Under the Homeowner Protection Act, certain types of new construction intended for rental use may qualify for an exemption from mandatory builder licensing, home warranty insurance, and, if applicable, the reconstruction levy.
What types of projects may be exempt?
The following classes of new homes may qualify for a rental exemption:
- Multi-unit buildings owned under one legal title and constructed for rental purposes
- Multi-unit buildings that are strata-titled but held under a single ownership and constructed for rental purposes
- Three or more dwelling units built for rental use and owned under a single legal title
To receive the exemption, qualifying owners must register a Section 219 Restrictive Covenant on the property title through BC Housing.
What is a restrictive covenant?
A restrictive covenant is a legal agreement registered on the property title under Section 219 of the Land Title Act. It restricts how the property may be used or sold.
For rental exemptions, the covenant:
- Requires the building to be used solely for rental purposes, and
- Restricts the sale or other disposition of any dwelling unit for 10 years from the date of first occupancy
Why must the covenant remain on title for 10 years?
Homes built under a rental exemption do not have home warranty insurance. Without this coverage, a buyer would have no protection if construction defects occurred. The 10-year covenant prevents units from being sold during the period when warranty coverage would normally apply.
Eligibility criteria for a rental exemption
To qualify, the following criteria must be met:
- You must be the registered owner of the property, or a registered leasehold owner.
- The property must be one legal parcel.
- If you plan to consolidate two or more lots, this must be completed before BC Housing can issue the New Home Registration Form (required to obtain a building permit).
- Your project must include:
- Two or more dwelling units in a multi-unit building that are owned under a single legal title, or strata-titled with all units held under one ownership
- Three or more detached dwelling units on one legal title
- The homes must be intended solely for rental use for the 10-year covenant period.
- For mixed-use projects (for example, rental units plus commercial space or units offered for sale); the rental units must be in a separate airspace parcel.
How to apply
- Complete the Rental Exemption Request Form
Email the completed form to [email protected]
Use the subject line: “Rental Exemption – [Project Address or Name]”
BC Housing reviews your submission
If the project meets the eligibility criteria, we will provide:
- A draft Section 219 Covenant, and
- Instructions for preparing and registering the covenant on the property title
Register the covenant
The owner is responsible for ensuring that the covenant is properly registered with the Land Title Office.
Provide proof of registration to BC Housing
Once BC Housing verifies the covenant is registered, we will issue the New Home Registration Form (NHRF).
The NHRF confirms that the building is exempt from the licensing and home warranty requirements under the Homeowner Protection Act.
Important
- Municipal building departments require the NHRF before issuing a building permit.
- In areas without building permit requirements, the NHRF must be obtained before construction begins.
Questions
For inquiries about rental exemption criteria or the application process, contact: [email protected]