The B.C. government has introduced legislation that will allow for a cooling off period following the purchase of a home, in an effort to protect buyers in the province’s red-hot real estate market.
The new Homebuyer Protection Period is the government’s attempt to respond to concerns that in the highly competitive housing market, buyers are submitting offers without basic conditions.
The legislative amendments, when passed, will give people buying a home more time to consider their offers, ensure financing and obtain a home inspection.
Regulations will be introduced later this year to actually define the specific time homebuyers will have to exercise this right, as well as the financial costs of retracting an offer.
“People need to have protection as they make one of the biggest financial decisions of their lives,” Finance Minister Selina Robinson said.
“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.”
The province says the decision on timing will be determined following consultations with home inspectors, appraisers, realtors, academics and representatives from the legal and financial services sectors.
Industry representatives estimate that more than 70 per cent of offers in B.C.’s most competitive markets over the past year may have been made without conditions, which can lead to major repair and renovation costs or the loss of a deposit if the buyer’s financing falls through.
The regulations will also address concerns that a cooling off period could drive prices up.
There are worries from those in the industry, including the B.C. Real Estate Association, that buyers will put down multiple approved offers and then back away at the last minute. These decisions could lead to challenges for the seller who may be using the sale money to purchase another home.
The goal is to have the new regulations in place by the summer.
“The introduction of a short, unrestricted cooling-off period or a separate, longer period to ensure appropriate financing can be arranged would remove uncertainty from home purchases and sales, and potentially save both buyers and sellers considerable costs over time,” Mortgage Professionals Canada CEO Paul Taylor said.
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.
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