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Recent Developments in Real Estate Law: British Columbia and Canada (2024–2025)

📅 April 17, 2025👤 By Richard Zhu
Recent Developments in Real Estate Law: British Columbia and Canada (2024–2025)

Housing Supply and Zoning Reforms in B.C.

In late 2023, the B.C. government enacted several pieces of housing legislation representing the most significant policy changes to housing in decades (QUICKSCRIBE REPORTER). One major reform is a requirement that municipalities allow “small-scale, multi-unit housing” on traditional single-family lots by June 30, 2024 ( Dentons - Restrictive covenants: A barrier to housing developments in British Columbia ). In practical terms, local governments had to update zoning bylaws to permit duplexes, laneway houses, secondary suites and other ground-oriented multi-unit homes in neighborhoods previously limited to one house per lot. The goal is to gently densify communities and increase housing supply amid a housing affordability crisis. Likewise, transit-oriented development rules now mandate higher minimum density around major transit hubs such as SkyTrain stations and bus loops (2024 B.C. Budget: More Changes to B.C.’s Real Estate Landscape - Lexology), aiming to create more homes near public transportation corridors.

However, private restrictive covenants on land titles are emerging as a complicating factor. Many older properties carry covenants that limit use to a single dwelling or impose other density restrictions. The government’s current position is that these private covenants are not automatically overridden by the new zoning laws ( Dentons - Restrictive covenants: A barrier to housing developments in British Columbia ). This means if a title has a covenant prohibiting multi-unit use, it could still block a duplex or laneway house even though zoning now allows it. Resolving such conflicts may require negotiation or legal action by developers and owners unless future policy addresses these covenants. From a homeowner’s perspective, the zoning reforms could present new opportunities (for example, the ability to add a rental suite or garden cottage for extra income) but also potential neighborhood changes as higher-density projects become permissible next door. Overall, these B.C. housing reforms are aimed at removing barriers to development and enabling a broader range of housing types – an important shift for builders and communities looking to increase housing options.

(What this means for you: Homeowners may be able to build additional units on their properties or see more multi-unit projects in their neighborhoods. Developers have new opportunities to create duplexes and small multiplexes without lengthy rezoning, though they must still be mindful of any restrictive covenants. Residents can expect gradual increases in neighborhood density, especially around transit, as the province pushes for more housing.)

Short-Term Rental Regulations Overhauled

Short-term rental platforms like Airbnb and Vrbo have come under new provincial regulation in B.C. The Short-Term Rental Accommodations Act was passed in 2023 (as part of Bill 22) with rules rolling out through 2024 and 2025 (2024 B.C. Budget: More Changes to B.C.’s Real Estate Landscape - Lexology). A key change is a strict principal residence requirement: as of late 2023, hosts can only offer short-term rentals in their primary home (plus one secondary suite or accessory dwelling on the same property) (B.C.'s short-term rental legislation - Province of British Columbia). In other words, operating a dedicated Airbnb in an investment property or second home is no longer legal in most areas – the home generally must be where the host lives most of the year. This change is intended to return investor-owned short-term rentals to the long-term housing market, making more homes available for local renters and residents.

Enforcement tools have also been significantly strengthened. Previously, some operators were “grandfathered” by legal non-conforming use (meaning they could continue renting short-term if they started before local bans existed), but the new law removed that protection for short-term rentals (B.C.'s short-term rental legislation - Province of British Columbia). Additionally, the province gave local governments more muscle to enforce their bylaws. For example, B.C. hiked the maximum fine for violating a municipal bylaw on short-term rentals from $1,000 to $3,000 per day (and up to $50,000 for more serious prosecution cases) (B.C.'s short-term rental legislation - Province of British Columbia). Online platforms are now held accountable as well – hosts must display a valid business license number on their listing in any municipality that requires an STR license (B.C.'s short-term rental legislation - Province of British Columbia), and platforms are required to remove listings that lack a license at the request of the local government (B.C.'s short-term rental legislation - Province of British Columbia). Platforms must also share data about their listings with cities on a monthly basis to facilitate enforcement (B.C.'s short-term rental legislation - Province of British Columbia).

Notably, a provincial short-term rental registry is being established. By May 1, 2025, all short-term rental hosts and platforms in B.C. must register and obtain a provincial registration number (B.C.'s short-term rental legislation - Province of British Columbia). Hosts will be required to display this provincial registration number in their online listings, and platforms must verify that listings are properly registered. This centralized registry will help ensure compliance across the province and prevent hosts from operating under the radar. The overarching aim of these measures is to discourage commercial-scale short-term rentals that remove housing from the long-term market, thereby easing rental shortages (B.C. judge dismisses challenge of province's short-term rental rules).

