>>1065975Vandyk builds a 200 unit condominium tower in a highly coveted area. Units are between 300k and 500k.
Vandyk needs to sell 60% of his units before he can get financing to begin construction.
To do this faster Vandyk sells 20 units to friends and family members who have no intention on moving into the unit. Vandyk sells another 100 units and gets financing for construction.
After another year vandyk sells the next 100 units and he has a sold out condominium tower.
Tenants get occupancy 3months or so before closing, suddenly 20 units with occupancy come on the market; the people sell those unis for usually 15-20% more than the pre construction price.
All they do is assign title to the new purchaser, avoid capital gains tax and land transfer tax because the vendor's name was never on title.
Those 20 units initialy sold artificially bumped up demand for housing units because they had no intention on living there in the first place.
This legislation puts an end to that; so if a builder wants to sell his units faster to get financing faster prices would need to be lower.
