Quick Tips: Should I buy or rent my home?

EVERYONE should buy a home as soon as they are able to.  Long term, the property value goes up, the mortgage gets paid off and the gain is tax free.

For most people, the paid off value of their home is most if not all of their retirement security (and ultimately their estate, to leave to the kids).  For the vast majority of people, their after-tax income is used up covering the cost of living, so if they rent their whole lives, there is usually not much to show for it at the end of the day.

Renting at the outset may be necessary, but it should never be a long term goal in this country.

Mind you, at the rate the NDP is going, property owners’ rights may be dwindled down to those of renters by the time they are finally kicked out of office.

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DISCLAIMER: The foregoing is not legal advice and is presented for information purposes only. Readers of this material should consult with their own legal counsel before making a decision based on this blog post.

For information about this please feel free to contact  Kenneth Pazder or Melissa Valana at 604-682-1509.

Further Reading:

5 Ways the Government could Help with Housing Affordability in Vancouver BC

Why are Metro Vancouver housing prices falling? When will this trend end?

Real Estate Advice: A dozen things NOT TO DO before you buy a home!

The Speculation and Vacancy Tax – What the government isn’t saying

On November 27, 2018, the speculation tax was passed in B.C. to, in the government’s words “target speculators who own residences in B.C. but don’t pay taxes here, turn empty homes into good housing for people, and raise revenue that will directly support affordable housing.”

The pitch to the public was that this tax would aid in tackling the housing crises in major urban centers in British Columbia and make housing more affordable for people in our province.

The government also claimed that over 99% of British Columbians would be exempt from the tax.

So far so good?

Well in realty the impact of The Speculation and Vacancy Tax is not exactly as advertised. Below are but a few of the issues that government neglected to include in its marketing materials:

What are Speculators?

The Speculation and Vacancy Tax does not define the terms “speculator” or “speculation.” Moreover, the term speculation is not even mentioned in the Act. There is no pre-amble or other section that explains how the Act is supposed to stop speculation. Then why is it called The Speculation and Vacancy Tax?

The term “speculation” is normally a pejorative description of the dubious practice of trying to make a quick buck on a venture while not contributing any long term value for anyone else.

It would seem that the BC government thinks that anyone who owns a property that is neither occupied by themselves or rented out is a speculator –and hence, should be punished by a hefty tax penalty.

Renting your property for 6 months is not as easy as you might think.

To avoid the tax penalty an owner has to occupy the property as his principal residence or rent it out for at least six months of the year.  The implied assumption is that it is entirely possible to rent one’s property out for this minimum period of time and thus, be in compliance with the Act.

Firstly, who rents a residential property for just six months? Most renters want a place to live for the indefinite future, which is usually measured in years, not months.

Secondly, even if you can find someone who agrees to rent for six months, recent changes to the Residential Tenancy Act (RTA) have now made a term lease very difficult to terminate. The amendments to the RTA prohibit landlords from ending fixed term tenancy agreements when they expire except in very limited circumstances. Therefore, your tenant is under no legal obligation to vacate the premises at the end of the fixed term!

Unless the tenant agrees to vacate, the tenancy will continue on a month to month basis and there is little the Landlord can do to terminate it thereafter except to move into the property (or have a family member move in), extensively renovate the property such that it’s not possible to live in during the renovations or sell it.

The Act is retroactive to January 1, 2018

Instead of making this tax prospective so that people could have arranged their affairs accordingly, the government made this tax retroactive to January 1, 2018. The act was passed in late November when it was too late for people to bring their properties into compliance with the Act.

This is incredibly disingenuous on the government’s part.

In addition, any form of retroactive legislation is generally considered bad tax policy.

As a marketing ploy the government generously allowed everyone a “tax break” to the lowest tax rate of one half of one percent of the assessed values of their properties. I am sure that the people affected are thrilled to be stuck with an extra tax bill (i.e. on a million dollar property that’s an extra $5,000 on top of the owner’s normal property taxes!)

The fact that the government made the tax retroactive is evidence that that the Speculation and Vacancy Tax is a tax grab –the NDP just couldn’t resist legally pilfering that extra .5% for 2018 from unsuspecting property owners.

