During the recent federal election I posted the party platforms on the housing issues in our current market. Each party had a plethora of possible or pathetic proposals. Since then the Provincial NDP has announced a number of other possible changes in an attempt to affect the current housing market. Most recently the concept of an additional tax on houses valued in excess of $1 million was touted and then backed by CMHC.
Almost all these ideas are bad and will have long term negative affects on the industry and your principal dwelling investment. They are also not applicable or necessary in any of the other types of market we have experienced in the last 20 years. This current over-heated market will change, and likely before the governments implement their strategies to affect the market.
On the Provincial side it has been proposed that the buyer have a right to a 7 day walk-away from any Contact of Purchase and Sale for real estate in BC. This option exists in new construction now and it works because the seller/developer is not relying on any specific sale for timely action on another transaction. The developer is there selling a great number of units over a lengthy period of time.
For the individual homeowner a sale of a home is typically tied to the purchase of another home and decisions on the purchase are governed by the results of the sale. In a normal market a buyer makes an offer with a number of due diligence conditions in the terms to be satisfied within a 7-10 day window. There is a principal at law that the buyer must make best effort to fulfill those conditions. A walk-away clause has no obligation on the part of the buyer and the seller is held hostage for the 7 day window while their opportunity to proceed on the other side of a move is held up by the walk-away clause. There is also nothing to stop a buyer making several offers on homes, tying them up for 7 days and then later deciding if they actually want to proceed with any of the agreements.
In the multiple offer trials we see now, a buyer will try to enhance their offer buy overriding the walk-away option and although you cannot waive a statute right, they could pay a non-refundable deposit directly to the owner to show binding intent. Then if they walked away it would cost them the deposit paid. In this heated market buyers are looking for a competitive edge to win the bid for the home, and the government cannot curb human drive and ingenuity.
As to the recent proposal of a tax on homes valued in excess of $1 million, it’s just the dumbest idea in a while. If you own a detached home in Langley it is now valued in excess of $1 million. This means most detached homeowners in the Lower Mainland will be receiving an additional tax. The Municipal Tax program already adds a greater tax to those with a more valued property. It is a reasonably equitable method of taxation. Yet again, with this suggestion the Federal Government is showing how completely out of touch they are with the constituent.
Both governments need to hear from the homeowner that these ideas are not just foolish but hazardous. I encourage you to contact your local MLA and MP and let your opinion be measured.