Cooling-off period to provide homebuyer protection in hot market
‘Cooling-off’ time coming for homebuyers but details yet to be worked out
Peter Mitham
Western Investor
Regional approach possible, similar to foreign buyer and vacancy taxes
B.C. Finance Minister Selina Robinson. | File photo
A cooling-off period is coming for resale homes in the province, but the province has yet to announced the details of the regulation, including where and when it will be applied and how long the recession period would last.
B.C. Finance Minister Selina Robinson introduced the Property Law Amendment Act in the legislature on March 28, which will give purchasers the right to “rescind the contract of purchase and sale for the property by serving written notice of the rescission on the seller.”
“People need to have protection as they make one of the biggest financial decisions of their lives,” Robinson told media in a briefing following the bill’s introduction. “The status quo is only working for those who profit from an over-heated housing market.”
Originally announced last November, the cooling-off period parallels the seven-day rescission period for buyers of pre-sale multifamily units.
But the length of the rescission period for other residential properties has yet to be determined, and may vary with location.
“British Columbia is a large province with different housing markets,” Robinson said. “Things might be very active in the South Island or Lower Mainland; they might not be particularly active in the North, and you might not need the same consumer protections in the same way.”
She said the regulation could also be responsive to shifting market conditions.
A regional approach was also taken with the foreign buyers tax introduced by the BC Liberals in 2016 and the speculation and vacancy tax the BC NDP introduced the following year.
A consultation the BC Financial Services Authority undertook when the measure was announced last November will guide the specifics of the regulation.
“BCFSA will consult with key industry stakeholders and experts on consumer protection issues and return to government with advice for other possible measures to enhance consumer protection and strengthen public confidence in the purchase and sale of homes,” it said at the time.
The consultation is complete but the report hasn’t landed on Robinson’s desk. It will provide valuable information, such as how often presale buyers exercise the right of rescission in multifamily sales.
However, the fact she has yet to receive the report means Robinson could give no timeline for implementing the new cooling-off period.
“We’ll get the legislation done, and I hope as quickly as we can we’ll get the regulation done,” Robinson told media.
Robinson says the change targets multiple-bid scenarios, and aims to address purchases that homeowners make because they don’t feel they can afford the luxury of a home inspection or because they agree to a sale but then realize they may not be able to afford it.
Both the Home Inspectors Association of BC and Mortgage Professionals Canada, which represents lenders, are in favour of the move.
The B.C. Real Estate Association has stated that it feels a cooling-off period would create more problems than it solves, including greater uncertainty for sellers and an increase in frivolous offers.
“Instead of a cooling-off period, we have suggested to government that a pre-offer timeline would better protect British Columbians,” the association’s CEO Darlene Hyde said. “During this period of a minimum of five business days from listing, prospective buyers could hire home inspectors of their choice, review important documents, ensure financing and complete any other due diligence prior to making an offer. This would achieve the stated consumer protection goals in a far more balanced manner.”
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