Non-arm’s length Tenancies for Foreign Owners and their unreasonable requirements

The non-arm’s length tenancy requirements for foreign owners leaves more questions than answers.

The law states that for non-arm’s length tenancies there is no need for a lease/tenancy agreement or for any rent to be paid. However, if the owner is a foreign owner then the tenant must meet other requirements for the owner to be exempt. The tenant must:

– Be a Canadian citizen or permanent resident;

– Be a resident of B.C. for income tax purposes at the end of the last day of the calendar year;

– Not be a member of a satellite family; and

– Have a B.C. income for the calendar year that is equal to or greater than three times the annual fair market rent for the entire residential property.

You may be wondering why the government cares about how much income the tenant is earning? That is a good question. This tax is supposed to be targeting vacant homes, so if there is someone occupying the property why does it matter how much income the tenant is earning?

Furthermore, even if the tenant is non-arm’s length how are landlords going to get their tenants to disclose their annual income? Clearly the government did not think about how this act would interact with privacy legislation.

Moreover, without the requirement of a lease or rent obligations if the government were to audit a filed Spec Tax Declaration, how does the owner prove that there was someone living in the property? I recently posed just this question to the Speculation and Vacancy Tax department and the answer I received was “that is a question for the Audit and Compliance team, which by the way hasn’t even been formed yet.”

Clearly the government sought to rush this piece of legislation through Parliament without considering the implications or how they were going to enforce it.

Issues in Estate Planning

A common estate planning method is to have children or other family members registered as joint tenants on title of the property to avoid probate fees when the elder joint tenant (usually the parent) dies. However, the Speculation and Vacancy Tax, unlike the Empty Homes tax is applicable to all owners of the property and its applicability depends on each owner’s use of the property, not just that of the person in possession.

Thus, having one’s child as a co-owner of the property without living in it may have adverse tax implications. For instance, if the child is a foreign owner and the parent does not meet the above requirements (e.g. doesn’t make the requisite amount of income), the child could be subject to the tax, thereby eliminating the advantages of avoiding probate fees.

This again leads to the same question. If someone is living in the property why should it be subject to tax?

Erosion of Property Rights

As long as your use of your house or condo is not illegal, why should the government be able to tell you what you can do with it?

Fee simple title, which is the highest form of ownership available in common law countries, is being eroded by laws such as The Speculation and Vacancy Tax and the Empty Homes Tax which require rental of properties not otherwise occupied as principal residences.

Failure to comply with such laws will result in a 1% property tax on the property in Vancouver AND a fine of up to $10,000 a day if a false declaration is made. Does that fine strike you as a bit much?

The Speculation and Vacancy Tax will add a further 2% tax if you are a foreign owner and 0.5 if you are a Canadian citizen or BC resident, for failure to comply with its rules (and to add insult to injury, it applies in Vancouver as well!) So for example, let’s look at a high end condo in the Shaw Tower in Vancouver where a “speculator” has owned the property for 15 years, but doesn’t live in it for more than six months each year. With an assessed value of $4,000,000, the owner would have to pay an extra $40,000 in taxes to the city of Vancouver and an additional $80,000 in taxes to the BC government.

If such taxes only applied to foreign owners, one could justify the tax grab on the basis that arguably, foreign capital has driven up the price of BC real estate, so foreign owners should foot the bills.

However, these taxes are applicable to any owners including Canadian citizens and BC residents.

This is clearly an unwarranted infringement on one’s ownership rights.
As usual, the unproven hypothesis is that the “many thousands” of vacant homes and apartments are the culprits and if the government could only get them occupied the housing problem would be ameliorated.

With all due respect, that is wishful thinking.

With some 50,000 people a year moving to the Lower Mainland, even mandating occupancy for every otherwise unoccupied house or condo in BC won’t even make a dent in the housing shortage –but it will create two more expensive bureaucracies and further siphon off people’s hard earned incomes.

What about raising revenue to support affordable housing?

The government estimates that the tax will raise about $200M in revenue.

Even if the cost of running the bureaucracy needed to administer this program was zero (which it clearly will not be), $200M is a drop in the bucket when it comes to building more affordable housing. That’s basically the cost of one large high rise condo development.

