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 Nanaimo
New Home Warranty
The first thing to know about buying new construction is that (in most cases), the home is insured against defects with a "new home warranty" as mandated by the government. That warranty 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, in order to prevent a claim against the warranty.
Of course, this is one reason why new homes cost more to purchase - it is the builder who is required to purchase that insurance, and naturally they must pass that cost along to the consumer in some form.
A note about "owner-builders": These are people who are NOT licensed contractors with BC Housing and must occupy the home for at least one year because it was deemed to be built for personal use. Owner-builders are NOT required to purchase a new home warranty policy for the home, which means if you buy an owner-built home, there may not be a new home warranty (unless the owner-builder purchased one). If there is a problem in the first ten years, you must pursue damages/recourse from the owner-builder directly.
Other Assurances
When you purchase new construction, you will usually view the property before it is fully completed. This means you are making an offer before seeing the final product. However, there is a process used by developers and real estate agents that minimizes the risk of shenanigans:
- The realtor includes a clause in the offer which allows for a "deficiency walkthrough"; Shortly before the closing date, all parties walk through the "finished" home and take note of any defects, recording them and agreeing on what still needs to be addressed by the builder.
- At closing, the buyer's lawyer withholds some of the money unless/until everything has been demonstrated to be completed.
I have never seen a situation where the builder was not extremely cooperative and eager to leave a good impression on the buyers. The process above, as well as the new home warranty insurance, helps to ensure that everything goes as it should 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 $750,000 fair market value (there's a partial exemption for some homes between $750k-$800k), 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!
Warranties on New Homes
Government regulations demand that developers must purchase third-party home warranty insurance to provide to the buyer along with the home. Naturally, this is one reason why new-construction properties cost more than older homes. Here is the minimum level of coverage that the home warranty insurance is required to provide:
- 2 years' coverage on labour and materials
- 5 years on building envelope
- 10 years on home's structure
Search New Construction in Nanaimo
These links point to the same pages as the three images shown near the top of this page.
I also showcase certain upcoming developments in the upcoming Nanaimo developments section of my blog.