Ahead of the introduction of consumer protections meant to help homebuyers entering British Columbia’s housing market, the province is outlining exactly what those protections will look like.
The provincial finance minister announced details of Phase 1 at a news conference in Vancouver Thursday, during which she described the measures as a first in the country.
The measures are meant to protect buyers from taking on too much risk in the housing market, Selina Robinson said.
She told reporters the government has heard many stories of buyers feeling that they need to waive all conditions when buying a home. The new legal protections, which come into effect on Jan. 1, 2023, are meant to combat that risk.
“This change means people will have a non-waiveable homebuyer protection period after every offer is accepted,” she said.
That period includes a rescission, or cancellation, fee of 0.25 per cent of the purchase price for would-be buyers who choose to back out. The seller of a million-dollar home, for example, wouldn’t get the full amount, but would get $2,500 for the inconvenience.
Introduced colloquially as a “cooling-off period,” those who do take advantage have only three days to secure financing or arrange a home inspection, among other things they may want to do before going ahead with the major purchase.
Buyers can still make offers involving conditions such as home inspections or financing, but the protection period gives buyers a bit more time to find out what they’re getting into in the event of a condition-free offer.
The provincial government says it consulted heavily with the B.C. Financial Services Authority before finalizing the plan. Consultations were also held with home inspectors, appraisers and realtors, as well as legal and financial experts, the ministry said.
But it’s still a controversial plan. Earlier this year the B.C. Real Estate Association called it “ineffectual at best,” and said the decision was made without adequate consultation.
The BCREA said it “won’t stand the test of changing market conditions” and regional market differentiation.
At a news conference in February addressing the measure, which was first announced in November, BCREA CEO Darlene Hyde said the group believed it would cause more problems than it solves – including that buyers will end up paying more.
“Our economics team estimates that a 10 per cent increase in bids would increase list prices by two to three per cent,” Hyde said at the time.
“(It) doesn’t equally serve buyers and sellers. It also does nothing to address the root of B.C.’s housing affordability problem: namely, the lack of supply.”
On Thursday, Robinson praised the plan as giving buyers the “peace of mind they deserve” while still protecting the interests of sellers.
She said too that the province will monitor the potential impacts and continue studying advice from the BCFSA.
Blair Morrison, CEO of the BCFSA, said in a news release accompanying the announcement that the protection period was determined based on consultations with more than 140 stakeholders, and that the goal is to “promote confidence in real estate transactions, and our advice is aligned with that outcome.”