The B.C. NDP's housing critic is calling for an inquiry into Metro Vancouver's real estate market over a technique known as shadow flipping, under which sales contracts are reassigned, in some instances multiple times, before the sale of a home is closed.
Vancouver member of the legislative assembly David Eby outlined his concerns on Monday at a news conference, where he said some realtors are using the technique to avoid paying taxes and, in some cases, to avoid controls established to prevent money laundering.
"The provincial government has been asleep at the switch on this issue, and it's time for them to step up and begin a formal arm's-length investigation into what's happening in our real estate market in British Columbia," said Eby.
A Globe and Mail investigation revealed that those involved in the shadow flipping can avoid paying the property transfer tax by reassigning the sales contract before the final sale.
Suggestions of money laundering
Eby said several people came to him in January with specific instances where forms were fudged, with implications for money laundering as well as tax avoidance.
Eby said he wrote letters to the Real Estate Council of B.C., requesting it investigate the allegations. He said the organization denied his request, citing insufficient evidence.
However, Eby maintains he has specific information of a foreign buyer listing a Realtor's Canadian address as his own on a Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) form. He said he shared that information with the real estate council and FINTRAC in January.
FINTRAC is Canada's financial intelligence unit.
Real estate council criticized
Eby said the real estate council is not living up to its responsibility of protecting the public from Realtors who don't follow the rules. He said a few corrupt agents are hurting the reputation of the whole profession.
"Clearly, something needs to happen to address the fact that people are told that they cannot trust real estate agents," said Eby. It is up to the B.C. government to ensure watchdogs are doing their job, he said.
Shadow flipping is helping to push housing prices upward, sometimes by millions of dollars, in an already overheated market, Eby said.
To hear the full audio, click the link labelled: B.C. NDP calls for real estate inquiry.