December 23, 2022, by Paul Rayburn
A significant law, Bill 44 was put into effect on November 24, 2022. Bill 44 and strata property values in BC. Policies set in motion in response to the Covid-19 pandemic spurred on a housing supply crisis, which is affecting nearly all of Canada. Many areas within British Columbia are particularly hard hit. In response, Bill 44 was passed which could significantly impact strata and bare land strata property values as well as it may have some unintended consequences. What does it mean for your strata property value and what are some of the potential issues? For instance, I understand there has been a surge in strata properties that were previously age-restricted to 19+, or any other age less than 55, now moving to amend their bylaws to restrict to 55+. That was surely not the intention of this bill. This could be a source of pain, particularly where those under 55 purchasers may not be able to take occupancy if a strata corporation changes its bylaws during the escrow period.
If the government is set on solving the housing crisis, which they have indicated was the number one priority for this bill, they will be faced with a tough choice in respect of any age restriction. The other significant change in the bill was the removal of strata’s ability to restrict rentals within their bylaws. This does not alter existing zoning regulations or other restrictions on title however, in many cases the ability to rent in the present market is seen as an investment opportunity and may result in increased values.
It may be too early to draw conclusions however, I recently looked into a strata that was previously age restricted to 50+ that a local Realtor tipped me of to investigate further. They had seen significant increases in demand following that particular strata councils decision to veto the age restriction. The vote was reportedly passed on August 23, 2021. See the following graph showing the sales since 2010.
There had been little activity up until this change was made and it is quite apparent that a change in demand occurred. These are a mix of 1 and 2 bedroom apartment units in a three story building and no adjustments have been made for size, condition, other appeal or transactional factors however, there can be no mistake that a significant increase in demand and prices can be seen. It should be noted this is only one example and no accurate inferred values or adjustments can be applied to your case without further analysis of market supply and demand factors. As previously mentioned, there was an almost immediate knee-jerk reaction from many strata councils to increase their age restriction to 55+ which, based on this example, may actually work to have reduced the overall market appeal. These examples were reported to include 19+ age restrictions. Unfortunately, that could be seen as a backfire by actually reducing the options for those under 55. Will the government seek to rescind the age restrictions altogether if this proves to exacerbate the issues? Will some of these stratas second guess their decision if they perceive an opportunity for profit?
This bill was proposed and passed within one week which is unheard of and probably for good reason. There are currently unanswered questions resulting from ambiguity in the language of the bill and we may have only touched on a score of current and future issues that will need to be addressed. Appraisers and others needing to determine market values will need to address the impacts in current and future assignments, where the value trends will need to reflect the change in market appeal pre and post November 24, 2022.
Bill 44 and strata property values in BC have raised a number of questions and concerns. If you have been affected directly by this law or know someone who may be, reach out to an appropriate professional. Call your preferred realtor, lawyer, or appraiser. If you need referrals or are uncertain, we are here for you and will network to connect you with the right party for your particular circumstances.
Here is a link to a few news articles and bulletins on the announcement.
For further information on the appraisal process check out our What to Expect section.