2006 was a record year for British emigration to Canada, with a total of 6,542 Brits receiving a permanent residence visa.

This, according to newly released data from Citizenship and Immigration Canada, is the highest since 1997 – from which the current means of collating statistics dates.

The figure is an 11 per cent increase over figures for 2005, and made the United Kingdom the seventh-biggest source country for immigrants entering Canada in 2006. This increase was despite a 4 per cent decrease in the overall numbers admitted through Canada’s immigration programme – from 262,239 in 2005 to 251,649 in 2006 – and a massive 22 per cent drop – to 33,080 – in the number of Chinese nationals becoming permanent residents of Canada, although the country did still head the 2006 league table of source countries.

In fact, considering that there’s been a well-publicised increase in the visa processing times at the Canadian High Commission (CHC) in London, which deals with visa applications from Brits, the increase could be considered something of a surprise.

As is well documented in the Vancouver media, one of the main sources for keeping the real estate market in Vancouver buoyant, is immigration from countries such as the UK where the exchange rate, even with the strong Canadian dollar, continues to be favourable.

The Real Estate Board of Greater Vancouver reports that east-side condo prices are rising faster than anywhere else in their region thereby offering an affordable alternative to an address in False Creek or Coal Harbour.

The average price of a condo in March 2008 compared to the same month last year has risen by the following percentages:

Vancouver East, +14.9
Coquitlam, +12.7
Richmond, +12.7
Port Coquitlam, +11.8
South Delta, +11.6
Vancouver West, +11.5
Burnaby, +11.2
North Vancouver, +10.9
New Westminster, +10.0
Maple Ridge/Pitt Meadows, +5.3
Port Moody, +4.6
West Vancouver, +4.0

Investors who have purchased overseas property can now capitalize on a reduction in U.K. Capital Gains Tax (CGT) to 18% from April 2008 from the previous rate of 24% thus increasing profits on overseas property investment.

The changes will take effect in the new financial year beginning 6th April 2008 and will include a £9,200 CGT allowance. Overseas property investments will only be subject to 18% tax on any gains above £9,200 replacing the previous sliding scale of up to 40%.

Property investors could also reduce tax bills further by splitting the capital gains with their partner where a property is jointly owned, and in effect pool their threshold allowance of £18,400.

Additionally, owners will be entitled to up to £40,000 letting relief against any gains earned. And as with the CGT allowance, providing the overseas property investment is held in joint names, the letting relief is available to each owner effectively doubling the maximum letting relief to £80,000.

Other tax reductions can be made upon the sale of property if the investor has previously let the property and then lives in the property for any length of time, under the UK Principle Private Residence Relief (PPR). This allows the owner the last three years worth of gain, plus the period in which they have lived in the property, completely free from CGT.

Although PPR generally means CGT is not applicable when selling your main and only residence, if more than one property is owned, the PPR may be offset against any property in the UK or overseas.

(extracts taken from Obelisk Investment)

B.C. Finance Minister, Carole Taylor, has given first time home buyers a major boost by increasing the threshold at which they have to pay Property Transfer Tax (PTT) to $425,000 (formerly $375,000), subject to various conditions.

The details of the exemptions and thresholds can be found here:

http://www.sbr.gov.bc.ca/documents_library/bulletins/PTT_004.pdf

In an article in today’s Vancouver Sun, Derrick Penner informed us that builders and developers piled another $3.3 billion worth of planned large construction projects onto British Columbia’s Major Projects Inventory between June and the end of September, increasing the list to a total of $135.1 billion.

There are now 843 projects on the list, which is compiled quarterly by the Ministry of Economic Development, with approximately 417 projects already under construction in B.C..  This is the 17th straight quarter that the inventory has increased.

Minister of Economic Development, Colin Hansen, said the inventory “is the best indicator of real, tangible [economic] activity for the years ahead”.  He added that the size and time span of the inventory offers hope for the B.C. economy after the 2010 Olympics.

Manley McLachlan, president of the B.C. Construction Association, said the breadth of work available on the project lists is comforting.  However there are challenges ahead, notably the recruitment of new workers and the rising dollar value which reflects the inflating construction costs as demand for buildings – and not just in B.C. – drives up the prices for materials such as steel and concrete as well as labour.

The Canada Mortgage and Housing Corporation expects the average single-family house price to reach $900,000 in Greater Vancouver in 2008 as an influx of new residents (expected to be around the 35,000 mark) and job creation (approximately 33,000) keep the city in a seller’s market. The CMHC further forecast that the region’s average price across all property types would rise by 9% from 2007 and would generate the demand for 18,500 new housing starts.

The Superintendent of Real Estate has introduced two new Policy Statements to further enhance consumer information and awareness and assist purchasers in understanding offerings of real estate developers. Beginning on November 1, 2007, Disclosure Statements filed under the Real Estate Development Marketing Act will require additional information regarding the terms of pre-sale agreements, the background of developers, and potential conflicts of interest.

