This topic has come often lately. We have seen many clients need to list their rental properties due to income loss during Covid. On the flip side, we have clients buying homes to live in that are currently rented.
Sellers Take Note:
If you are selling your home (with a suite or rental property) you may be interested in reviewing the process for ending a tenancy. If the people buying your home want the property to be vacant at the time of possession, it’s essential to make sure you follow the correct steps and obey the tenancy act: https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/ending-a-tenancy .
Also, you want to be a good landlord and make sure you follow the rules when listing your tenanted property. Here are the rules if you are looking at selling a tenanted property: https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/during-a-tenancy/selling-a-tenanted-property
Buyers Take Note:
Vacant Possession Matters!
If you are buying a house to live in, the banks/mortgage insurers, want to make sure that you can move in at the time of closing. If the property is currently tenanted, a clause must be added to ensure that the current owner has the property vacant at the time of closing.
If you are thinking that you will give notice to the tenants sometime after you take possession, then the property is no longer “owner-occupied”. At this point, it is considered a rental purchase. This means a 20% downpayment at a minimum and higher rates.
But – We aren’t moving in for a few months anyway!? … And, We are ok staying in the property we rent for a few months. Or, We will move in down the road! – These scenarios will often cause a decline in the application for a mortgage or will result in a higher interest rate.
The government has really limited the insurers and thereby limited the bank’s ability to offer an “owner-occupied” mortgage on a property unless it is vacant at the time of possession.
Make sure to talk to you realtor about putting in a Vacant Possession clause if you are buying a property to live in. (Note: this means that part of the property needs to be vacant – tenants in a suite could stay as long as the upstairs is vacant).
Learn more by contacting our mortgage team, or apply now using our no-obligation application form to see where you stand.