Registration fees on the rise in Alberta
In a move that has surprised many in the sector, new land title registration and mortgage registration fees will be going up in triple or quadruple for many new property owners in a market already hit hard by the oil price collapse. The flat-fee portion for each type will go from $50 up to $75 (a 34% increase). The variable or per-dollar fee will be hardest hit as it rises to six times the current level. For example, a buyer who picks up a $500,000 new home with a $400,000 mortgage will need to pay $1230 in fees rather than $290. A new land title will cost $675 (versus $150) and registration $555 (versus $140).
This is still a fraction of the overall purchasing cost in reality but seeing as how its the first time since 2011 that the province has increased the flat for these registrations, it will be shock for buyers of resale and new homes. The increase then was only .02%, now its .12%.
The increase still falls below the country average though with the same $500,000 property costing $8,000 in transfer tax in Vancouver, $7,500 in Halifax, and $12,200 in Toronto, according to ratehub.ca.
These increases come as Albertas real-estate market is seeing a drop in both sales volumes and prices to the tune of one-third fewer residential sales this February compared to last February. The median price has also gone down 2.1 percent.
Although unexpected, according to Service Alberta Minister Stephen Khan, key stakeholders he spoke to (lawyers and real-estate associations) told him there was room to grow compared to taxes and fees in other provinces. He also was told that Theres recognition that having the lowest fees is not a sustainable model.
When asked to weigh in on this latest development in the Alberta housing market, REINs Senior Analyst had this to say:
The dramatic and stinging increase in fees for those buying a home and getting a new mortgage in Alberta will hurt, but not hurt the housing market in a significant way (after the initial emotional shock wears off). The majority of consumers do not even know the many and sundry fees they incur upon buying a property, until they receive their final State of Adjustments from their lawyer. So the increase will definitely hurt the home buyer but because it is not on their radar at the beginning of the transaction will not stop many from buying or financing their property. The Alberta housing market is already in an underperforming territory and is responding exactly as expected as we enter month 9 of the oil price down. We can expect more listings in the spring and fewer buyers than last year and this will have the largest impact on the market.
What do you think? Share your thoughts in the comments below.
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