(What this means for you: If you are a homeowner or investor who operates vacation rentals, you will need to comply with these new rules or potentially face steep fines. Many condo owners who were renting units on Airbnb may now have to switch to long-term tenancies or sell, since only one’s primary residence is allowed for short stays. Neighbors and communities may benefit from a reduction in “party house” rentals and see more units return to local renters. Indeed, the new rules have already survived an initial court challenge by some STR operators – a judge dismissed the challenge in early 2025, leaving the law in force (B.C. judge dismisses challenge of short-term rental rules). Overall, anyone engaging in short-term renting in B.C. must register and follow local bylaws closely, as enforcement is much tougher now.)

New Tax Measures: Flipping Tax and Transfer Tax Relief

Property transactions in B.C. are seeing new taxes and new tax breaks as the government tries to curb speculation while aiding buyers. Starting January 1, 2025, B.C. will implement a new Home Flipping Tax on residential properties sold within two years of purchase (BC Gov News) (BC home flipping tax - Province of British Columbia). This tax – officially the Residential Property (Short-Term Holding) Profit Tax Act – imposes a 20% tax on any profit from selling a home in the first year of ownership, with the rate tapering in the second year (2024 B.C. Budget: More Changes to B.C.’s Real Estate Landscape - Lexology). After two years, the tax no longer applies. There are important exemptions for certain life circumstances: sellers forced to move due to reasons like divorce, the death of a spouse, disability, job relocation, or other hardship will be exempt from the flipping tax (2024 B.C. Budget: More Changes to B.C.’s Real Estate Landscape - Lexology). Notably, this B.C. flipping tax is separate from the federal government’s own anti-flipping tax rule (in effect since 2023), which treats gains on homes sold within 12 months as business income (BC home flipping tax - Province of British Columbia). The provincial tax is an additional 20% levy and is not part of income tax – it will be collected to directly fund housing initiatives in the province (BC Gov News). For speculators and “flippers,” this means quick flips will now carry a hefty penalty, making fast turn-around sales far less profitable in B.C. For ordinary homeowners, the message is to think long-term; those who sell a property within two years of buying (for reasons other than an exempt life event) should budget for this new tax. Buyers may benefit indirectly if the policy succeeds in deterring purely speculative bidding up of home prices.

On the other side of the ledger, the B.C. government has expanded certain tax relief programs to help home purchasers. As of April 1, 2024, the threshold for the First-Time Home Buyers’ Property Transfer Tax (PTT) exemption was raised to $835,000 (from the previous $500,000) (2024 B.C. Budget: More Changes to B.C.’s Real Estate Landscape - Lexology). Qualifying first-time buyers in B.C. now pay no property transfer tax on the first $500,000 of a home’s value, with a partial tax break up to a home value of $860,000 (2024 B.C. Budget: More Changes to B.C.’s Real Estate Landscape - Lexology). (Above $860,000, the standard PTT applies.) This is a significant boost – under the old $500k limit, many buyers in B.C.’s pricey market couldn’t fully benefit. The new threshold saved first-time buyers as much as $8,000 on their tax bill, and indeed more than 22,000 first-time buyers were helped into homes in 2024 after this change, over double the number from the prior year (BC Gov News). Similarly, the province expanded the Newly Built Home PTT exemption: previously, new primary residences priced up to $750,000 were exempt; that cap has now been lifted to $1.1 million (with a partial exemption up to $1.15 million) (2024 B.C. Budget: More Changes to B.C.’s Real Estate Landscape - Lexology). This expansion recognizes that new construction is often more expensive – it allows many middle-income families to buy newly built homes (like condos or houses from developers) without incurring transfer tax, thereby saving up to $17,000 (the PTT on a $1.1M home) and encouraging development. These changes make home buying a bit more affordable for first-timers and those “moving up” into newly built homes.

