New Tenancy Rules Could Impact Mortgage Financing

By Jamie Moi

Effective July 18, 2024, the notice required to evict a tenant from a property that a landlord wishes to occupy has increased, and the conditions to end the tenancy have become far more expensive for landlords.  Currently, a landlord can evict a tenant for the purpose of occupying the property themselves, or having a close family member occupy the property.  The notice required was previously 2 months, and has now been extended to 4 months.  Additionally, the tenant will be entitled to 2 months of free rent and, should the owner not fulfill their intent to occupy the home within a reasonable time and the property is not used by the landlord for a full year, the landlord will owe the tenant the equivalent of 12 months of rent.

From a mortgage perspective, there are several concerns about these new rules.  Firstly, mortgage lenders can do rates holds, but they are usually for a maximum of 120 days.  This could mean that mortgage approvals cannot be guaranteed beyond the tenant notice period.  Also, if a buyer is looking to purchase a currently tenanted home and the seller runs into challenges evicting the tenant, the sale could collapse.  From a lender perspective, the presence of a tenant could mean trouble for the buyer who is trying to qualify to purchase an owner occupied home, rather than buying a rental property which has very different lending criteria.  

Make sure you educate yourself on the tenancy rules on the BC Government’s website HERE.