New Year, New Changes

As we move into 2023, housing remains top of mind for not only home buyer and sellers but also both provincial and federal governments. As a result of the heated market conditions over the past couple of years there have been some new changes that have come into effect at the start of the year. Whether you are home buying or selling, these new rules & regulations are important to be aware of. We hope this is a helpful guide and breakdown to better understanding the changes and what they mean for you.

BC Homebuyer Rescission Period

As of January 3, 2023 the Government of BC announced a homebuyer protections period of residential real estate sales. This “cooling-off” period will provide buyers the ability to rescind (cancel) their contract of purchase & sales within 3 business days after the acceptance.

Here’s what you need to know:

• As of January 3, 2023, when a seller accepts a buyer’s offer to purchase a home, the Buyer will have three business days to cancel the contract. This is called the “right of rescission.”
• If the buyer changes their mind and chooses to exercise their right of rescission, they will need to notify the seller with the help of their real estate agent.
• The Buyer will need to pay a 0.25% fee to the seller. If the Buyer makes a deposit, this fee will be deducted from the deposit and the balance, if any, must be returned to the buyer.
• A buyer cannot waive their rescission right.

Some exemptions do apply:

• Residential real property located on leased land
• A leasehold interest in residential real property
• Residential real property sold in auction
• Residential real property that is sold under a court order or the supervision of a court

We believe that we may not see the new home buyer rescission exercised by home buyers as much this next year as the policy really only applies in certain market conditions and the current market is vastly different to the heated market with multiple subject free offers over the couple of years. For more information on the new Home Buyer Rescission Period: Click Here

Foreign Buyer Ban

As of January 1, 2023, the Prohibition on the Purchase of Residential Property by Non-Canadians Act prevents non-Canadians and corporations controlled by non-Canadians from purchasing residential property in Canada for 2 years. During this period, the government aims to better regulate the role of foreign buyers in the housing market to ensure housing is available for and used by Canadians.

The Act Defines A Non-Canadian As:

• Non- Canadian citizen
• A corporation that is incorporated otherwise than under the laws of Canada or a province
• A prescribed person or entity

Exempt Individuals:

• • Temporary residents studying in Canada, if they:
    • Are enrolled in a program of authorized study at a designated learning institution as defined in the Immigration and Refugee Protection Regulations
    • Have filed income tax returns for each of the 5 taxation years preceding the year in which the purchase was made
    • Have been physically present in Canada for a minimum of 244 days in each of the 5 calendar years preceding the year in which the purchase was made
    • Have not previously purchased a residential property in Canada while the prohibition is in effect
    • Purchase a property for a price not exceeding $500,000
  • Temporary residents working in Canada, if they:
    • Hold a valid work permit or are authorized to work in Canada
    • Have worked full-time in Canada for at least 3 years within the 4 years preceding the year in which the purchase was made
    • Have filed income tax returns for 3 of the 4 taxation years preceding the year in which the purchase was made
    • Have not previously purchased a residential property in Canada while the prohibition is in effect
  • Refugees, if they:
    • Have been given refugee protection or are a protected person under the Immigration and Refugee Protection Act, 2001
  • Refugee claimants and individuals fleeing international crises, if they:
    • Have made a claim for refugee protection in accordance with the Immigration and Refugee Protection Act, if that claim has been found eligible and referred to the Refugee Protection Division; or
    • Have received temporary resident status in accordance with the Immigration and Refugee Protection Act based on humanitarian public policy considerations to provide a haven to those fleeing conflict
  • Accredited members of foreign missions in Canada, if they:
    • Hold a passport that has a valid diplomatic, consular, official, or special representative acceptance issued by the Chief of Protocol of Canada
  • Non-Canadian spouses and common-law partners, if they:
    • Purchase residential property in Canada with their spouse or common-law partner who is a Canadian citizen, a person registered under the Indian Act, a permanent resident or a non-Canadian for whom the prohibition does not apply.

Exceptions for certain types of property:

• The Regulations include an exception for any residential property found outside of a Census Metropolitan Area or Census Agglomeration as identified in Statistics Canada’s Standard Geographical Classification 2021.
• Both Census Metropolitan Areas and Census Agglomerations are formed by 1 or more adjacent municipalities centered on a population centre, or the core.
• A Census Metropolitan Area must have a total population of at least 100,000 of which 50,000 or more must live in the core and a Census Agglomeration must have a core population of at least 10,000.

Additional Exemptions:

• The acquisition by an individual of an interest or a real right resulting from death, divorce, separation or a gift;
• The rental of a dwelling unit to a tenant for the purpose of its occupation by the tenant;
• The transfer under the terms of a trust that was created prior to the coming into force of the Act; and
• The transfer resulting from the exercise of a security interest or secured right by a secured creditor.

We don’t feel like this change will make much difference on its intended purpose of making housing more affordable or available to Canadians. Foreign investment accounts for such a low percentage of sales in BC and so while its disappointing to see this imposed it’s important to speak to your real estate advisor and if you feel your situation could be impacted by this change to seek legal advice to better understand how this change affects your ability to purchase a property in BC. For more information about the Prohibition on the Purchase of Residential Property by Non-Canadians: Click Here

Effective March 27, 2023 Additional Exemptions: 

• No longer applies to Vacant Land, so non-Canadians can not purchase vacant land zoned for residential use and use it for any purpose.
• Has increased the corporation foreign control from 3% to 10%.  Previously, an entity was deemed foreign if non-Canadians owned 3% or more of it. With the amendment, the maximum amount of non-Canadian control is 10%.
• Allows non-Canadians to purchase residential property for the purpose of development. Note that this will likely not include leasing or renting the property out to tenants or otherwise managing property as a rental property as part of a portfolio.
• No longer applies to work permit holders. Now, those who hold a work permit or are authorized to work in Canada are allowed to purchase residential property.  This exception will apply so long as the permit holders have 183 days of validity, or more, remaining on their permit, and have not purchased more than one residential property.

We understand with lots of change happening in the market there might be some questions.. and we get it! We would be more than happy to chat through any questions on how this could affect you and your own unique situation. We are always here to help!

*Disclaimer* This blog post provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.