and tenants, called “hosts,” give strangers keys, front door codes, and gate openers. This can bring parking problems, noise, and crime into previously quiet residential communities.
If neighbours complain or police are called, strata councils and municipalities can take action.
Who has authority over short-term rentals?
Strata corporations and the local municipality both have authority.
- Under the Strata Property Act, Part 8 – Rentals, a strata corporation has the power to establish and enforce rental bylaws, which may include forbidding rentals or limiting the number of rentals. This is because property owners don’t want to share their pool, exercise equipment, gardens, and visitor parking with short-term renters.
- Municipalities. In BC, short-term rentals are under municipal jurisdiction. Rental periods of less than 30 consecutive days are typically considered tourist accommodation.
Depending on the municipality, short-term rentals may be:
- allowed under a specific bylaw (for example, Whistler through its Zoning and Parking Bylaw;
- allowed under a residential zoning bylaw, for example, Vancouver if the property owner is on site and runs a legal bed and breakfast (B&B);
- not allowed; or
- not dealt with.
Property owners must comply with bylaws
If a municipality permits short-term rentals, property owners have to comply with local zoning and business licensing requirements, strata bylaws, and insurance requirements.
Property owners must understand:
- the tax implications set out by Canada Revenue Agency and the BC government;
- the financial risks and liability involved in renting a home or room(s); and
- the insurance coverage required.
If property owners are renting their apartment, a room, or their entire home, they must notify their insurance company.
“The key is disclosure,” says Trudy Lancelyn, Deputy Executive Director of the Insurance Brokers Association of BC. “Talk with your insurance broker because short-term rentals may affect coverage.”
Renting is a material change of use and home owners will typically be required to:
- change their insurance to rented dwelling coverage;
- remove all valuables, breakables, and jewellery; and
- pay a surcharge of as much as 25 per cent on the premium.
A policy may include a “mysterious disappearance restriction.” This covers any items that go missing, and typically requires that there are signs of forced entry.
Airbnb in Metro Vancouver – just how big is it?
As of June 1, 2015, there were 4,268 Airbnb listings, an increase of 19 per cent from 3,888 listings on January 1, 2015.
More than three-quarters (77 per cent) of these listings were in the City of Vancouver.
How many Airbnb listings were in Vancouver?
- Downtown had 648 listings (19 per cent of the Vancouver total).
- The West End had 474 listings (14 per cent of total).
- Kitsilano had 380 listings (11 per cent of total).
- Mount Pleasant had 317 (9 per cent of total).
- Grandview-Woodland had 218 (6 per cent of total).
What types of units were listed?
In Metro Vancouver
- 66 per cent of all listings were for “entire homes/apts” (this includes condos).
- 32 per cent were for private rooms.
- 2 per cent were for shared rooms.
- 71 per cent of all Vancouver Airbnb listings were for “entire homes/apts” (this includes condos).
- 27 per cent were for private rooms.
- 2 per cent were for shared rooms.
Source: Karen Sawatzky, Airbnb listings in Vancouver: How many? What type? Where? University of British Columbia, Urban Studies master’s thesis research, 2015.
A strata council can fine the strata owner as long as the maximum amount of the fine ($500) is set out in the strata’s bylaws.
The municipality may also issue fines or prosecute for municipal bylaw violations.
Legislation and regulations affecting short-term rentals
Property owners renting short-term must also comply with the following:
- Goods and Services Tax (GST). If rental income exceeds $30,000 per year, the GST must be paid. Contact: 1.800.959.5525. To register for the GST, complete form RC1, Request for a Business Number or phone 1.800.959.5525.
- Health Act and Regulation. Maintains public health by preventing/removing health hazards. The Swimming Pool, Spray Pool and Wading Pool Regulations govern construction and maintenance of swimming pools, including permits and operation.
- Hotel Keepers Act and Hotel Guest Registration Act. Oversees short-term rentals to overnight guests, including Airbnbs, B&Bs, boarding houses, homes, privately owned vacation homes, motels, hotels, and resorts of four or more units.
- Income Tax Act. Applies to property owners receiving rental income from the rental of a property. If owners provide services, such as cleaning and meals, they may be considered to be carrying on a business and different rules apply. Non-residents earning rental income from property in Canada must pay a 25 per cent withholding tax.
- Provincial Sales Tax Act. If a property owner sells goods at a B&B, such as toiletries or souvenirs, they must register and collect PST. Here is more information.
