Good news for prospective homebuyers in British Columbia!
On July 18th, 2024, the BC government introduced new Residential Tenancy Regulations, which included several changes aimed at better protecting tenants. However, one of these changes created a significant challenge for buyers looking to purchase properties with existing tenants.
The initial rule extended the tenant notice period from 2 to 4 months when a buyer intended to occupy the property. While this was great for tenant security, it posed a problem for mortgage financing. Typically, mortgage rate holds are valid for a maximum of 120 days (approximately 3 months). With the new 4-month notice period, buyers faced the risk of their rate holds expiring before they could take possession of the property. This could lead to higher interest rates at closing and, in some cases, could result in buyers no longer qualifying for their mortgage under the new rates.
Recognizing these issues, real estate and mortgage professionals, along with other industry stakeholders, advocated for a revision to the new regulations. The BC government responded with an amendment, which comes into effect on August 21st, 2024.
Key Changes to the Tenant Notice Period
- Reduced Notice Period: Landlords issuing an eviction notice on behalf of a purchaser now only need to provide 3 months’ notice, down from the original 4 months. This change aligns better with standard financing timelines and the Canada Mortgage and Housing Corporation (CMHC) requirements for insured mortgages and other programs.
- Dispute Timeline: The timeline for tenants to dispute these eviction notices has been shortened from 30 days to 21 days.
It’s important to note that if a landlord issues an eviction notice to move into the unit themselves or for the use of a close family member, the original 4-month notice and 30-day dispute periods still apply.
What Does This Mean for Mortgages?
With the adjusted 3-month notice period, buyers and sellers can now better coordinate closing dates with the eviction dates. This alignment means that:
- Interest Rate Certainty: Buyers can close on their property within the 120-day rate hold period, ensuring that the interest rate they were initially offered remains intact.
- Mortgage Qualification Confidence: Since mortgage qualification is based on the interest rate at the time of application, buyers can be more confident that they will still qualify for their mortgage at closing.
These changes bring much-needed stability and predictability to the mortgage process, allowing buyers to plan with greater confidence. As always, if you have any questions or need personalized advice on navigating these new regulations, feel free to reach out. We’re here to help you every step of the way.
Hi, I’m Jill, your mortgage pro. I am here to make the world of mortgages less confusing so you can feel confident in your financial decisions. Through my blog, I aim to provide you with the knowledge and guidance you need to make informed decisions. Your financial peace of mind is my top priority.
