Real estate in Canada is a highly regulated industry all the way from the federal level down to our local Comox Valley. Unfortunately many aspects of the real estate industry are not fully understood by the Canadian consumer. When consumers browse through Comox real estate listings they are not struck by all of the regulatory issues that can and do apply to this local market area. Canadian news headlines that discuss things like real estate bubbles in Canada or the prices of real estate in Canada are not particularly helpful in clearing up some of the misconceptions and lack of understanding of this complex industry. The real estate industry is regulated by many different statutes (laws). This industry is affected by economic factors and it is influenced by several different organizations within Canada. Similarly, the Comox Valley real estate market is affected by many different and varied inputs and factors.
From a regulatory standpoint, the federal government has jurisdiction over things like trade, taxes, the postal service, currency and banks, criminal law, and the militia and defence. When it comes to real estate, however, this responsibility rests with the provinces just as it does with health and education. The source of this division of powers between the federal and provincial governments is sections 91 to 95 of the 1867 Constitution of Canada. The provinces provide direction and guidance in the form of statutes and regulations.
There is no federal Real Estate Act, but the following federal statutes can and do have a bearing on real estate in each of the provinces. These include, but are not limited to the:
Personal Information Protection and Electronic Documents Act;
Proceeds of Crime and Terrorist Financing Act;
Aeronautics Act; and
At the federal level, real estate can be affected by economic factors such as federal monetary and fiscal policy. Monetary policy is carried out by the Bank of Canada through its policy instrument called the overnight interest rate. This key interest rates affects all other interest rates such the mortgage rates available to the Canadian consumer. The real estate industry can also be impacted by federal fiscal policies developed and monitored by the Department of Finance. Specifics are often announced in the Federal Government’s annual budget and summarized in the Department’s Report on Plans and Priorities. As well, policies aimed at regulating the operations of organizations like the Canadian Mortgage and Housing Corporation (CMHC) can also have a direct impact on real estate across the country. They can also have an impact on local real estate decisions within the Comox Valley real estate property and housing market.
Influence at the national level can come from a variety of sources as the government developed and implements policies and programs. One of the better known organizations is the Canadian Real Estate Association (CREA). Among other things this organization maintains and its members pay for the realtor.ca website that many Canadians access on a regular basis in order to find out what homes are available for sale through the Multiple Listing Service (MLS) system used by real estate boards throughout the country.
As mentioned earlier, the responsibility for real estate rests at the provincial level. Within the province of British Columbia, one of the main references for real estate is the Real Estate Services Act. Others include but are not limited to the:
- Law and Equity Act;
- Business Practices and Consumer Protection Act;
- Homeowner Protection Act;
- Wills Variation Act;
- Fish Protection Act;
- Heritage Conservation Act;
- Environmental Management Act;
- Land title Act;
- BC Limitation Act;
- Personal Property Security Act;
- Residential Tenancy Act;
- Local Services Act;
- BC Fire Code; and
- Health Act.
Just as federal fiscal policies can affect real estate so can provincial ones. British Columbia’s budget and fiscal plan is currently provided by the Ministry of Finance as a three year plan. As of the writing of this article, the current plan is dated February 18, 2014 and it covers the Fiscal Year (FY) years of 2014/2015, 2015/2016, and 2016/2017. As an example, this plan announces taxpayer-supported infrastructure spending on hospitals, schools, post secondary facilities, transit, and roads totaling $11 billion over the fiscal plan period. While announcements such as these are interesting at the provincial level, they are vital at the local when when a place like the Comox Valley is affected. The recent announcement of a new hospital to be built in Courtenay for the Comox Valley is an example of one such important announcement that has significant local real estate impact.
The British Columbia Real Estate Association is one of the provincial organizations that can have influence on real estate at the provincial level. Among other things, the organization is involved in realtor education and the analysis of economic factors affecting BC’s housing market. One of the news updates posted on their website focused on how May 2014 home sales were the strongest for that month since 2007 ( when the real estate market peaked in BC).
Below the provincial level, there are a number of organizations that exist at the regional and local levels that can and do regulate real estate. In our area, the Comox Valley Regional District has regional responsibilities while other organizations like the City of Courtenay, Town of Comox, and Village of Cumberland regulate within their own areas of responsibility. Each of these organizations can also have an impact on economic factors that affect real estate at the regional and local levels. Add the Vancouver Island Real Estate Board (responsible for all of Vancouver Island except Victoria) to this melange of organizations and the complexity becomes increasingly evident.
Step down another level and land developers, builders, and individuals have roles to play and impacts to make. For example, if a developer were to develop a large tract of land within the Comox Valley, the development would have an economic impact and it may have other impacts related to real estate. All of this type of activity must take place within a regulatory framework that is both comprehensive and complex.
When buyers and sellers plan to buy and sell real estate in the Comox Valley they may be faced with many different challenges. Some people who try to do this themselves may not even appreciate what the challenges are and will be. What laws apply to the potential transaction? How have these laws changed or been amended lately? What factors mighty come into play for a specific property? How important are these factors? Do any of them requires specialized advice or expertise? How much time will it take to effectively address the various factors?
Buying or selling a home is not like buying or selling a consumer product like a car. The laws are different, the processes are different, and the considerations that could come into play are different. Also different is the relationships that exist in these two different industries. When you walk onto a car lot the salesperson who works for the dealership is there to sell you a car. They work for the business and not for you. In real estate, realtors can help you buy or sell your home or property. They can work exclusively for you in most circumstances. This change known as Designate Agency became the industry standard in BC on June 1, 2012.
For most of us in Canada, our homes are our most expensive asset. When buying or selling such an asset does it make sense to have a knowledgeable and competent professional working exclusively for you who will look out for you and your interests? Realtors provide professional real estate services each and every day to buyers and sellers of homes in the Comox Valley. To find out more about the Comox Valley real estate market or to hire a professional realtor to guide you through the buying and selling process, contact Brett and get started meeting your Comox Valley real estate needs.
by Brett Cairns