October 12, 2016 - Federal Finance Minister Bill Morneau, will impose three new measures to ensure a stable realestate market, to avoid a possible housing bubble.
Amongst these measures, Ottawa wants more particularly toensure thatnewproperty ownerswill,in the event of an interest rate increase, be able to reimburse theirhypothecary loan.
Stress test
To verify it, lenders shall, in some cases, conduct a stress test. Thus,lenders willbe able to test the borrower’s financialresources. We remind you this new rule will be effective as of October 17.
Until now, only insured hypothecary loans, being those with a floating or fixed rate and of a term of less thanfive years, were subject to this rule. But from October 17, the measure will cover all insured hypothecary loans, including fixed rate loans of a term of five years or more.
The owners of a residence already holding an insured hypothecary loan, or those renewing an insured hypothecary loan, will not be affected by this measure, states the Canadian government.
Unjustified tax exemptions
Finance Minister Bill Morneau, also wants to address abuses committed by some foreign investors buying property in the country, and then selling it and claiming anexemption from the taxes on such sale, by declaring it astheir principal residence.
Ottawa wants to ensure that these exemptions applyonly to those entitled thereto, being those who live in the country, and whose spouse, children or themselves inhabited the said property at one time or another during the year.
The government also plans strengthening the rules regarding hypothecary loan insurance. It plans consulting all interested parties shortly, after which it intends implementing the best provisions to better protect taxpayers. This measure should ensure, it is argued, a more equitablerisk distribution in the real estate sector.
Montreal, October 12, 2016
Source: CBC + Government of Canada
