New cooling-off period has been introduced following recommendations by the B.C. Financial Services Authority
British Columbia now has a cooling-off period for homebuyers, providing three business days to pull out from a purchase after an agreement has been signed.
The province is the first in Canada to bring in the protection for buyers of resale and newly-constructed homes, although other countries including France and Australia have similar provisions.
Its introduction follows BC Financial Services Authority’s (BCFSA) report on improving consumer protection in the real estate market and means that buyers will have extra time to ensure the home purchase is right for them when considering market conditions including interest rates and high-pressure sales.
“Housing remains a top concern for people in BC and a top priority for this government,” said Katrine Conroy, Minister of Finance. “Buying a home is one of the biggest decisions of people’s lives. This is an important milestone as we lead the way in protecting people and strengthening public confidence in the real estate market.”
The right to pull out of buying a home in the province comes at a price. Those buyers who use the homebuyer protection period, also known as a recission period, will be obliged to pay the seller a cancellation fee of 0.25% or $250 per $100,000 of the contract price.
The provincial government says that other measures recommended by the BCFSA are likely to be introduced in the coming months.
Not needed at all
The new rule has been criticized by Elton Ash, executive vice-president of RE/MAX Canada, who believes that it’s the wrong measure to tackle the deep-routed issue of inadequate supply.
“The three-day rescinding period is much improved over the initial 10-day cooling-off proposal. However, given the current market rebalancing that we are now experiencing, it isn’t needed at all,” he said.
He added that government has proven its inability to react to market conditions in a responsive and meaningful way, favouring political measures that can have unintended consequences.
“The measure could jeopardize sellers by penalizing them; or even deter prospective sellers from listing their homes, which may further compound the critical housing supply shortage in the province,” Ash warned. “The real issue is a shortage of housing supply in all sectors, from shelter to rental stocks, onto owned homes. Until these issues are addressed in a meaningful way, affordability will continue to be an issue affecting all Canadians.”