- Provincial Sales Tax Act – Accommodation. Sections 122-125 of the Act regulate the charging of PST on short-term/overnight accommodation including Airbnbs, B&Bs, boarding houses, cabins, hotels, and motels of 4+ units. This function used to be included in the Hotel Room Tax Act, which has been repealed. Information on the collection of the accommodation PST and the municipal and regional district tax (MRDT) is found in this recently updated government bulletin.
- Residential Tenancy Act. Covers rentals of 28+ days. Landlords cannot evict tenants to rent suites on a short-term basis. Tenants cannot rent suites without the landlord’s permission.
- Strata Property Act. Covers strata property in BC, including bylaws and rules, and rentals.
The real estate market in Vancouver is currently stabilizing, with housing prices being held in check by lower levels of supply and demand. According to the Canadian Real Estate Board, the median selling price for a detached home in the Greater Vancouver Area in September 2014 was $633,500, an increase of 5.3 percent from September 2013. Central Vancouver consists mostly of high-rises and apartment buildings, and is home to the Downtown area and the trendy West End. The West Side is where you can find some of the city’s most affluent neighbourhoods, such as Shaughnessy and West Point Grey. South and East Vancouver are both highly multicultural with a mix of houses and apartments for various income levels.
Vancouver Population (2011)
5 Year Population Change
Number of Homes in Vancouver
Data source: Statistics Canada
Why Buy a Home in Vancouver?
The Greater Vancouver Area is the third largest metropolitan area in Canada, and the largest in Western Canada. It has an idyllic location, nestled between the west coast and the Rocky Mountains. Vancouver is consistently voted as one of the best cities in the world to live in. It ranked in the top ten of the Economist Intelligence Unit’s most liveable cities list for five years in a row. Residents of Vancouver love having all the benefits of an urban environment surrounded by nature. They also appreciate the city’s laid-back atmosphere and cultural diversity – more than half of Vancouver’s residents do not speak English as their first language.
Explore Vancouver’s Rich Cultural Heritage
Aboriginal peoples have been living in the Vancouver area for as long as 10,000 years. Its present-day name comes from George Vancouver, a British explorer who explored the harbour in 1792. American settlers began to arrive in the nearby Fraser Canyon during the Fraser Gold Rush of 1858. The first European settlement in what is now Vancouver was established in 1862. Shortly afterward, logging mills were set up in the area to capitalize on the abundance of forests. The City of Vancouver was incorporated with the arrival of the Canadian Pacific Railway in 1886. The CPR fuelled economic growth and attracted new residents. By the turn of the twentieth century, Vancouver was well on its way to becoming a prosperous, diverse economic centre.
Getting around in Vancouver
There’s a lot to see and do in Vancouver, and thankfully it’s all easily accessible. TransLink Vancouver is one of the most unique public transit systems in Canada, offering such services as the SeaBus and SkyTrain. TransLink services over 1800 square kilometres and provides some breathtaking views of the city. The streets in downtown Vancouver are grid-patterned and easy to navigate – generally, “avenues” run east-west and “streets” run north-south. The Trans-Canada Highway runs through the city’s east end, and the Vancouver-Blaine Highway runs south through Richmond all the way down into the United States. Cycling is Vancouver’s fastest growing mode of transportation, and the city has an extensive network of designated bike routes. Some bike trails worth exploring are those at Stanley Park and Pacific Spirit Park.
Shopping and Amenities
Shopping in Vancouver consists of everything from big malls, to designer boutiques, to multicultural markets. Metropolis at Metrotown, located just otuside the city, is British Columbia’s largest mall. The Downtown and Gastown area abounds with a mix of high-end and independent stores. In Chinatown, you can a wide variety of goods for sale. Vancouver’s mild climate and beautiful environment make outdoor recreation activities popular. The city has over 18 kilometres of beaches that provide for many kinds of water sport, as well as several running and cycling trails. Indoor fitness facilities and gyms are also prominent. There are over 200 public, Catholic, and private schools in Vancouver, and a number of colleges and universities, including Simon Fraser University and the University of British Columbia.
Entertainment and Attractions in Vancouver
It would be impossible to capture all the things to do in Vancouver in a single list. The more adventurous types might want to try tree top walking in the Capilano Suspension Bridge Park. For a more cultured outing, check out the Vancouver Art Gallery or the Museum of Vancouver. The music scene is prominent and encompasses everything from orchestral music, to alternative rock, to folk. The city also has vibrant nightlife centered around the Granville Entertainment District and Gastown. Sports fans won’t find a lack of teams to cheer on, including a number of minor league teams and three major league professional teams – the Vancouver Canucks, Vancouver Whitecaps, and BC Lions.