Ontario Finance Minister Charles Sousa is hinting strongly that the Wynne government’s upcoming house affordability package will include measures targeting real estate speculators, or as he calls them “property scalpers.”
Sousa told reporters last week speculators are reselling contracts for pre-construction homes multiple times before closing, using assignment clauses.
However, the finance minister admitted there’s no data to show how widespread such a practice is in Ontario.
Something similar — called "shadow flipping" — became increasingly common in Vancouver, in which a real estate agent would resell the same previously-owned home mant times before the closing date, driving up the price of the house, sometimes by hundreds of thousands of dollars.
Last year, the Clark government in B.C. put in place new rules that require real estate agents to draft offers that require the seller’s consent to a contract transfer, and any resulting profit to be returned to the seller.
In Ontario, according to Sousa, property scalping involves only new developments, adding at least some of the housing measures will be included in the Ontario budget, set to be tabled April 27.
Assignment sales are not illegal, but Sousa said he wants to close a loophole that allows so-called property scalpers to treat their profits as capital gains — which means only 50% is taxable. Efforts to change capital gains treatment at the federal level were unsuccessful.
