Planning for Post-COVID-19 Economic Recovery

With British Columbians being asked to head to the polls on October 24, BCREA is advocating with all parties to ensure that market housing affordability is a cornerstone of the province’s COVID-19 economic recovery plan.

“The COVID-19 pandemic has made market housing affordability inequities more apparent than ever,” says Trevor Hargreaves, VP Government Relations and Stakeholder Engagement. “Whatever the election outcome, a better future for British Columbians must include meeting British Columbia’s housing needs, controlling rising strata insurance costs and supporting a greener future by encouraging energy retrofits.”

Meeting British Columbia’s Housing Needs

Throughout the province, there is a mismatch between available housing options and consumers’ needs. Providing enough supply – and choice in types of housing – to meet demand is a key factor in managing housing affordability. As we plan for economic recovery, ensuring all British Columbians have access to affordable, appropriate housing, whether to rent or purchase, must be a priority.

Our recommendations include:

  • In urban areas, increasing the supply of affordable, market, ground-oriented, family (three-bedroom) homes along transit corridors in lower density neighbourhoods using Property Transfer Tax revenue.
  • Encouraging local governments to legalize secondary suites with minimal red tape and enable alternative rental units such as coach houses.

New construction will also put people to work, further contributing to economic recovery.

Controlling soaring strata insurance costs

At least a quarter of the BC’s population lives in stratas. The massive rise in strata insurance costs has created uncertainty and risk for property owners and renters across the province. We appreciate the steps that the provincial government has already taken to protect strata owners, but more action is needed.

Our recommendations include:

  • Encouraging the BC Financial Services Authority to foster a robust, economically viable market that attracts and retains insurance providers.
  • Developing mandatory education for strata council members.

Encouraging energy retrofits

While all levels of government are rightly focusing on supporting British Columbians through this pandemic, climate change risks remain as urgent as ever. BC’s next government can help reduce greenhouse gases while bolstering our economy by offering energy retrofit incentives. Such incentives would make important renovations more affordable, help the government meet its climate change targets while contributing to economic recovery.

Our recommendations include:

  • Committing to a long-term, widespread investment in financial incentives to help property owners voluntarily retrofit existing buildings.
  • Making financial incentives available to owners of existing commercial, purpose-built rental, multi-family strata and single-family properties.

Click here to read all our policy recommendations for the next provincial government.

BC REALTORS® support strong communities

The housing market and the Realtor profession are key contributors to the provincial economy. A 2019 study from The Canadian Real Estate Association estimates that each home sale on the Multiple Listing Service® in BC between 2016 and 2018 generated approximately $72,000 in related expenditures in the three years after the sale.

BC’s 23,000 Realtors are committed to working with government and other partners to support policies that build stronger communities by encouraging economic vitality, providing housing opportunities for all British Columbians and contributing to a sustainable climate future.

Strata Insurance Update

For several months, BCREA and other stakeholders have drawn the government’s attention to significant increases in the cost of strata property insurance in BC. This is a complex issue and, while it can’t be solved quickly, actions are underway.

Initial research findings
The BC Financial Services Authority (BCFSA), BC’s financial services regulator, published a brief interim report in June on the causes of significant increases in strata insurance. These are some of the key findings:

  • Looking at both large and small stratas, premiums have risen on average by approximately 40 per cent across the province over the past year while deductibles have increased up to triple-digits over the same period.
  • Price pressures will continue and there is not enough capacity in the strata insurance market to support future expected demand.
  • Insurers are incurring losses mostly from minor claims due to poor building maintenance practices, initial construction quality issues, building material changes and rising replacement costs.

The BCFSA is consulting with stakeholders – including BCREA – and plans to publish its final report in the fall.

