Real Estate changes in 2023

HUGE Real Estate changes are coming  in 2023

You’ve probably heard me repeatedly say that the 3 levels of government have been the principal causes of all the fluctuations in Real Estate. Steadily dropping interest rates over the past 2 decades led to an explosion in real estate prices and demand, and the government poured gasoline on the flames during the Covid-19 pandemic by giving out literally hundreds of billions of dollars, much of which found its way into real estate asset purchases. And now, in addition to rapidly hiking interest rates to combat inflation, governments are introducing massive legislative changes that will surely impact Real Estate in 2023: Ban on Foreign Buyers, End of Rentals and Age Restrictions in Strata Properties, Home Buyer Rescission Period, and Federal Housing Tax Changes (Multigenerational Home Renovation Tax Credit & Residential Property Flipping Rule).

Ban on Foreign Buyers for 2 years

Did you hear that the Federal Government is set to ban foreign buyers from the Canadian real estate markets (with some narrow exemptions) from January 1, 2023 for 2 years? It’s true! There are narrow exemptions for recreational properties and residential property outside of large urban centres. Exemptions are also anticipated for indigenous people, international students on a path to permanent residency, individuals with work permits residing in Canada, refugees and accredited members of foreign missions. It’s unclear whether recreational properties will be exempted; regardless, there have been a LOT of Americans snapping up  recreational property in the latter half of 2022 to beat the ban. The BC Real Estate Association has a nice summary of the changes.

The impact of the foreign buyer ban will vary by neighbourhood. The very expensive neighbourhoods in West Vancouver and Vancouver West were heavily patronized by foreign buyers, and one could reasonably assume that those markets, which are already buyers’ markets, are going to suffer further declines in sales and prices. Contact us to discuss the likely impact in other neighbourhoods!

End to Rentals and Age Restrictions for Strata Properties

The BC Government has decided that, effective immediately (November 25, 2022):

• Strata corporations are not permitted to impose rental restrictions.
• Strata corporations may not impose age limitations, except for age 55+ seniors’ complexes.

Bylaws restricting short-term rentals, such as AirBnB, will continue to be allowed. The government hopes that the additional units now eligible for rental will help alleviate the Lower Mainland’s chronic shortage of rental housing.

Introduction of Home Buyer Rescission Period

Are you tired of bidding in multiple offer scenarios where being competitive requires a subject free offer? Many people are, and the government has introduced a buyer rescission period to help. The basic idea is that a contract for the purchase of a residential property may be cancelled during the rescission period. The period is 3 full business days, commencing the day after an accepted offer. The rescission period would run concurrently with the subject removal period, if any. There is a fee of 0.25% of the purchase price to invoke the right of rescission, payable to the seller.

The rescission period has no impact on offers containing subject clauses with duration longer than 3 days. At the end of the subject removal period, the buyer may remove subjects if more than 3 business days have elapsed, the offer is now firm and binding. If the buyer declines to remove subjects for good reason, the contract is dissolved and neither party owes the other anything. The rescission period comes into play when a subject-free offer is made. Regardless of any terms in the contract, the buyer has 3 full business days after contract acceptance to change their mind for any reason whatsoever, and to dissolve the contract with written notice to the seller and payment of the rescission fee.

Federal Housing Tax Changes

Multigenerational Home Renovation Tax Credit

On January 1, 2023, the Multigenerational Home Renovation tax credit will come into effect. This tax credit will cover eligible homeowners up to 15 per cent (to a maximum of $7,500) for creating a secondary unit in their home to accommodate a senior or adult with a disability. To be eligible for the Federal Tax Credit , the renovation must be completed in the owner’s primary residence where they live with a senior or disabled person.

Residential Property Flipping Rule

Beginning January 1, 2023, individuals who sell their residence within 12 months of acquiring it will be taxed as business income and be ineligible for either the 50 per cent capital gains rate or the principal residence exemption. There are exemptions for “life events” such as a divorce or death. Read more about these changes on BCREA (British Columbia Real Estate Association)

Check our other blogs under Real Estate 101 – that might give you answers about buying or selling a home.

The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.