There are some consumer protections being entered into British Columbia that should help new homebuyers entering the housing market. They made it their objective to outline exactly what those protections looked like before they were released.
The details of phase one were announced. The provincial minister made the announcement at a news conference in Vancouver on July 21, 2022. The measures she described are a definite first in the country. And definitely will protect home buyers from the higher risks of the housing market.
Many home buyers feel like they need to waive all conditions when they are buying a home. But these new legal protections will come into effect on January 1st, 2023. This protection will provide home buyers with a non-waivable protection period after their offer is accepted.
There are fees, so the seller is protected to some extent if the buyer chooses to back out. There is a rescission fee of 0.25% of the purchase price of the home. So the seller would get to keep some of the down payment for being inconvenienced.
Introduction as a Cooling-Off Period
Anyone who doesn’t take advantage of this will only have 3 days to arrange financing, home inspection, and other things necessary to complete a home purchase. Buyers still have the ability to make offers, find financing, and schedule home inspections, but the protection period will give them some additional time to ensure they know what they are getting into if they are working with a condition free offer.
The provincial government consulted with the British Columbia Financial Services Authority before creating their final plan. They also consulted with realtors, appraisers, inspectors, financial experts and legal experts.
The BCREA’s Take on the Plan
Even with all the consultations, the plan is still being seen as controversial. This year, the British Columbia Real Estate Association called the plan ineffectual. They also indicated the plan was finalized without enough consultation.
The British Columbia Real Estate Association’s CEO indicates their extreme disappointment in the policy. They indicate it goes against the advice recommended in May for consumer protection measures as a part of an overall package, instead of this a la carte style.
They see this decision as one that undermines the independence and expertise of the regulator, and that the policy addresses concerns that have changed since the first time the cooling off period was brought up.
The BCREA doesn’t believe that the plan will stand up to the test of the market conditions which are ever changing. They additionally indicated that the best protections could not come from government interventions, but from the BCFSA’s research and decision-making.
Without that, there is no real positive change to be expected, Koot said. The BCREA estimates that 10% increase in bids is caused because of this new system, and they indicate this will drive up prices.
The Good and The Bad Of the Policy
One of the biggest failures of the policy is its failure to address housing affordability’s root cause. This is the lack of housing supply in the province. The plan does however give home buyers some peace of mind, and it does this will also protect the seller’s interest.
Another good is that the province indicates they will be monitoring the impacts and will continue to study advice from the BCFSA.
What’s your take on the policy? Are you excited about the change and the possible benefits to buyers and sellers?