Legislative changes
During the summer session, BC MLAs passed the following legislative amendments as the first step to address strata insurance concerns:

  • Add insurance information to the Form B Information Certificate (recommended by BCREA).
  • Strengthen notification requirements by insurers to strata corporations of changes to insurance coverage and costs, or an intent not to renew (recommended by BCREA).
  • Require strata corporations to inform owners about insurance coverage and provide notice of any policy changes, including increasing deductibles (recommended by BCREA).
  • End the practice of referral fees between insurers or insurance brokers and property managers or other third parties, and require brokers to disclose the amount of their commission.
  • Set out clear guidelines for what strata corporations are required to insure to help strata councils make informed decisions.
  • Allow stratas to use their contingency reserve fund when necessary to pay for unexpected premium increases.
  • Protect strata unit owners against large lawsuits from strata corporations if the owner was legally responsible for a loss or damage, but through no fault of their own.
  • Identify when stratas are not required to get full insurance coverage.
  • Strengthen depreciation reporting requirements.
  • Change the minimum required contributions made by strata unit owners and developers to a strata corporation’s contingency reserve fund.

Most of the changes will take effect by regulation, and BCREA looks forward to opportunities to provide input. In the meantime, resources are available from the Condominium Home Owners Association of British Columbia and the BC Government.

Province Revises Strata Property Act in Response to Insurance Crisis

The Province of BC has changed the Strata Property Act and the Financial Institutions Act in response to the recent escalation of insurance premiums and deductibles. In a communication to Strata Managers, the Real Estate Council of BC (RECBC) highlighted that now:

  • Strata corporations are required to inform owners as soon as it is feasible of any material change in the strata corporation’s insurance coverage, including increasing deductibles; and
  • Strata corporations can use their operating fund or contingency reserve fund to pay for property and liability insurance required under the Strata Property Act or the strata corporation’s bylaws without a vote of owners if there are reasonable grounds to believe that an immediate expenditure is necessary to obtain the required insurance.

RECBC also noted that more changes are in the works and advised real estate professionals to refer to the updated insurance web page on the government’s strata housing website for further details.

BCREA Continues to Advocate on Insurance Issues

The dramatic rise in insurance premiums and deductibles experienced by many strata properties and owners is an issue of significant concern to BCREA.

The need to find a solution is urgent, but there are no quick fixes on the horizon. The issues are complex, ranging from high claims ratios and our ever-present risk of earthquakes, to insurance companies vacating the BC market and poor maintenance practices. For the approximately 1.5 million BC residents who are strata residents, and any potential purchasers of condominium units, this crisis creates risk and uncertainty.

We have engaged with the BC Financial Services Authority with our recommendations (viewable in this previous blog post), and continue to advocate for further actions by government to ensure better availability of insurers in the market, and improved education and training for strata councils.

This page on the provincial government’s website provides more information on the recent legislative changes and additional background on insurance for strata corporations.

Government’s First Actions on Strata Insurance

After hearing from strata corporations, owners and other stakeholders – including REALTORS® – for several months, on June 23 the BC Government introduced legislative changes to help address the high costs of strata insurance.

Strong advocacy work by BCREA and the real estate boards has resulted in BCREA being named as a contributor in the government’s news release and three of our recommendations being included:

  1. Add insurance information to the Form B Information Certificate, with liability for accuracy resting with the insurer or insurance agent instead of the strata corporation. We hope this can happen quickly after the legislation is passed.
  2. Require strata corporations to inform owners about insurance coverage, provide notice of any policy changes, including increasing deductibles. This will be in effect as soon as the legislation is passed and will give all owners a better understanding of their situation.
  3. Strengthen notification requirements by insurers to strata corporations of changes to insurance coverage and costs, or an intent not to renew. The government hasn’t specified how much notice will be given, but BCREA asked that strata corporations receive 60 days’ notice.

Other measures include ending referral fees between insurers and property managers, identifying when stratas are not required to get full insurance coverage and strengthening depreciation reporting requirements. All proposed changes have to be debated in the legislature, and most of them will require more work and consultation by the government and others (ideally) to work out the details.

The government knows these changes won’t fix the problem, but this is a start. This fall, the BC Financial Services Authority, which regulates provincial financial services including insurance, will publish research findings that will help the government create effective policies to help BC strata owners and corporations now and into the future.