The province will introduce what it calls a homebuyer protection period later this year after amendments to the Property Law Act were introduced Monday.
The changes will allow the province to establish a cooling-off period that is meant to protect people buying homes in B.C.’s overheated real estate market.
A cooling-off period would give buyers a limited amount of time to consider their offers, ensure financing, obtain a home inspection and cancel a purchase.
It’s an attempt to address concerns that would-be buyers are feeling pressured into submitting offers for homes without basic conditions in order to ensure they have a chance of buying in a hyper-competitive market.
The province has not said how long the cooling-off period will be, or what the financial costs of retracting an offer would be.
“People need to have protection as they make one of the biggest financial decisions of their lives,” said Finance Minister Selina Robinson. “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 legislation allows for regional variation within the province, based on variations in the housing market.
The B.C. Financial Services Authority has consulted with real estate industry stakeholders, including home inspectors, appraisers, real estate agents, academics and representatives from the legal and financial services sectors. That analysis is due this spring.
Industry representatives estimate that more than 70 per cent of offers in B.C.’s most competitive markets like Victoria over the past year may have been made without conditions.
B.C. would be the first province to implement a homebuyer protection period for resale properties and newly constructed homes.
Seven-day cooling-off periods for pre-construction sales of multi-unit development properties such as condominiums are already in place under the Real Estate Development and Marketing Act.
In a bid to pre-empt the province imposing a cooling-off period on home purchases, the B.C. Real Estate Association recently released a white paper offering the government alternatives for protecting consumers amid a red-hot housing market.
Among its 30 recommendations, the paper suggests creating a five-day, no-offer period — what the industry calls a pre-offer period — from when a property is listed that would give buyers time to research a property before making an offer; creating a more transparent process for properties where there are multiple offers; making property disclosure statements mandatory and available when a property is listed; making all strata documents available with a listing; and raising the entry qualification for new real estate agents.
Helene Barton, executive director of the Home Inspectors Association B.C., says every B.C. homebuyer must be allowed the opportunity to “conduct their own due diligence prior to a purchase and avoid the high risk of buying without a home inspection.”