There are also new incentives for those building or purchasing rental housing. The 2024 BC Budget introduced a PTT exemption for purpose-built rental buildings acquired from 2025 through 2030 (2024 B.C. Budget: More Changes to B.C.’s Real Estate Landscape - Lexology). To qualify, the property must be a newly built housing development with at least four residential rental units, all to be used as rentals. A purchaser of such a building (e.g. a developer or a rental housing operator) will pay no property transfer tax on the transaction. This measure, combined with the federal government’s recent elimination of the 5% GST on new purpose-built rental projects (2024 B.C. Budget: More Changes to B.C.’s Real Estate Landscape - Lexology), substantially reduces the upfront tax cost of creating new rental housing. The aim is to improve project viability for rental developments and spur the construction of more apartments and rental units. For investors and developers, this is a welcome tax break that could make marginal projects financially feasible, ultimately benefiting renters by increasing the supply of rental homes.

Finally, a small but noteworthy tweak was made to B.C.’s Speculation and Vacancy Tax (SVT) rules effective January 1, 2024. The SVT is an annual tax targeting homes left vacant in certain urban areas of B.C. Under the new amendment, if a long-term lease (with a term of at least 50 years) is registered on title for a property, the lessee (tenant) is responsible for any applicable speculation tax, rather than the owner (2024 B.C. Budget: More Changes to B.C.’s Real Estate Landscape - Lexology). In other words, someone who holds a long-term lease on a residential property must make the SVT declaration and would pay the tax if the home is empty – not the underlying landlord. This change ensures that the person actually enjoying use of the property is accountable for keeping it occupied or paying the tax. It’s particularly relevant in leasehold developments or situations like prepaid strata leases. Most ordinary homeowners won’t be affected by this, but it closes a loophole and is good to know if you ever purchase a property where a long-term lease is involved.

(What this means for you: House flippers and speculators now face a significant new tax if they try to “flip” properties in B.C., which may discourage quick resale schemes. First-time buyers and families buying new homes, on the other hand, stand to save thousands in closing costs thanks to the higher tax exemptions – potentially making the difference in affording a home. Investors in rental apartments will benefit from tax relief at both the provincial and federal level, ideally leading to more rental units being built (good news for tenants seeking housing). Overall, the tax changes seek to shift the real estate market away from short-term profit-taking and towards long-term housing creation and accessibility.)

Foreign Buyer Ban Extended and Other Federal Developments

At the national level, the Canadian federal government has doubled down on measures to keep housing available for Canadians. In early 2024, the federal government announced a two-year extension of the ban on foreign purchases of residential property, formally known as the Prohibition on the Purchase of Residential Property by Non-Canadians Act. This ban came into effect on January 1, 2023 for an initial two-year term; it was set to expire on Jan 1, 2025, but will now remain in force until January 1, 2027 (Government announces two-year extension to ban on foreign ownership of Canadian housing - Canada.ca) ( Dentons - Federal government announces extension of the prohibition on the purchase of residential property by non-Canadians ). The law prohibits non-Canadian citizens and non-permanent residents, as well as foreign commercial entities, from buying residential real estate in Canada (with some limited exceptions such as recreational properties, multi-unit buildings over a certain size, and homes purchased by newcomers with work permits meeting specified conditions). The policy’s intent is to prevent foreign capital from driving up housing prices in Canadian markets (Government announces two-year extension to ban on foreign ownership of Canadian housing - Canada.ca) and to ensure that homes are used for people to live in, rather than as speculative investments by overseas buyers. For the B.C. market – especially Metro Vancouver, which has historically attracted foreign investment – this extended ban means foreign buyer demand will remain subdued for an additional two years. Local buyers may face a bit less competition from abroad, which can be helpful in a tight market, though other factors like domestic demand and interest rates play a larger role in pricing. Sellers, on the other hand, will continue to have a smaller pool of potential buyers (excluding most foreign purchasers) until 2027, which is something to keep in mind if you are looking to sell a property that might have international interest.

In addition to the foreign buyer ban, the federal government and provinces are introducing other policy shifts aimed at housing. As noted above, one federal move in late 2023 was to eliminate GST on new rental housing developments (2024 B.C. Budget: More Changes to B.C.’s Real Estate Landscape - Lexology) – a significant incentive for builders of apartment buildings, student housing, and other long-term rental projects. (Provincial sales tax does not generally apply to new housing, so GST was the main sales tax cost on construction; its removal acts like a 5% price cut on building rentals.) The hope is that this, along with B.C.’s matching PTT exemption, will kick-start more rental construction to address housing shortages. Another federal initiative impacting real estate is the ongoing enforcement of the Underused Housing Tax (UHT), a 1% annual federal tax on vacant or underused residential properties owned by non-residents. The UHT, which took effect in 2022, requires owners to file declarations each year; in 2024 the Canada Revenue Agency ramped up enforcement of this relatively new tax, reminding foreign owners and certain Canadian companies and trusts holding property of their filing obligations. While not a new law in 2024, it’s part of the evolving landscape of real estate regulations that property owners (especially those with international ties) need to be aware of. The overall trend at the federal level is a continued focus on housing affordability – using tax measures and ownership restrictions to disincentivize vacant homes and speculative purchases, while also investing in programs to build more homes.