The full text of the Information Bulletin can be found at http://www.fic.gov.bc.ca/pdf/real_estate/redma-07-03.pdf.

In an article in the Vancouver Sun, Derrick Penner writes that real estate sales across the Lower Mainland continued their upward trend throughout August defying early forecasts which called for moderation in the markets. The Multiple Listing Service recorded sales were up 12.9 per cent across Metro Vancouver compared with the same month a year ago, the Real Estate Board of Greater Vancouver said.

During August, 3,384 properties sold in Vancouver alone, with the average price for a single family home hitting $726,067, up 11.1 per cent from a year ago. “We’ve seen sales near record levels for three consecutive months despite the summer traditionally being a slower time for real estate in Greater Vancouver,” board president Brian Naphtali said in a news release.

It wasn’t just single family homes that enjoyed the increase, condo sales saw the biggest growth with 16 per cent more transactions at 1,504 compared with the same time last year. The average price for a typical condo was $367,944 in August, up 11 per cent from this time last year.

“The Canadian Real Estate Association revised its annual forecast for 2007 in August because the market so far this year has performed much stronger than they predicted it would,” said Jim McCaughan, president of the Fraser Valley Real Estate Board, an area which also demonstrated price increases.

However, Helmut Pastrick, chief economist for Credit Union Central B.C., said the resurgence in 2007’s real estate markets follows from a period in 2006 when sales had started to fade because of rising mortgage interest rates. “We did have a bump up in mortgage rates in mid-May,” Pastrick added, which might still result in declining sales. In any event, Pastrick said he expects overall sales in Greater Vancouver to end up higher than in 2006.

Cameron Muir, chief economist for the B.C. Real Estate Association, added that while prices across the Lower Mainland are up, their rate of increase has slowed considerably from the inflation seen in 2006. “Price growth has moderated, but not as rapidly as we had expected it to at the beginning of the year,” Muir said. He added that buyers who rushed in to use mortgages that they had pre-approved before May’s rate increases also helped bump up sales in recent months.

“It will be interesting to see what happens in the fall months in terms of this upward trend,” Muir said. “Is it going to continue?” Muir said buyers at the bottom end of real estate markets are being squeezed out, which is one of the biggest issues the region faces. At the top end though, Muir said those who have benefited from the economic prosperity of the times, and baby boomers who have seen significant equity gains, continue to drive sales.

The art of buying and selling a condo before it is even built – otherwise known as ‘flipping’ or assignments – has rocketed in recent years, particularly in Vancouver and the Lower Mainland.

Where such sales were unheard of a few years ago and were limited to a few Realtors in the know, the huge hike in apartment developments has spawned a new breed of investor looking to snap up a pre-sale from developers and then flip it before the completion date.

Responding to a significant rise in the phenomenon called ‘assignment sales’, www.AssignmentsCanada.ca, was established in 2004 to advertise an increasing number of assignment listings.

An assignment sale goes like this: Unlike a regular apartment purchase where the physical property is bought at the time of sale, the seller (‘assignor’) transfers to the buyer (‘assignee’) the obligations and contractual rights to the apartment before the completion of the building. Upon completion, the assignee gains the title deeds from the building’s developer. And in times of a rising property market, it is often possible to achieve a significant profit even before a brick has been laid, through an assignment sale.

“There’s a definite niche for these types of sales – and buyers who have missed out on pre-sales need a forum where they can search for property assignment sales in the building or areas of their choice,” says Nicola Way, founder of AssignmentsCanada.ca.

“Indeed I started the company because I missed out on buying a condo in a desirable tower and could not find anywhere to look for a possible assignment sale. With cranes dominating our city skyline and demand continuing to outstrip supply, an assignment purchase may be the only way to get your hands on a hot property in a sought-after area.”

Key considerations in the success of an assignment sale are location, accessibility, amenities and the opportunity to own a brand-new apartment.

Indeed there are buyers who often purchase numerous units within the same development all for the purpose of assigning.

The practice is not without risks: There is no guarantee that as the building nears completion, the price of the property will have increased.

Also, there is no guarantee either that the building will have ‘sold out’ before completion, thus making it harder to sell an assignment sale as it is virtually impossible to compete with a unit still available at a pre-sale price.

There is also the issue of potential buyers needing to find the necessary funds upfront as payment for the contract transfer. These include the replacement of the deposit that the original purchaser paid to the developer (typically 25 per cent of the purchase price) plus the ‘lift’ or profit in the price from original purchase price to new assignment price.

Initially, many Realtors were reluctant to represent assignments as, for the most part, developers did not allow such listings on MLS.ca – which has always been Realtors’ main advertising vehicle. But with the advent of specialist sites such as AssignmentsCanada.ca, Realtors are now equipping themselves with knowledge of assignment transactions.

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