Our Federal and Provincial governments are making significant policy changes that will affect our real estate market for tenants, landlords, buyers, and sellers. One of them affecting strata restrictions is already in effect and three new rules are expected this coming January 2023: a rescission period for buyers, a ban on foreign home buyers, and a new anti-flipping tax rule.
In BC the Age and Rental Restrictions to Strata Title Properties Lifted
In November 2022, the B.C. government passed amendments to the Strata Property Act which removed rental and age restrictions in strata properties (not including short term and 55+ restrictions). In areas where the government has data through the Speculation and Vacancy Tax, there are approximately 2,900 empty condos that cannot be rented out because strata rules prevent them from renting out their condo. This amendment will enable owners to rent out these badly needed homes immediately. That was a huge step towards the province’s goal of creating more housing.
BC’s Home Buyer Rescission Period
The Property Law Amendment Act, 2022 will give British Columbia buyers of most residential properties a rescission period, informally known as a “cooling-off” period, where buyers can change their minds within a prescribed period and cancel a contract of purchase and sale for a residential property with few consequences. This period will protect buyers from the pressures that come with high-risk purchases and will allow time to receive feedback on home inspections, legal advice, and funding confirmation, similar to the cooling off periods already in place for pre-construction sales.
The Act and its regulations establish a buyer’s right to rescind or cancel a contract of purchase and sale for residential real property within a three-business day period after final acceptance (starting on the next business day after an offer is accepted and excludes Saturdays, Sundays, and holidays in BC). If a buyer chooses to invoke their right of rescission within the rescission period, the buyer must pay to the seller 0.25% of the purchase price in compensation ($2,500 on a $1M purchase), meaning the right to rescind exists but comes with a fee. There is also a requirement that the buyer serve a written notice to the seller within this period if they seek to rescind the contract.
The BCFSA’s mandatory cooling-off period is expected to be in effect as of January 3, 2023. It applies to “residential real property” which excludes:
- residential real property that is located on leased land
- a leasehold interest in residential real property
- residential real property that is sold at auction
- residential real property that is sold under a court order or the supervision of a court
Canada’s Foreign Buyer Ban
Starting January 1 2023, non-Canadians will be banned from buying homes across Canada, through the Prohibition on the Purchase of Residential Property by Non-Canadians Act. This Act prohibits non-citizens and non-permanent residents from purchasing residential property in Canada for two years.
The Act also restricts non-Canadians from avoiding the ban by using corporations or other entities to purchase residential property. Both the non-Canadian purchaser of prohibited property and any person or entity that knowingly assists in the purchase can be fined up to $10,000 and the property may be forced to be sold.
The Regulations provide exceptions for the following people.
- 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 theImmigration and Refugee Protection Act
- 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 Actbased on humanitarian public policy considerations to provide a safe 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
Canada’s Anti-Flipping Tax Rules
The government of Canada’s proposed anti-flipping rules are expected to come into force January 1, 2023 and are designed to reduce speculative demand in the market place and help to cool excessive price growth. The new tax law will disallow the use of the principal residence exemption to shelter the capital gain realized on the sale of your home if you’ve owned it for less than 12 months, allowing for certain exemptions such as death, disability, separation, and work relocation. Instead, the gain will be 100 per cent taxable as business income.
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It is so important to us that you feel empowered and educated throughout the buying and selling process – if you have questions or would like to know more about another area in the lower mainland, give us a call, text, or email with any questions you have!
Note: This article is only intended to offer general information and does not cover every possible legal remedy or right. These materials should not be taken as legal advice or opinion due to the fact that laws may change over time and should be interpreted in the context of particular circumstances. For any specific advice, readers should consult a legal professional.