"Very dangerous": Why BC needed to change eviction rules for home sales

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BC needed to shorten the eviction notice period in cases where homes are being sold to comply with federal policy on mortgage approvals for buyers so that first-time homebuyers could have a shot at purchasing tenanted properties.

That’s according to Rebecca Casey, president of the Canadian Mortgage Brokers Association of BC. The province’s short-lived four-month eviction notice period ran contrary to the Canadian Mortgage and Housing Corporation’s mortgage approval rules.

Casey said the federal entity requires buyers to take vacant possession of their new home within a certain time frame for their CMHC-insured mortgage to be approved.

“That’s problematic because it means any property that’s currently tenanted [was] off the table for any buyer looking to buy a property with less than 20% down,” she said.

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The mismatch in provincial and federal policy prevented those with smaller down payments, who are often first-time buyers, from accessing the properties on the market.

“The unintended consequences are that it creates further demand on the short supply that we have for properties for buyers. So there’s a risk of property prices being pushed up,” Casey said.

During the few short weeks the four-month eviction notice policy was active in July, Casey personally had to push clients away from tenanted properties because they didn’t have the downpayment required.

“My messaging to realtors was these properties are just not eligible. You cannot look at them.”

She didn’t want her clients entering a firm agreement to purchase without their mortgage financing being able to hold up.

“That’s very dangerous,” she said.

BC’s Ministry of Housing announced on Thursday that it’s walking back its extension of the eviction notice period from four months down to three months. It previously extended the notice period from two months to four months on July 18.

“Since the amendments came into force, government has listened to feedback from industry stakeholders that a four-month notice period could prevent first-time buyers from purchasing a tenanted property, particularly for those under CMHC programs, which require the property to be vacant at possession,” the Ministry said in a news release. “The extended notice period could have an impact on this requirement and potentially disqualify them from financing.”

The government also acknowledged the four-month notice period wouldn’t align with many homebuyers’ mortgage commitments which would expire before the closing date. Casey said mortgage financing is often only valid for 120 days.

Casey wanted to be clear that she supports tenants’ rights but doesn’t want the policy mismatch to push housing prices ever higher, which could, in turn, result in a quicker increase in market-rate rents and evictions.

“It’s not landlords versus tenants. It’s not property owners versus renters. It’s everybody caring about people’s ability to rent and own property in our country and our province,” she said.

The eviction notice change only applies in cases where a tenanted property has been sold. Landlords who already own their property and plan to move themselves or their family members in still need to give tenants a four-month eviction notice.

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