B.C. homebuyer protection period announced amid real estate crunch

B.C. is making changes to how real estate deals happen, with the intention of adding a layer of consumer protection.

The province is bringing in a “non-waivable” three-day homebuyer protection period after every offer is accepted, with the goal of ensuring a buyer is able to secure mortgage financing and get a home inspection done.

“This change means that people will be better protected now and through any future market volatility. The period of parameters, which are based on advice from the BC Financial Services Authority’s consultation with industry, will give homebuyers a bit of time, just a bit of time that they need to make a sound, financial decision that will impact them for years to come,” said Finance Minister Selina Robinson Thursday.

If a buyer backs out after making an offer during the three-day period, they will have to pay 0.25 per cent of the previously agreed-upon purchase price to the seller as a penalty.

The homebuyer protection period will come into effect on Jan. 1, 2023. The measure does not prevent buyers from making offers conditional on things like home inspections or financing.

The three-day period was one of many recommendations outlined in a BC Financial Services Authority report released earlier this year.

The province has not mentioned any of the other recommendations made, such as a mandatory period of five days on the market before offers can be made.

Robinson says the province will be watching to see if this works.

“If people are saying that they have the time that they need to get their home inspections done, to get their financing in place, then we’ll know that we’ve done the right thing,” she said.

“I know that we’ve started to see signs of a cooling real estate market, but it will be some time before we see a return to balance. We also know from experience that the real estate market can fluctuate and can have moments of volatility and we need to be prepared.”

The introduction of the homebuyer protection period comes as many British Columbians continue to struggle to enter the real estate market. Some have been forced to relocate to other cities or even provinces because they are being priced out of the market.

While sales have slowed in recent months across Metro Vancouver, supply remains a problem.

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Some industry stakeholders hope the three-day period will help people make sound decisions, rather than find themselves in difficult situations.

“Home inspections help to eliminate some of the potential costly risks involved in purchasing while helping to make an informed decision,” said Jonathan Sheppard, president of Home Inspectors Association BC.

Others say the period is much needed to modernize the way British Columbians make real estate purchases.

“It is important to balance the interests of buyers and sellers. A key objective is to level the playing field and allow buyers to avoid having to make decisions under unreasonable time pressure. It addresses the very important goal that buyers feel trapped into buying a property without an inspection,” said Tsur Somerville, a senior fellow at the UBC Centre for Urban Economics and Real Estate.

The B.C. government says it is the first province to implement such a measure for resale properties and newly constructed homes.