The UK's independent property help portal
March 25, 2008

Property Investment in Canada

Permalink: Property Investment in Canada
by Brian Turner

Property Investment in Canada

Guide to Property Investment in Canada

The Canadian property market has been on a rise (although very slow) for the last several years. Housing prices have consistently risen and hit a high in 2006 of almost 11% (some regions have shown a near 50% increase). Rising mortgage interest rates may slow down or even level out the increase in 2008.

The instability of the property industry in the neighboring United States may also have an impact in the market in Canada.

Much of the Canadian property market is being fueled by economic growth, low interest rates and consumer confidence. This year shows sign of a slowing economy and there has been a rise in taxes as well. The market should begin to feel the changes. Many analysts are predicting that housing prices will only increase around 3 to 5 percent.

Almost any one can purchase property in Canada and there are relatively few limits for foreigners. The process will require a property agent and a lawyer, but is simple to follow.

Rental yields are moderate in the Canadian market. A few cities (like Calgary) have seen higher yields, but most are only around 3% or 4%. The increase of new citizens and other aliens to Canada has helped to spur the rental market. As mortgage rates continue to rise, it is likely the rental demand will rise with them.

There are a number of costs associated with purchasing property in Canada. With every transaction there will be registration costs, property agent fees, legal fees and sales and transfer taxes.

Legal and taxes

Land Transfer Tax – is the fee imposed for purchasing property (also called a purchase tax) but it is not imposed in every province. It is typically between .5% and 2% (depending largely on the price of the property and its location).

Legal Fees – those amounts paid to the lawyer to review the purchase agreement and to review the property ownership. The fee is highly flexible (determined by each individual lawyer) and can be negotiated. Legal fees can run as high as 10% of the purchase price.

Goods and Service Tax – this it the fee paid for new construction or on renovated homes. It is usually around 6% of the purchase price and customarily included in the quoted sales price of the property. The higher the price of the property then the lower the percentage of taxes on that property will be.

Real Estate Agent Fees – paid to the agent that finds and negotiates the property you purchase. The fees ARE negotiable but most likely you will pay between 3% and 7% of the purchase price. If two agents are involved in the transaction then each party will pay their own agent, otherwise the buyer will normally foot the entire fee.


Click here to discuss this: Home Move property forums



Related stories to: Property Investment in Canada



Previous: «
Next: »

Visited 61351 times, 1 so far today