Nanaimo New Homes
Nanaimo is under construction, with hundreds of new housing units being added every year. I follow the developments as closely as possible and then I update the following three pages - new houses, new apartment-style condos, and new townhomes. Or, see further below for more information about buying new homes in Nanaimo.
Buying New Construction in BC
There are special considerations when you purchase a home that is newly-built, or especially if it is not-yet-built (pre-sale).
New Home Warranty
The first thing to know about buying new construction is that (in most cases), the government has mandated the builder to purchase a "new home warranty" to insure against defects. The warranty typically covers the STRUCTURE for 10 years, the BUILDING ENVELOPE for 5 years, and all other LABOUR & MATERIAL DEFECTS for two years after occupancy.
Not only does this mean that you have an insurance company behind you if things go wrong, but it also means the builder will often come and fix any issues you report to them because they don't want any claims against the warranty. But, see below about owner-built homes.
Owner-Built Homes
BC Housing makes a distinction between the regulated licensed contractors who build most of our homes, vs. "owner-builders", i.e., regular folks who are building a home for themselves. Clearly they are two different kinds of builder and require different regulatory oversight; the owner-builders are given more leeway, for example by NOT being required to purchase new home warranty insurance for their build. An owner-built home must be occupied by the builder for at least one year before it can be offered for sale.
The takeaway for buyers is this: If you're buying a home that's less than 10 years old, you can't assume there is a 2/5/10 new home warranty in place. (But it's easy to find out.) If there is no warranty but you want to pursue damages/recourse, it would have to be from the owner-builder directly.
Pre-sale Homes in BC
With pre-sales, you are committing to a contract before you see the final product. This naturally comes with many risks, but the regulators (and the real estate development industry itself) have implemented numerous checks and balances to protect consumers.
Standard Clauses in the contract
There are some clauses that a buyer's real estate agent will typically include in the contract to protect you:
- The "builder's lien" clause protects you if a sub-contractor wasn't fully paid for their work on the property and is suing.
- The "deficiency walkthrough" clause says you can go to the place a few days before your final payment, and point out any problems or workmanship defects. If the builder hasn't addressed those by completion day, you can withhold some funds as leverage. In my experience, the builders are eager to leave a good impression on the buyers (and the new home warranty insurance companies) so this all goes well for the buyer.
Taxes on New Homes
The tax man treats new home purchases differently from "used" home purchases.
Property Transfer Tax Exemption
For "used" homes, there is a provincial property transfer tax (PTT) of several thousand dollars. It's calculated as 1% of the first $200k and 2% on the rest, with more increases above $2M. For example, that is $12,000 paid in property transfer tax for a $700,000 home.
But for newly built homes, the BC government offers a full exemption to the property transfer tax as long as it's your principle residence. However, this is only for homes with less than $1.1M fair market value (there's a partial exemption for some homes between $1.1M and $1.15M), and only if the property size is under 1.25 acres.
Note, Property TRANSFER Tax is a one-time provincial tax and is not related to your "property taxes", which are local and annual.
GST Charged for New Homes
Although new builds are exempt from the property transfer tax, they are actually subject to a HIGHER tax rate because GST is payable - at 5%. This works out to much more than the PTT - it's $35,000 on the $700,000 home mentioned above.
There's a federal "New Housing Rebate" for some of the GST if you buy something with a value of $450k or less, from a licensed builder, and you use it as your primary residence. Ask your tax accountant or notary/lawyer if you think you might qualify!