(Posted on Oct 4, 2016 at 07:32PM by Michelle Bogle)
On October 3, 2016, the federal government’s Minister of Finance Bill Morneau announced that non-residents will no longer be able to avoid capital gains taxes on residential home sales by declaring them as their principal residences.
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This is just one initiative designed to cool the housing markets in cities, such as Vancouver and Toronto, and to also slow the flow of foreign wealth into the Canadian real estate market.
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In addition to this change, Morneau also announced new rules surrounding mortgage insurance eligibility criteria. Effective October 17, 2016, all new buyers requiring an insured mortgage will be subject to a mortgage rate stress test, which is intended to ensure that homeowners will be able to afford their mortgages even if interest rates go up.
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It was also announced that mortgages that are insured with portfolio insurance, as well as low-ratio insured mortgages, have to meet the same criteria as for high-ratio mortgages to qualify. Buyers will need to have a minimum credit score of 600 and mortgages will need to have a maximum amortization period of 25 years.
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Here’s Minister of Finance Bill Morneau with more on the new regulations for housing and mortgages:
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In a nutshell, all of these measures combined should help to reduce the risk of a housing market correction in Vancouver and Toronto, as well as a broader abatement in Canadian household spending stemming from elevated debts.
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New regulations, such as these, as well as the 15% foreign buyer tax, are also fuelling much speculation that investors will start shifting their focus to commercial assets, more specifically office, retail and industrial properties, as these assets are reaching all-time high numbers.
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Our skilled team of commercial investment advisors are keeping a close eye on B.C.’s provincial government and the real estate sector across the Lower Mainland. To learn more, please contact our Vancouver office to speak with a broker.
