Hello all, below are the highlights of all the new rules and regulations. There will be some more items to come in the next few weeks. I will keep you posted. These rules will certainly negatively affect markets across the board including the last north vancouver apartment market report I wrote. Government interventions, especially black sawn types, have a way to dampen your market outlook.
UPDATE Jan 2017: North Vancouver Markets roar in 2016 despite all regulations. https://www.strawhomes.com
Summary of Changes for High Ratio Property Deals above 80% LTV:
All high ratio (less than 80% LTV) deals submitted will be subject to the new Qualifying rate guidelines, i.e. Benchmark rate. (Today the benchmark rate is 4.64%)
The maximum GDS/TDS ratios allowed for high ratio (less than 80%LTV) deals are 39%/44%.
Conventional/Portfolio Insured Deals: Starting November 30th.
Deals over $1m, refinances, rentals and BFS are no longer eligible under the government portfolio insurance program.
The big question is whether what lenders will qualify the conventional deals at Benchmark rate. (Today the benchmark rate is 4.64%). We will have to wait and see what lenders come out with over the next few weeks
Most lenders have come out and say they still will be doing rentals, BFS, and refinances. Most have added rate premiums to these products.
New Tax law to File to report Your Principle Residence:
Under the new rules, in the year that you purchase a new primary residence you should file a T2091 to designate your property as a primary residence. If you do not, then when you sell it the property will be deemed to be NOT your primary residence and you will be forced to pay any taxes due on the realized capital gains.
In order to avoid paying this tax you will be able to ask CRA for an amendment to your tax return in the year that you failed to file the T2091 but there will be a penalty of $100 per month since the time you should have files up to a maximum of $8,000.
As more information comes to light I will be writing more here. Here is a Summary from BNN:
Ramifications for Canadian Real Estate Markets
Prices may adjust downwards with perhaps 40% fewer buyers everywhere across Canada.
If you want to sell, make sure you do so before November 30th
Rates are rising for people who can least afford it - the first time buyer
This will in turn affect the mover uppers, which in turn will affect the top tier of the market. It will trickle up.
Mortgages over 25 years are out - that was half of all mortgages underwritten by CMHC home purchases
Ramifications 20-30% decrease in prices across Canada
We are already correcting @ 15% decline since April for Vancouver real estate market
MEDIAN SALES PRICE DECLINING 15% SINCE APRIL FOR VANCOUVER AND FRASER VALLEY RESIDENTIAL MARKETS