SECONDARY UNITS BYE LAW: THE LIKELY FALL-OUT Lets do a case study: A $ 400K house with illegal basement apartment is penalized $25,000 under new proposed bye law. With a @ 5% home equity he has $20,000 invested and after Mortgage Penalty for pre payment $ 10,000 ........the home owner actually has only $ 10,000 in equity, which he will pay in real estate fees. So effectively the Home Owner has Nil Equity and he is faced with a $ 25,000 penalty from the City. Its the law that unpaid city dues are first priority and the bank comes second. So the City forecloses the house and the home owner is very glad, as he had no effective equity anyways. The city sells the house for @90% of market rate (as its a disputed structure now, with the main dispute being the basement apartment, due to which it was having added value) and City recovers its outstanding dues but the bank takes the hit. Once a few houses are foreclosed by the city under new byelaw, all others will evict their tenants. This may result in five things: a) Increase in Rents by @20% for tenants b) Loss of market value by @10% for houses with disputed basement apartments as now they will be treated as single family residences with finished basements only c) The home owners without the additional rental income will find it hard to pay the mortgage and will offer the property for sale d) we all know that from a sellers market suddenly it will become a buyers market and there is every likelihood of the prices going into free fall..........which is called Recession. e) Good Luck to Brampton.............then the city may get reduced tax collection, as migration will set in f) Good bye to Builders too.........its time the Builders lobby utilize their good offices to scuttle this dracorian proposed bye law, in their own long term interest
Posted on: Sun, 13 Apr 2014 19:06:37 +0000
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