Under the Residential Tenancy Act, a landlord can end a tenancy for personal or caretaker use. There are new rules as to how it can be done. As of July 18, 2024 according to the BC Real Estate Association's July 4 news release:

1. Mandatory Use by Landlords of New Web Portal: Landlords must use this portal to generate Notices to End Tenancy for personal or caretaker use. Landlords using the website portal will be required to have a Basic BCeID to access the site. The portal will require landlords to provide details about the persons moving into the home. The details of the new occupant of the home will be shared with the tenant. While using the website portal, landlords will be given information about the required conditions for ending a tenancy and the penalties associated with ending the tenancy in bad faith. They will also be informed about the amount of compensation they will be required to issue to tenants when ending a tenancy.
2. Extended Notice Period: The Two-Month Notice is changing to a Four-Month Notice on July 18,2024. Tenants will have 30 days to dispute Notices to End Tenancy, extended from 15 days.
3. Occupancy Requirements: The individual moving into the property must occupy it for at least 12 months. Landlords found to be ending a tenancy in bad faith could be ordered to pay the displaced tenant 12 months’ rent.

This is a change that I am happy to see.

In the past the Provincial Government introduced the concept of The Depreciation Report. The Depreciation Report is an indepth look at a strata building and provides insight into repairs and replacements of parts of a strata so that proper budgeting could be done to cover these costs and avoid large special assessments for deferred maintenance.  The problem is that the reports are costly, they were supposed to happen every 3 years but could be waived by the strata with a ¾ vote.

New Rules, effective July 2024 

• Depreciation reports cannot be waived
• Depreciation reports are required every 5 years
• Depreciation reports must be done by a professional who is certified to do Depreciation Reports

Why is this good? Firstly, when buying into a strata complex it is good to know what the next “Big” repairs are going to be, whether it is roof, plumbing, windows, etc.  Secondly, it makes the strata accountable to be proactive in their maintenance, thirdly, banks and mortgage finance companies like knowing the property they are lending money on is being maintained and finally, you get a pretty in depth look into the construction of your property. Knowledge is the key to being prepared for future fixes.

There is not one real estate market in Canada, in the Province or even in your town. The news headlines might lead you to believe that everyone is in the same boat, the reality is... we're not.

“Housing Market Bounces Back”

“Majority of Aspiring Home Owners Awaiting Rate Drops”

The headlines are many, but often they are only regionally applicable.

The fact is that the government is trying to play 25 years of catch up in 7 years with a promise to build 4 million homes by 2031. To put this in perspective, that is 1528 homes per day for 7 years straight, 7 days per week. All at record high interest rates.

There is a Canada Builds initiative to help build affordable housing for the middle class on underutilised public land across the country. But not all of the country is rich with public land.

Here is the reality on Vancouver Island, particularly from Victoria to Courtenay. Many years ago a crappy deal was made with coal baron Robert Dunsmuir, trading millions of acres of land in exchange for a railway. Consequently, we don’t have the luxury of crown land to take advantage of these public land initiatives, most of the land is privately owned. We have been railroaded.  

So, if you are listening to the news, or speaking with your brother in Ontario, your sister in Alberta and your Mom in Manitoba, our story and subsequently our real estate market is different. Different forces have affected it in the past and will continue to alter it into the future.

That’s the macro level reality.

Micro level on Vancouver Island, if a house is well priced and in great condition it is going to sell. However, if a house is overpriced or needs work, those houses are not selling. Why? Because at these interest rates people are stretching as much as they can just to get the house. Buyers don’t have the luxury of sinking an extra 50K into redoing floors, roofs, windows or whatever needs to be done. 

The market is still very busy, with multiple offers coming in on well-priced homes. For Buyers,  financing is tougher currently, with lenders being extremely diligent (aka difficult) so it is important to have a full pre-approval done by your mortgage broker prior to looking at homes. This includes down payment, income and debt verification. Any changes in your situation need to be relayed to your mortgage broker so they can update your application. 

Sellers, there is still a lack of inventory, so you will get people coming through your house. If people come through, over and over, but don’t buy, it’s likely a combination of being over priced and/or work needs to be done on the home. Buyers are well researched, they know their home prices and renovation prices. Buyers are unable/unwilling to take the same risks when interest rates are at 6% versus when interest rates were at 3%. There is just not the same type of wiggle room or fallback money.

Entry-level houses are selling well. Condos and townhouses that allow pets are selling well. Beautiful high end homes are selling well. Down-sizing homes are selling well. The market is active, but it is just not one real estate market, no matter what the news may lead us to believe.

