2023 dawned an altered and uncharted chapter in our province’s history of real estate. With well-meant intentions to expose corruption, reduce speculation, and increase affordable supply back into BC markets, buyers and sellers will now have several additional layers of government policy to navigate when entering into any real estate transaction.
Ironically, with all its timely conveyance intricacies, the sales process is now a more complicated and costly proceeding.
Industry insiders have voiced strong opinions that all this “help” to police, patrol and limit when and who can and cannot purchase commercial and residential real estate will further complicate the challenges home buyers and sellers are facing in this mid-correction market, suffering from interest rate shock.
In addition to banning a small segment of foreigners from metropolitan residential purchases with the new Federal Foreign Buyers Ban, buyers and sellers must also be compliant with the new anti-flipping tax on profits realized with less than one year of property ownership, the mandatory 3-day cool off period in which buyers can back out of an accepted offer contract and register any title transfer with LOTA, the new Land Owner Transparency Act.
The vilification of “foreign buyers” as the main reason residential housing has become unaffordable in BC just doesn’t ring true, as The BC Real Estate Association pointed out in a recent email that stated, “Here in British Columbia, given that foreign buyers purchased less than 0.5% of residential housing sales volume in 2022, it is extremely unlikely that this new policy will have any meaningful impact on housing affordability. However, this type of policy “polls strongly” and represents a populist move that generates good press but also more bureaucracy, with little or no real impact.”
The British Columbia Real Estate Association is disappointed to see this legislation move to implementation when its effect on affordability is so insignificant.”
The Canadian Real Estate Association also held nothing back in their public criticism of the Federal Foreign Buyer Ban, stating, “The Canadian Real Estate Association (CREA) is extremely disappointed by the government’s decision to move forward with this legislation and the rollout of its regulations. Parliamentarians that supported the introduction of this measure need to recognize it will have a detrimental impact on Canada’s reputation, labour market, and economy and severely hinder our ability to attract global talent.”
From what I have sussed out, the two-year “foreign buyers prohibition” will only apply to residential-zoned properties and vacant land that fall within specific Metropolitan Census Tract Boundaries. Residential homes and land outside these census tract boundaries are not subject to the ban in any capacity. After reviewing the available census tract maps, there are undefined geographical exclusions that have yet to be clarified. No searchable database or list of land titles affected by the prohibition is available to be referenced.
Secondly, the definition of “non-resident” has been whittled down with a long list of exemptions that include; temporary foreign residents – who must satisfy one of the five qualifiers that include: they are enrolled in a program of authorized study at a designated learning institution and the purchase price of the residential property does not exceed $500,000.
In addition, notable exemptions for non-residents include; persons that have made a valid claim for refugee protection, foreign nationals with valid temporary resident status, and foreign nationals who hold a passport that contains a valid diplomatic, consular, official or special representative acceptance.
Furthermore, the onus of regulatory compliance is obscure in its wording, and it is unknown how it will be legally interpreted. Outlined as a “self-executing enforcement framework”, meaning that real estate professionals and residential sellers are not responsible for record-keeping or enforcement of the ban. But, at the same time, the policy regulations states: The Act provides any person knowingly assisting or attempting to assist a Non-Canadian in the purchase of a prohibited property may be subject to a summary conviction offence under the Criminal Code and a fine of up to $10,000. A double-edged sword that may swing in either direction in the event of a breach made.
As we advance, the CREA has recommended that all realtors perform extra due diligence before assisting or advising a client on purchasing a residential property. To be compliant and avoid unforeseen problems with the new regulatory policies, I recommended that buyers and sellers do the same. Protect yourself and your investment and choose to work with an experienced, licensed realtor affiliated with a reputable brokerage.
Freddy & Linda Marks, 3A®Group RE/MAX Nyda Realty