The BC Real Estate Association (BCREA) and the Canadian Mortgage Brokers Association — British Columbia (CMBA-BC) are urging the B.C. Government to revise recent changes to the Residential Tenancy Act (RTA).
Bill 14, which amends the RTA to safeguard residential tenants from bad-faith terminations, went into effect on July 18, 2024.
Inadequate consultation; changes could exacerbate rather than alleviate tenant & housing issues
Trevor Hargreaves, senior vice president of government relations, marketing & communications at BCREA, stated: “We acknowledge the importance of protecting tenants from unjust evictions and the necessity of increasing rental supply. However, we are apprehensive that the policy revisions were made without sufficient consultation with relevant sectors, leading to potential complications. These changes may inadvertently hinder all buyers, especially first-time buyers who are often current tenants looking to enter the housing market.”
Rebecca Casey, president of CMBA-BC, echoed these concerns, saying: “While we appreciate the B.C. Ministry of Housing’s efforts to tackle housing challenges and safeguard tenants’ rights, we fear that these amendments could worsen the situation instead of improving it. This could jeopardize the stability and affordability for existing and future tenants and homebuyers.”
Both organizations have published open letters outlining their concerns about unintended consequences and the likelihood of negative impacts on homebuyers, rental-property owners, and tenants in the province. They have highlighted areas of confusion that could create challenges in transactions.
BCREA’s concerns
BCREA highlighted the following main concerns in their letter to the government:
1. The new requirement of providing four months’ notice instead of the previous two months’ notice for evictions due to personal or caretaker use poses a significant obstacle, especially for high-ratio buyers like first-time buyers who rely on mortgage default insurance.
2. The legislation does not differentiate between a buyer moving into their new home and a landlord using a bad-faith eviction to raise rents excessively.
3. The combination of a four-month eviction notice and a 30-day dispute notice results in a five-month period where a buyer cannot take possession of their new home, causing practical challenges for buyers transitioning between homes.
4. Without default mortgage insurance, lenders require a 20% down payment for rental properties, which is often unattainable for first-time buyers. Additionally, default-insured mortgage holders need vacant possession to qualify for a mortgage, creating obstacles if the previous tenant has not vacated the property.
5. Homeowner and mortgage insurance eligibility require owner-occupancy, posing challenges for buyers of previously tenanted properties.
6. Landlords are now required to disclose personal details about new occupants through a web portal, raising privacy and security concerns for owners.
CMBA-BC’s additional concerns
CMBA-BC raised concerns about mortgage approvals, increased financing risks, and legal and liability issues:
1. The four-month notice period conflicts with the typical 90 to 120-day rate hold period for mortgage approvals, potentially causing challenges for buyers coordinating property vacancy with their mortgage approval timeline, particularly affecting first-time homebuyers.
2. Buyers may need to remove financing conditions from their offers without guaranteed mortgage approval due to the extended notice period, exposing them to financial risks from interest rate fluctuations.
3. The extended timeline could lead to purchase contract cancellations, triggering legal disputes and financial risks for all parties involved.
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