There are some great changes coming for transactions closing after April 1, 2024 for First Time Home Buyers. Let’s start with a definition of a First Time Home Buyer for this particular program, as the definition is different if you are accessing a Provincial or Federal Program. This is a Provincial program, so a First Time Home Buyer is someone who has NEVER owned a property, anywhere in the world before. If more than one person is buying the home and only one of you has previously been a home owner, you want to speak to your lawyer/notary as you can still take advantage of the program, although not to its fullest extent.

Here are the nuts and bolts of the old program and the new program:
Currently, when you purchase a property in BC everyone pays a property transfer tax of 1% on the first 200,000, 2% between $200,000 and $2,000,000 and 3% and higher above $2,000,000.

The current program allows a First Time Home Buyer (FTHB) to be exempt from this tax for purchases up to $500,000. You can immediately see the problem with this program as it now stands. It is very hard to find anything under $500,000.
The new program, starting April 1, 2024, allows the FTHB to purchase a home up to $835,000 and still claim the exemption up to $500,000.  This will be a savings of up to $8,000 and get more FTHB into condos, houses and townhouses.

If you are one of the many people who are a FTHB, have the down payment saved but can’t find anything under $500,000, you can now go up to $835,000 and receive the tax exemption on part of the purchase. We can help you figure out your new down payment, get you reapproved and see what you can now qualify for to get into a home!  Yay, this is a good program!

Another fantastic change to the Property Transfer Tax is the elimination of the tax on new construction houses, townhouses and apartments up to $1,100,000 from the original $750,000. 

This is a great change. New construction has GST added to the purchase price which is already a large extra expense, so not having to pay the property transfer tax is a great incentive to look at buying or building a new house.

What I personally really like about this new change is that GST can be added to the purchase price and included in the mortgage but property transfer tax is paid out of your pocket at the lawyer. For you, this means that you don’t have to have as much cash on hand to purchase a new build as long as you have the down payment and can qualify for the mortgage amount required. 

Here is an example:
$900,000 purchase price plus GST of $45,000 for a total purchase price of $945,000
Down payment is 5% on first $500,000 and 10% on remaining $445,000 = $69,500
Savings in Property transfer tax = $16,000

I often find the government's incentives to get into housing to be too little, too late, too complicated or just plain stupid. This time I actually agree with these changes and feel they are timely, reasonable and will be utilised. 

Are you getting prepared to do your income taxes? If you are a renter and make under $80,000 there is a tax credit waiting for you.

The nitty gritty is that if you make less than $60,000 you will get a $400 tax credit by filling out Form BC479 2023. This is the same form that you use for UCCB, UCCB, the Renovation Tax Credit for Seniors and Disabilities, training tax and renter's tax credit.

If you (you being the entire family) make between $60,000 to $80,000 you will receive a reduced amount. Still, it is worth filling out a form!

Criteria are:

• You occupied an eligible rental unit in BC under a tenancy agreement, licence, sublease or similar arrangement for at least 6 one-month periods.
• Rent was paid for the unit.
• You are 19 year or older, a parent or cohabitating with a spouse or common law partner.

Eligible Rental units are house, apartment, condo, townhouse, basement suite, detached suite, carriage house, co-housing, dormitories, long-term care facility, shared housing (roommates), subsidised and employer-owned housing.

There is more than one type of adjustable/variable rate mortgage and it is important to know which type you have. If you have an Adjustable Rate Mortgage then as the prime rate has been changing, so have your payments, which keeps the amortization the same. With a Variable Rate Mortgage, the rate changes but your payment stays the same, which in turn extends the amortization. You may have been happy to find out you have a variable rate mortgage as prime rates moved up quickly and yet this can really affect you at renewal time. Let me explain.

The variable interest rate has increased by 4.5% in the past 18 months. To put that into perspective, with a 15 year amortization, this is an increase in payments of $762 per $100,000 in mortgage money to stay on track and not go backwards. For a 25 year amortization it is an increase in payment of $550 per $100,000 in mortgage payments. So if you have a $400,000 mortgage, you should be increasing your mortgage payment by a minimum of $2000 per month to avoid moving into a negative amortization situation (defined below).

Let’s suppose you have a variable rate mortgage with a $1200/month payment and 15 years remaining on your amortization. If the payments have remained the same you will likely be at around a 40 year amortization at this point. This is what is called negative amortization as your entire mortgage payment is going to interest and even that interest is not fully covered. This will become a “problem” when your mortgage is up for renewal. At renewal time a few things can happen.

