With a new year comes a new piece of legislation that now allows home buyers to back out of a house purchase after their offer has been accepted.
“The B.C. government has just implemented on Jan. 3 a three-day rescission period,” said Jaime Briggs, a Kelowna realtor with Coldwell Banker Horizon Realty.
The Home Buyer Rescission Period (HBRP) gives buyers a window to have a change of heart about the purchase of the property.
“If you write an offer today (Wednesday) and it gets accepted today, you have three full business days,” Briggs said. “So that would be Thursday, Friday, weekends and stat holidays are excluded.
“So the buyer would have up until midnight on Monday that they can just decide I don’t want to buy this house anymore. I’m going rescind or take back my offer. No questions asked. No explanation and they can just get out of their offer.”
And while buyers now have the new option to back out, it does come at a cost.
“The buyer does have to pay to the seller .25 per cent on the accepted purchase price,” Briggs added. “So here in Kelowna, our median home price of course is just over one million dollars. That would be $2,500 that the buyer would have to pay to the seller if they choose to rescind that offer.
“That does need to be paid within 14 days.”
The homebuyer rescission period, which is only applicable on residential real estate, was designed to provide a cooling-off period during the sizzling hot market and buyers having to make hasty decisions.
“Buyers were really stressed because they were having to move so quickly to write offers to get that property and they would have to write an offer with no conditions,” Briggs said. “And so that’s why the government put this cooling-off period in effect.”
Briggs added that the legislation would have been far more useful back in the spring.
“It would have been great in the spring but our market has already cooled off,” she said. “I mean we are already in the softer months of the year. January, February is a quieter time so we will see if this will really have an effect.”
Chief economist with the B.C. Real Estate Association Brendon Ogmundson said the legislation was intended to prevent buyers from regretting their purchase, or getting in over their heads in the heat of the moment amid a booming market and competing offers — a housing market that’s vastly different now.
“It’s a policy that’s meant to really only apply in certain market conditions,” Ogmundson told Gloal News. “Those market conditions are not what what are prevailing right now, I I would doubt we’re going to see a lot of use of the rescission period over the next year.”
Another new real estate rule is the foreign buyers ban.
The federally-imposed legislation went into effect Jan. 1 and prevents out-of-country investors from purchasing residential properties in census metropolitan areas such as Kelowna, Vancouver and Victoria.
While there are numerous exemptions, it’s aimed at increasing the housing supply in order to make homes more affordable
But the B.C. Real Estate Association stated it’s disappointed to see the legislation move to implementation, adding it believes its effect on affordability will be insignificant.
“Over the past two years only about 0.5 per cent or actually less most months of home sales in B.C. were to foreign investors. So if you want to take that number all the way down to zero, it’s not going to make much of a difference,” Ogmundson said.
“At the time, when we had 0.5 per cent share of investor sales, we also had record sales and record prices…if it goes to zero for two years, that’s not going to make a difference.”
The foreign buyers ban has been implemented for a period of two years.