In a recent batch of initiatives to cool the overheated housing market and promote affordability, the Government of Canada and British Columbia have indicated that they will be implementing two noteworthy changes.
Cooling-Off Period
British Columbia may soon become the first province to have a mandatory cooling-off period for residential real estate. The cooling-off period is aimed at providing homebuyers more time to consider their offers, ensure financing, and obtain a home inspection.
In the current market, many offers are being written condition free in order to be competitive. Some buyers are being saddled with homes that require significant repairs or they find themselves in a position where their financing falls through.
Selina Robinson, the Province’s Minister of Finance stated that, “people need to have protection as they make one of the biggest financial decisions of their lives. In our overheated housing market, we have seen buyers feeling pressure to waive conditions just to be considered, and new homeowners discovering costly problems only after a deal has closed. We want to make sure people buying a home have time to get the information they need to make a sound decision within limits that still give sellers the certainty they need to close sales.”
The exact details of the cooling-off period are still to be determined.
GST payable on all Assignment Sales
In an effort to restrict housing speculation and promote affordability, the Government of Canada announced on April 7, 2022 that GST will apply to all assignment sales of newly constructed or substantially renovated residential housing effective May 7, 2022.
Previously, an individual, under certain circumstances, could assign their pre-sale contract to a purchaser and avoid GST consequences on that sale. In the rising housing market, speculative investors would purchase various pre-sale homes and resell them at a premium, avoiding certain taxes. This new initiative is seeking to cool these speculative investments, freeing up homes for individuals to occupy. With lower demand for pre-sales, the Government of Canada hopes that this will slow the increase in housing prices.
This article is intended to be an overview of the law and is for informational purposes only. Readers are cautioned that this article does not constitute legal or professional advice and should not be relied on as such. Rather, readers should obtain specific legal advice in relation to the issues they are facing.