In a budget thick with user fee increases, homebuyers face the biggest whack — registration fees will triple or quadruple for many new property owners.
The dramatic hikes for registering new land titles and mortgage documents come as Alberta’s real-estate market is mired in a significant slump, with sales volumes down and prices beginning to dip.
The move surprised many in the sector, but Service Alberta Minister Stephen Khan said lawyers and real-estate associations told him there was room to grow, compared with the taxes and fees in other provinces.
“We heard that independently from our stakeholders — boy you guys are really, really really low when it comes to fees,” Khan said. “There’s a recognition that having the lowest fees is not a sustainable model.”
There are two segments of land title and mortgage registration fees, and both will rise July 1. The flat-fee portion for each type of registration goes from $50 to $75.
But it’s on the “variable” or per-dollar fee that homeowners will really pay up. That charge will rise to six times its current level.
Here’s what it will mean for someone who purchases a $500,000 new home this summer — the rough average price for a standalone house in Calgary — and takes out a $400,000 mortgage:
— Currently, the new land title for that buyer costs $150 and the mortgage registration costs $140, for a total of $290.
— In the new budget, a land title would cost $675 and mortgage registration $555. The new total: $1,230.
While this fee is a fraction of the price of a new house or condo, new homebuyers are often surprised by the bevy of unexpected costs like home inspection, legal fees and the suddenly increased levy for document registration, said Liberal MLA Darshan Kang, a former real-estate agent.
“I don’t think this is going to help sales,” Kang said.
It’s the first time since 2011 the province has increased the flat fee for property and mortgage registrations. In the Klein era, the province slashed the variable fee from o.1 per cent of a property price to 0.02, and it hadn’t moved since. Now it will be 0.12 per cent.
While registration fee hikes bring Alberta much closer to the national average, it’s still well below what homebuyers pay in provinces with land transfer taxes. That same $500,000 property would come with an $8,000 transfer tax in Vancouver, $7,500 in Halifax, and $12,200 in Toronto, according to ratehub.ca, a financial comparison website.
The oil price collapse has walloped Calgary’s home resale market.
The Calgary region recorded one-third fewer residential sales this February compared to last February, while the median price went down 2.1 per cent, according to Calgary Real Estate Board data.
“The market has already been trending downward and the added fees certainly won’t help, but won’t be the sole deterrent from buying,” said Mike Fotiou, an associate with First Place Realty.
While Khan said he hasn’t heard worries about the fee hike from many groups, others that didn’t see this coming are still looking at what the change means for buyers of resale and new homes.
“It was a surprise to us. We didn’t know it was on the table,” said Amie Blanchette, government affairs director for the Canadian Home Builders Association, Calgary region.
No comments:
Post a Comment