New protections for Canadian home buyers and a ban on blind bidding are in the works as the federal government announced the development of a Home Buyers' Bill of Rights.
Included as part of the 2022 Federal Budget put forward on Thursday, the government confirmed that over the next year, Minister of Housing and Diversity and Inclusion Ahmed Hussen will engage with provinces and territories "to develop and implement a Home Buyers’ Bill of Rights and bring forward a national plan to end blind bidding."
"Unfair practices like blind bidding or asking buyers to waive their right to a home inspection can make the process of buying a home even more stressful for too many Canadians," the federal budget reads. "To help level the playing field for young and middle class Canadians, the government will take steps to make the process of buying a home more open, transparent, and fair."
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Implementing a Home Buyers' Bill of Rights would mark the realization of a 2021 campaign promise from the Liberals -- a promise that was recently reaffirmed after it was included on a list of shared NDP-Liberal priorities, published as part of the two parties' governance agreement.
With intense competition and limited housing supply fuelling fierce bidding wars all across the country, the federal government is looking to possible market cooling measures. Prospective buyers not knowing the offers of other bidders, the Liberals say, ultimately drives up home prices, making open bidding a natural fix.
Some have questioned this policy move, however, with one report from policy think tank Smart Prosperity Institute stating that not only is there no evidence to support the government's claim that blind bidding causes prices to soar, but that actual evidence suggests open bidding will lead to higher prices.
The overall motivation behind the Bill of Rights is a desire for increased transparency. The bill, once finalized, could also include ensuring a legal right to a home inspection and ensuring transparency on the history of sale prices on title searches.
Although not stated in the budget, the Liberal party has previously called for the bill to also establish a publicly accessible beneficial ownership registry. Additionally, they proposed that real estate agents be required to disclose to all participants in a transaction when they are involved in both sides of a potential sale, as well as the insurance of "total transparency on the history of recent house sale prices on title searches."
The Liberal's housing plan also called for the Bill of Rights to ensure all banks and mortgage lenders offer mortgage deferrals for up to six months in the event of a job loss or other major life event. Lenders would also be required to act in a buyer's best interest by fully informing them of the full range of choices available to them, including the First-Time Home Buyer Incentive.
To support the creation of the Home Buyers' Bill of Rights, the federal budget has allocated $5M to the Canada Mortgage and Housing Corporation, spread out over two years, starting in 2022-23.