1. You will need to make a massive lump sum payment to bring the balance back to the original amortization or

2. Your payment will increase to put your amortization back to 25 - 30 years.

3. You could be forced to remain at your current lender due to either of these situations, unable to negotiate the best mortgage rate for you.

How do you protect yourself?

Call your lender/bank and ask some key questions. I would ask:

1. What is my current payment?
2. What is my current rate?
3. What is my current amortization?
4. What is going to happen at my renewal if I don’t make any changes?
5. What changes do I need to make to ensure I do not have a negative amortization upon renewal of my mortgage?

Once you have those answers you can make an informed next step decision, whether that is to increase your mortgage payments, keep them the same or make a lump sum prepayment. Knowledge is your power. Do not avoid this conversation. The sooner you know what is happening with your mortgage the sooner you can right the boat and get back on course. 

One thing I know after over 20 years in the mortgage financing industry is that lenders of money do not like to have mortgage defaults on their books. Arrears in mortgages are when payments are 90 days past due. https://cba.ca/mortgages-in-arrears  Arrears in Canada are still very low, however, for people who are already at the top of their payment budget and have a renewal coming up in the next 24 months there could be some serious challenges. 

As interest rates rise and fall, it is your responsibility to protect the largest financial asset you have. I am here for you if you have any questions about your mortgage and your home.

It is forest fire season in Canada and that means that insurance companies are watching where fires are burning in your neck of the woods. For example, on Vancouver Island as of writing this article there are two forest fires. Insurers have rules around insuring homes near forest fires and therefore you getting insurance on your new home purchase could be in jeopardy. 

Recently State Farm advised it was no longer underwriting home insurance in California due to the continued fire hazard in the State. For perspective, State Farm’s market share of insurance in California was 19.9% in 2021. Forest fires cause significant financial damage to insurance companies and at some point they will decide the reward is not worth the risk.

In BC, when getting your home insurance it is important to ask some questions. Ask if your home insurance covers you in case of wildfire damage and is there additional coverage for additional living expenses if your house does burn down? Ask about flood insurance, wind damage, earthquake damage. Then you can decide which natural disasters you wish to get coverage for. 

When purchasing a home it is important to get your home insurance quote and have the insurer issue a binder (this is different from a quote). A quote summarises what you are being offered and the price of the insurance. When an insurance company BINDS an insurance policy it means they have actually issued the policy and will come into effect on an agreed upon date. Once a policy has been bound, the policy generally will be honoured.

Selling a house due to separation or divorce can be stressful on all parties and this is where we come in. I have gone through this before. Trust me, I get it. You are dealing with managing finances, trying to maintain a normal homelife for dependents, figuring out what is best for you and what you are going to do after this is over. Our job is to make the sale process as quick and easy as possible, provide you the best advice and keep communication open for both parties so there are no surprises. 

Divorce and owning real estate is a difficult combination. One of the biggest challenges is timing. “You can apply to the court any time after you separate - the court will not grant a divorce until you have been separated for at least one year. A divorce is automatically final 31 days after the court grants a divorce if no appeal has been filed.” https://www2.gov.bc.ca/gov/content/life-events/divorce/family-justice/family-law/separation-divorce/what-do-i-need-to-know-about-getting-a-divorce

Often in a divorce situation there is a division of assets and often one of those assets includes a house. There are a few things that can be done in this situation. 1. One spouse could buy the other spouse out. 2. Sell the property and divide the assets. In both cases it is important to have several facts. 1. Did one of the parties already own the property or sell a previous property for part of the down payment? If so, then the division of assets may only be the increase of the value in the property or the value of the property less the down payment. 2. What is your household debt, including the mortgage, car payments, credit cards etc. This includes debt one or the other party may not know about. 3. Common exclusions of joint property are assets you owned before living together and inheritances or gifts that only one spouse received. https://family.legalaid.bc.ca/finances-support/property-debt/dividing-property-and-debts-after-you-separate

The division of assets is complicated and requires expert legal advice.

If you are facing a divorce situation this is my immediate advice. Limit the credit on your credit cards, ensure you are staying on top of your debt with at least minimum payments, figure out what the total assets and liabilities are for the household debt. If you have any joint lines of credit, credit cards, etc ensure these are not utilised without both parties in agreement. If you have joint accounts ensure the accounts are not being drained by the other party. Both parties need to protect their credit and their assets, and as we read above, this is a long process so the better the communication and understanding of the outcomes is paramount.

The Worthy Group gets it. We can facilitate the sale of your home efficiently, effectively and with the least amount of stress on all parties involved. That’s what we do.