Changes to Strata Property Act Provides New Investment Opportunity

(November 04, 2015 , posted in Investment Property)

Metro Vancouver’s aging condominium and townhouse projects could be the new target of developers when proposed changes to the Strata Property Act go into effect in the very near future...

Changes to the strata property act will be a big deal anyone who owns an old condo as strata can be dissolved with 80% vote rather than requiring 100% of all owners to agree. This presents enormous investment opportunity for buyers looking to get into the market at a lower price point. Opportunity knocks in Vancouver Real Estate in many forms and this change to the Strata Property Act, which could happen by the end of the year and has the potential to offer some serious financial windfalls to strata owners throughout the city.

Under the proposed change, it will be easier for strata owners to dissolve their strata corporation and sell the entire building. Under the change, 80 per cent of strata owners, rather than the current unanimous vote, will be needed to dissolve the strata. 

The first condominiums in BC were built in the mid-1960s, and some strata buildings were converted from even older condominiums.

Reasons for terminating a strata corporation vary, but typically are related to the age of the building and large levies that are imposed when the building's major components such as the roofs and foundations start to fail. These kinds of levies can be crippling for strata owners who do not have the resources to come up with thousands and thousands of dollars in special assessment and I've met many who have to re-mortgage in order to pay for a new elevator in an old building and they are left owing more on their unit that what it is worth. This new change to the Strata Property Act should be able to help in situations like these where previously strata owners have often been chained to a building that doesn't hold anymore value simply because 100% of the owners couldn't agree to sell. 

When you have to make pay-outs for repairs that out value the building, it makes more sense to move on but of course, this can make it difficult to sell to regular buyers on the market. Investors, however, will see the potential - with the right location - to pick up a property like this with the potential of selling to developers. 

Another reason that strata owners may want to sell the property directly to a developer is that current land value may exceed what an old building is worth. All of the owners can sell at once for a greater value than what they could hope to achieve otherwise.

However, not all owners can expect a big cash out. The ideal is buildings close to SkyTrain stations and those on major corridors where higher density is allowed under updated official community plans (OCP) of the local municipality.

This could mean, for example, that a 50-unit condominium building could be demolished and rebuilt with 75 or more modern strata units if the floor-space ratio allows.  For investors, the first thing to have your Realtor check the OCP for an area and then to start looking for condominium and townhouse complexes that have a combination of a large land base, an aging structure, and a higher density allowance.

Based on current land values, there are potential windfall prices available. I have already helped several clients buy into some of these opportunities in up-and-coming areas.. solid rental investments to hold onto until inevitably these older buildings will have to come down and because of where they are located, will demand interest from developers and new builds.

If this interests you and you are looking to invest in something with this kind of potential, please don't hesitate to give me call! 778-386-0771    or email christina@christinaerl.com
I can send you some options immediately in an email so you can see what potential there is for you.