BC Strata Property Regulation: Updates to Depreciation Report Requirements

Boughton Law summer student Rachel Lum delves into the recent changes to BC Strata Property Regulations. 

The Minister of Housing has recently announced significant amendments to the Strata Property Regulation that strengthen the requirements for strata depreciation reports. These changes aim to improve the quality of mandatory assessments, ensuring that strata corporations proactively plan for their long-term maintenance needs. These amendments will have important implications for strata corporations with 5 or more strata lots, real estate developers, and licensees.

The regulatory amendments come into effect on July 1, 2024.

What are Depreciation Reports?

Depreciations reports are a mandatory and comprehensive management tool that inform strata corporations about their common property. The report provides a detailed evaluation about the condition of particular assets, including their anticipated costs for future maintenance and repairs over a 30-year timeline.

Key Changes to the Depreciation Report Requirements

The regulatory amendments will invoke four key changes:

1. Enhanced Reporting Quality – Effective July 1, 2025, strata corporations will be required to obtain depreciation reports from a specified list of qualified persons. Strata corporations with fewer than 5 strata lots in the strata plan will be exempt from obtaining depreciation reports;
2. Reduced Reporting Frequency – Strata corporations will be required to obtain a depreciation report every 5 years instead of every 3 years;
3. Eliminated Indefinite Deferrals – Strata corporations will no longer be permitted to indefinitely defer getting a depreciation report by obtaining an annual ¾ vote; and
4. Developer Funding – Developers establishing new strata corporations with 5 or more strata lots on or after July 1, 2027 will be required to provide funding for depreciation reports. The required funding is a minimum of $5,000 plus $200 per strata lot, up to maximum of $30,000. These funds must be deposited no later than the date of the strata corporation’s first annual general meeting.

Transitional Provisions

The amendments also provide transitional provisions for both new and existing strata corporations. If a strata corporation does not have a depreciation report, or a depreciation report was received prior to December 31, 2020, then the strata corporation must obtain a depreciation report before:

• July 1, 2026: If located in Metro Vancouver, the Fraser Valley, or the Capital Regional District (excluding the Gulf Islands and other islands within the Capital Regional District if only accessible by boat or plane); or
• July 1, 2027: If located in all other areas of British Columbia

Implications for Real Estate Developers and Licensees

Real estate developers are required to provide funding for depreciation reports effective July 1, 2027. This will impact disclosure statements or disclosure statement amendments under the Real Estate Development Marketing Act for developments that are expected to be completed on or after July 1, 2027. As such, developers should ensure that the disclosed annual budget for the strata corporation complies with the new funding requirements.

Real estate licensees are encouraged to familiarize themselves with the updated regulations so they may accurately advise their clients. This is particularly crucial for those licensed to provide strata management services, as clients must be informed about the new deadlines for obtaining depreciation reports.

For more information about the new regulatory amendments, please contact Boughton’s Real Estate team.

Special thanks to Boughton summer student Rachel Lum for researching and writing this article.