Vancouver Presale Guide
Updated: Aug 25, 2017
Whether you are looking to purchase a new property for your principal residence or as a rental investment, presales are a great option!
The suite will be brand new and under the New Home Warranty!
You do not have to worry about paying for costly repairs immediately upon possession. Should there be any issues requiring immediate attention, it is likely covered under the 2-5-10 warranty which accompanies the home.
More time to SAVE!
The deposit payment structure is staggered and typically spread out over 12-18 months. After paying the full deposit (often around 20-25% of the purchase price), you do not have to worry about financing the home until it nears completion! This allows you more time to save up money for a larger downpayment or to purchase furnishings. Enjoy the comfort of locking in a home at today's price, without having to pay for it immediately!
Low initial investment!
Take advantage of any increase in value during the construction period without having to pay for the mortgage, property tax, strata fee, or repairs!
More choices for suite selection!
If you like a certain floor plan in a particular building, you have a higher chance of being able to purchase a home with that layout than if you were to wait for a resale suite to be listed for sale. Typically, each layout will be available on multiple levels.
You can choose the colour scheme for your home based on the selections offered by the developer. Perhaps you may want to upgrade the carpets to laminate flooring, or laminate to hardwood. Developers often have upgrade packages available for selection. Additionally, you may have the option to purchase extra parking or storage lockers.
Desirability amongst tenants!
People often prefer newer buildings, making it easier to rent out in the future. Also, a higher rental rate can be charged.
If your situation changes within the construction period, you may have the option to assign your suite to someone else. Should the market value increase, you could potentially assign your contract to another buyer at a higher price than you paid!
DRAWBACKS + RISK
GST payable in addition to purchase price
Presales in BC are subject to 5% GST on the purchase, due and payable upon completion. Thankfully, the government offers a program for a partial GST rebate if the property is under $450,000!
Delay between purchase and completion
Buyers who purchase a presale property typically wait around 3-4 years before getting the possession of their home. If there are unforeseen changes in the construction schedule, the developer is permitted to delay the completion of the home a certain amount of time. This could lead to additional expenses for the accommodation prior to the completion of the building. Buyers should have alternative plans in the event that they are unable to move into their home as scheduled. Patience is key!
Market volatility during construction
During the time period between construction and completion, the market value may go up or down. The market value is largely determined by supply and demand, as well as the introduction of new government policies. Regardless of what the value is upon completion, the buyer is still required to complete the purchase.
Complications with obtaining firm financing
Some banks may not guarantee mortgage qualification for a property completion 3 years later. Thankfully, RBC offers a program that can assist with what!