By Amy Fendley
The fallout from the leaky condo crisis in the Lower Mainland will be felt by builders in Whistler and the rest of the province, but new regulations for the construction industry won’t come into effect until July 1.
The introduction of mandatory new home warranties and the licensing of residential builders will be delayed from May 1 to July 1, in the wake of a major change affecting the largest new home provider in B.C.
On March 30, New Home Warranty of B.C., a non-profit corporation started by the Canadian Home Builders’ Association in 1976, sought temporary protection from creditors in order to prepare a restructure proposal. Strained by claims made by owners of leaky condos, New Home was the largest provider of voluntary new home warranty coverage in B.C., with about 1,600 registered builders and 80 per cent of the market.
Two weeks ago, New Home announced it had agreed to sell its major assets to National Home Warranty programs. Once this sale is finalized, New Home will no longer be a participant in the home warranty market in B.C.
"These developments, coming just weeks before the mandatory new home warranties and builder licence provisions of the Homeowner Protection Act were to come into effect, leave me no choice but to extend the implementation schedule," said Jenny Kwan, Municipal Affairs minister.
Kwan said builders who were relying on New Home, many of them small builders operating in the North and the Interior, will need time to register with a warranty provider.
If the May 1 implementation date had remained in effect, thousands of people employed in the home building industry would have found themselves unemployed, as their businesses would not have been certified by the Homeowners’ Protection Office.
"I figured there would be a delay, they just weren’t ready to go," said Dave Johnston of Whistler’s Blue Ice Construction Ltd. "A May 1 deadline would have allowed insufficient time for a competitor to come on board. There has to be two competitors, otherwise there’s a monopoly and a backlog because there would be insufficient time to register everybody. There could have been a big outcry if things reached a standstill."
Liberal Municipal Affairs critic and West Vancouver-Garibaldi MLA Ted Nebbeling said the delay in implementing the regulations is long overdue.
"For months, builders and municipal officials have been raising serious concerns with the May 1 implementation date," said Nebbeling. "It’s incredible that it has taken this long for the minister to get with the program."
The delay will affect the timing of the mandatory new home standards, licensing of residential builders and the reconstruction levy on new homes.
It could mean that homes started before July 1 will not have the new warranty and the builders may not be certified. But the builder/buyer may also save a few hundred dollars because the reconstruction levy won’t be applied on homes started before July 1.
Shayne Ramsay, CEO of the Homeowner Protection Office, says they are working closely with the companies that intend to provide the new mandatory home warranty.
"They are all in the final process of getting approval from the Financial Institutions Commission, as required by legislation," said Ramsay. "I fully expect that warranty coverage that meets the mandatory standards will be available within a matter of weeks.
"As soon as any warranty provider is approved by the Financial Institutions Commission and ready to go, builders can be simultaneously approved for licensing and warranties," says Ramsay. "This will reduce the processing time."
Whistler’s extreme weather conditions mean structural design and materials are a little different from what Vancouver is using. There have been fewer low-end, poor-quality homes built in Whistler. But in lieu of the problems seen in Vancouver, Johnston says people like the idea of having their house covered by a warranty, even if it costs a little more.
"Some people could construe this as being another tax, but it’s better to think of it like getting an extended warranty on a stereo," said Johnston. "Everybody guarantees it for at least a year, but now the guarantee’s for 10 years... structurally nothing’s going wrong with the equipment. I don’t think anybody here is going to do anything differently in construction, we’ve had no problems here, but builders definitely have to be more careful."
Andrew Munster, of Munster and Sons Development Ltd., says the warranty system also works in the builders’ favour by eliminating questionable contractors.
"The goal is to provide homeowners and builders with assurance that the home they have bought or built is covered," says Munster. "It works in our favour. It asks for references, three years worth of financial statements, a letter from the building inspectors, and a payment of $600.
"They want a lot of information, but it weeds out all the fly-by-night contractors. There are a couple of those guys here who weave in and out and try to bid you down."
While some builders knew about the delay in implementation, others who applied for warranty coverage are still trying to figure things out, as they find themselves missing a $600 cheque, payable to New Home Warranty.
Johnston says there’s going to be a transition period of about a year, "While everybody figures this out."