The Homeowner Protection Act recognizes certain types of new construction intended for rental use may be exempt from the mandatory licensing and warranty requirements.
The following classes of “new homes” are exempt from the requirements of builder licensing, home warranty insurance, and if applicable, the reconstruction levy:
- Multi-unit buildings owned under a single title and constructed for rental purposes
- Multi-unit buildings that are strata-titled, but held under single ownership and constructed for rental purposes
- Three or more dwelling units built for rental purposes and owned under a single legal title
In these cases, the owner may pursue the rental exemption through BC Housing by registering a restrictive covenant on the title to the property.
What is a restrictive covenant?
A restrictive covenant is an agreement between the land owner and a third party which is registered against title to the property to restrict the use and/or disposition of the land in accordance with Section 219 of the Land Title Act.
In the case of a rental exemption, the Section 219 Covenant limits the sale or other disposition of any dwelling unit to ensure that the building is used solely for rental purposes for a period of 10 years from the date of first occupancy.
Why must the Covenant remain on title for 10 years?
Residential construction built under a rental exemption is restricted from being sold for a period of 10 years from the date of first occupancy. As a dwelling unit constructed under a rental exemption does not have home warranty insurance in place, the covenant restricting the sale reduces consumer harm from any construction defects that may have otherwise been covered under home warranty insurance.
How do I apply for the rental exemption?
In order to pursue a rental exemption, the following criteria must be met:
- The applicant must be the owner of the property;
- The property you are planning to build on must be one parcel only; if you are consolidating two or more lots, this needs to occur and be completed prior to pursuing the rental exemption;
- You must have two or more dwelling units in a multi-unit building;
- If the units will be strata titled, they all must be held under one single ownership;
- If your project is mixed use, rental dwelling units may not be part of the same strata plan as dwelling units being offered for sale. Please contact our office directly for further information on this requirement.
You may send your enquiries regarding the rental exemption requirements and process to [email protected] with the subject line “Rental Exemption” and the address of the project or project name. Our office will follow up with specific information on the rental exemption process and any required information needed to verify the rental exemption acceptance criteria.
For any additional questions, please contact the Licensing and Consumer Services branch of BC Housing.