Furthermore, I did not notice in any articles or press releases that the $200M would be specifically ear marked for affordable housing, so one can only assume that this revenue, like all government levies will go into GENERAL REVENUE of the Province of BC, to be used for whatever project of the day that government deems most expedient.*


The BC Speculation and Vacancy Tax will fall far short in terms of achieving its stated policy goals.

Unfortunately, that is not relevant. These “virtue-signaling” taxes are supposed to make tax payers feel good about paying them –whether they work or not.

*PST (provincial sales tax) is generally levied on goods sold in BC, however in 1992 Premier Glen Clark amended the law to allow the government to tax legal services under this legislation –ostensibly to fund the provincial legal aid plan, a worthwhile cause which is perpetually short of money.

However rather than using the money to fund legal aid, both the province’s political parties have used the levy to siphon money into general revenue rather than earmarking the funds collected by lawyers for much-needed legal aid and other justice-related services.

The government is pocketing more than $140 million a year while spending only about $80 million on legal aid when the courts are overflowing with the unrepresented litigants who can’t afford lawyers and don’t qualify for legal aid.


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DISCLAIMER: The foregoing is not legal advice and is presented for information purposes only. The Speculation and Vacancy Tax has already been changed several times since its recent passage only months ago so it is suggested that readers of this material should consult with their own legal counsel before making a decision based on this legislation.

For information about this please feel free to contact  Kenneth Pazder or Melissa Valana at 604-682-1509.


Changes to the Residential Tenancy Act in British Columbia – the good, the bad and the ugly!


Within the last six months the BC Government has made some significant changes to the Residential Tenancy Act (“RTA”) which will impact future and existing tenancy agreements –effectively making the legislation retroactive.

Retroactive legislation is NEVER advisable.  People make business and financial decisions every day on the basis of the existing legal and regulatory framework.  Changes to the law are inevitable, but normally they are prospective, meaning that they take effect on a go forward basis and leave existing contracts and other legal relationships alone.

The BC Government is ostensibly attempting to increase protection for tenants at the expense of limiting the freedom to contract by landlords.  Is that a good thing?

Here are the most significant changes –you be the judge!

Vacate Clauses in Fixed Term Tenancy Agreements

For many years the prescribed RTA form of residential rental agreement contained a section allowing for the use of fixed term leases which either 1) terminated at the end date or 2) turned into month to month tenancies at the end date.  The landlord and the tenant would agree to either option at the outset of the lease by checking the appropriate box on the lease.

There were pros and cons to this section.

On the con side, some landlords used the termination clause to avoid the annual rental increase limit prescribed by the Residential Tenancy Branch (“RTB”) by terminating the fixed term lease and then entering into a new lease with the former tenant or a new tenant at the market rent (which often had risen faster than the prescribed allowable rental increase).

On the pro side, landlords also used the vacate clauses in fixed term agreements to get rid of unsatisfactory tenants who were frequently late with rent payments, who did not keep the rental property in good condition or who were not abiding by the strata by-laws.

As usual, the NDP government decided that the tenants’ rights trumped the landlords’ and effective December 11, 2017, limits were imposed on landlords’ ability to terminate a fixed term rental agreement when the term expired.

The new provisions in the RTA now prohibit landlords from terminating fixed term tenancy agreements when they expire except when:  1) a tenancy agreement is a sublease agreement or 2) the landlord or a close family member of the landlord intends, in good faith at the time of entering into the tenancy agreement, to occupy the rental unit at the end of the term or 3) the tenant has abandoned the premises or 4) the tenancy is frustrated or 5) the Director of the RTB decides or 6) the landlord and tenant agree to terminate the lease.

Except in these limited circumstances (or the parties agree to another fixed term lease), the tenancy will automatically continue as a month-to-month tenancy under the same terms as the original agreement or until either party serves notice on the other or both parties agree to end the tenancy.

These new rules are RETROACTIVE! They will apply to both new and existing tenancy agreements!

For existing fixed term tenancy agreements, tenants will not be required to vacate at the end of the term unless the landlord meets the specific circumstances described above. If both parties agree to end the tenancy its necessary that they a mutual agreement to end the tenancy.

If you are a landlord who wants to rely on a vacate clause, you will need to first advise your tenant and try to obtain their consent to end the tenancy at the end of the term. If your tenant does not agree to end the tenancy, you must apply for an order of possession through the Residential Tenancy Branch where you must meet the specific circumstances described above to enforce the vacate clause.