(What this means for you: If you are not a Canadian citizen or permanent resident looking to buy a home in B.C. (or anywhere in Canada), you will generally be barred from doing so until 2027 due to the extended foreign buyer prohibition. Canadian residents, meanwhile, might find slightly less competition from foreign bidders when house-hunting. Developers and investors in rental housing benefit from the GST relief on new projects, improving the economics of building much-needed rental units. Overall, federal policy is aligning with B.C.’s aggressive approach to make housing more accessible and to prioritize homes for those living and working in Canada.)

Notable Case Law: Real Estate in the Courts

Legislatures aren’t the only ones shaping real estate law – the courts have delivered decisions in the past year that property owners and practitioners should note. In Yu v. 1020590 B.C. Ltd., 2024 BCSC 179, a case decided in early 2024, the B.C. Supreme Court ordered the cancellation of several Certificates of Pending Litigation (CPLs) that had been registered against three development properties in Surrey (QUICKSCRIBE REPORTER). The plaintiffs claimed an interest in the properties (which can justify a CPL, effectively freezing the title), but the court found their claims were not viable under the Land Title Act. The judge’s decision to cancel the CPLs reinforces that tenuous or meritless claims cannot be used to tie up real estate indefinitely. For buyers and developers, it’s a reminder of the importance of clearing any unwarranted charges or notices from a title – and for would-be plaintiffs, a warning that courts will require a solid basis before encumbering property with a lawsuit notice.

Another significant case focused on liability for construction defects in condos and other buildings. In a recent Court of Appeal decision (Centurion Apartment Properties LP v. Loco Investments Inc.), the court considered whether professionals involved in a building’s construction owe a duty of care to subsequent owners. In that case, condo owners had discovered dangerous structural defects and sued the engineering consultants for negligence, even though the owners hadn’t directly hired those consultants. The B.C. Supreme Court originally dismissed the claims, but the Court of Appeal reversed that decision, finding that a prima facie duty of care did exist between the engineers and the eventual condo owners for serious defects (QUICKSCRIBE REPORTER). In essence, professionals could be held accountable to future owners if their work was negligent and caused foreseeable harm, despite the lack of a direct contract. This is an important development for homeowners dealing with construction deficiencies – it potentially expands who they can sue to fix costly issues. Builders, architects, and engineers should take note as well: the court is affirming that their responsibility for sound construction extends to those who ultimately live in or own the property, not just the party who originally hired them.

(Why these cases matter: The Yu case highlights how the courts will strike a balance between protecting legitimate claims and preventing abuse of the system to stall developments – good news for developers and buyers who might otherwise be caught in protracted litigation over a property. The Centurion case is a win for homeowners (especially strata owners) facing building defects, as it recognizes their right to seek recourse against negligent professionals even without direct contracts. Law is always evolving, and these decisions clarify rights and remedies in the real estate context. Property owners and investors should stay informed on legal precedents like these, as they can impact strategies for dispute resolution, due diligence, and risk management in real estate transactions.)

Conclusion

From sweeping zoning law changes to new taxes and landmark court rulings, 2024 has been a transformative year for real estate law in British Columbia and Canada. Governments are using every tool at their disposal – legislation, regulation, and taxation – to address the housing affordability challenge. For buyers, there are new opportunities (higher tax exemptions, potential cooling of competition) but also new rules to follow. Sellers and investors must navigate taxes aimed at speculative gains and stricter enforcement of property use regulations. Homeowners may find it easier to add rental units or harder to use their homes for short-term rentals, depending on their situation. The bottom line: staying informed is crucial. These developments underscore the value of consulting with legal professionals on real estate matters. A qualified real estate lawyer can help interpret how these changes affect your rights or plans – whether you’re purchasing your first home, investing in property, managing a rental portfolio, or embarking on a development project. As the legal landscape continues to evolve, proactive advice will ensure you remain compliant and make the most of the new opportunities while avoiding the pitfalls in B.C.’s dynamic real estate market.

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