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Should you buy a property?

Property is in high demand in Canada.

Housing in Toronto, Calgary and Vancouver are generally lower than in cities such as London and Paris (May 2018.) Low mortgage rates and high demand for rentals has influenced some first-time buyers to get on the property ladder in places, making the situation even more competitive.

It would be fair to say that property close to a metropolitan centre demands a higher price but, in keeping with most cities across the world, there are up-and-coming suburbs that carry their own premium rates.

Weather appears to be a determining factor of house prices. Looking across Canada as a whole, the highest house prices are in Vancouver and British Columbia where the weather is mildest, whilst the lower prices can be found in Manitoba and Prince Edward Island where the weather is more severe and the towns remote.

Prices aside, the good news is that Canada has an open door policy on property ownership with tax credits and interest-free loans for first-time buyers, but it is still a good idea to employ a realtor with knowledge of Canadian law to help navigate the process of purchasing a house.

When thinking about where to buy it is important to consider:

  • In some areas, house prices are going down.
  • Schools are usually allocated by catchment area.
  • There is a wide range of houses available from detached homes to apartments.
  • The climate is an important consideration as it can vary greatly between provinces.

With regard to who can buy a property, the regulations allow non-residents to buy property and open a bank account but, if they plan to spend more than six months out of twelve in the country, it will be necessary to apply for residency. Non-resident home loans are available but newcomers should expect to only get 65 per cent of the value with 35 per cent required as a down payment.

Another consideration is that the mortgage has to be raised with a Canadian bank. The borrower will need a Canadian lawyer or public notary to prepare the documents and registration at the land titles office.

Further costs that need to be taken into account:

  • Property transfer tax
  • Bank appraisal fees (sometimes not required)
  • Inspection fees
  • Insurance costs
  • Closing legal fees

For more information, there are some great mortgage qualifier and calculation tools available from the government’s Financial Consumer Agency of Canada.

A simplified version of the procedure:

  • First, find a realtor: a licensed professional experienced in sourcing properties, dealing with negotiations, navigating legal procedures and completing the transaction on the buyer’s behalf.
  • Find out from the bank how much there is available to spend by getting a pre-qualified mortgage from the bank.
  • Have the realtor look at the properties, if possible with the buyer, to match a home with your needs.
  • Once a suitable property is found, the realtor should write a contract of sale and purchase agreement, which will be presented to the seller. The contract should include details of the home inspection.
  • The realtor will organise conveyance and the conclusion of the contract.

It is also worth noting that the tax system in Canada does not treat the interest on your mortgage as tax- deductible. However, some moving expenses may be deductible, as may some expenses of home-based businesses.  It is worth engaging an accountant to assist you at first as the Canadian tax system will be different to that of your home country.

Renting in Canada

The standard of accommodation in Canada tends to be high and, as it is a cold country, most properties will be fitted with a climate control (heating and air conditioning) system as standard (although this is something that is obviously worth checking). Home security is not usually an issue in Canada as long as the occupier exercises common sense. Happily, property is normally a little more spacious than in Europe.

The lease or tenancy agreement should cover:

  • Length of lease
  • Arrangements for the landlord to access the property
  • Additional financial responsibilities of the tenant (such as utilities, although water is usually included)
  • Deposit (usually two months’ rent, refundable on termination)
  • Managing sublets
  • Notice, renewals, and terminations
  • Rent increases
  • Disputes and breach of contract
  • Rules about pets and smoking

Rental agreements are covered by laws specific to each province and territory. For instance, in Manitoba, a rent increase guideline is set by the province each January, while in Alberta, there is no control on rent increases. It is worth knowing your rights as a tenant in your particular province, so to find more information, check out the Canada Housing and Mortgage Corporation website here.

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