Rental Increases

The BC Government has also made changes with regards to rental increases between fixed term tenancy agreements with the same tenant. Effective December 11, 2017, a landlord must now give a tenant 3 full months’ notice of a rental increase. Landlords are not to impose a rental increase for at least 12 months from when the rent was first payable or from when the rent was last increased.

A landlord may impose a rental increase that is no greater than the Percentage Amount calculated at the inflation rate + 2%.

Furthermore, landlords are now prohibited from applying for an additional rent increase on the basis that the rent is significantly lower than other similar rental units in the same geographic area.

Investigations and Administrative Penalties

The BC Government has also changed the RTA in attempts to strengthen the ability of the Residential Tenancy Branch to investigate and levy administrative penalties. The Residential Tenancy Branch (“the Branch”) may conduct investigations to ensure compliance with the RTA and its regulations regardless of whether there is an application for dispute resolution in relation to the matter.

A monetary penalty, not exceeding $5,000, may be imposed if the Branch is satisfied that on a balance of probabilities the person has contravened a provision of the RTA or its regulations or failed to comply with a decision or order.

The Branch will give the person an opportunity to be heard and consider: the gravity and magnitude of the contravention; previous enforcement actions for contraventions of a similar nature; the extent of harm to others resulting from the contravention; whether the contravention was deliberate, repeated or continuous; economic benefits derived by the person from the contravention; and the person’s effort to correct the contravention.

If the contravention or failure occurs over more than one day or continues for more than one day, separate penalties not exceeding $5,000 may be imposed for each day the contravention or failure continues. An administrative penalty imposed is a debt due to the government. Failure to pay may result in a filing of a certificate in court. The certificate has the same force and effect as if it were a judgment of the court.

Demolition, Renovation or Repair

Effective May 17, 2018, the BC Government is now requiring all landlords to give 4 months’ notice to end a tenancy for demolition, renovation or repair, or conversion. Tenants have 30 days to dispute such notice.

A landlord (or purchaser) must compensate a tenant 12 months’ rent if a landlord ends a tenancy under s. 49 of the RTA (Landlord’s use of the Property) and the landlord (or purchaser) does not take steps to accomplish the stated purpose for ending the tenancy within a reasonable time period after the effective date of the notice or use the unit for that stated purpose for at least 6 months beginning a reasonable period after the effective date of the notice.

A tenant has a right of first refusal to enter into a new tenancy agreement if the rental complex has 5 or more rental units. Although not yet evident in the RTA or on the RTB’s website, we are advised by the RTB staff that the rent on the suite will be set by the landlord, presumably based on the market rent, not the prescribed rental increase. This gives tenants a greater ability to re-rent after renovation or repair, but depending on the increase they may no longer have the financial ability to do so.

If a tenant exercises a right of first refusal and the landlord does not give the tenant both 45 days’ notice of availability or a tenancy agreement to sign, the landlord must compensate the tenant an amount equal to 12 months rent.


If you are a landlord, these rights may seem like an unwarranted intrusion on your freedom to contract.  Contrary to the government’s belief, all landlords are not wealthy individuals or large corporations with deep pockets. As the purchase price of strata properties has risen almost 40% in the past 2 years in the Lower Mainland, a landlord has to charge a high rent to cover his or her expenses including the mortgage, strata fees, insurance, property taxes, repairs and special strata levies where applicable.  Regulating a landlord’s ability to charge the market rental is a serious restriction on the landlord’s property rights.

On the other hand, if you are a tenant struggling to keep up with the sky high rents you may welcome these changes as being long overdue, as BC residents’ salaries are not keeping up with either rental rates or property values.

Questions? Contact us?

How these changes will impact residential tenancies in BC is yet to be determined. If you have any questions, or want to share your story we would love to hear from you!  Feel free to contact Kenneth Pazder or Melissa Valana at 604-682-1509.


Disclaimer:  The foregoing is not intended as legal advice.  It is presented for information purposes only. When entering into residential contracts it is advisable to contact legal counsel (or the RTB has a telephone help line with staff who are prepared to answer questions regarding the RTA).