New real estate rules leave some first-time buyers in the cold

For four years, Jasbeen Lallbahadoor saved for a down payment on a new home.

Since new real estate regulations in Canada passed this October, however, she no longer qualifies for the $350,000 townhouse in Montreal's Mile Ex neighbourhood she was considering for purchase.

New real estate measures introduced by the federal government on Oct. 17 put buyers' finances against a stress test to make sure a borrower can pay their mortgage on a higher rate.

"I feel deceived by the government," said Lallbahadoor. "You're planning ahead and then all of a sudden the government comes and takes it away from you."

A buyer's finances are tested against the Bank of Canada's posted rate, currently 4.64 per cent, while they used to qualify under the promotional rate of 2.39 per cent.

The new regulation was implemented by federal Finance Minister Bill Morneau to address concerns over growing household debt and rising house prices.

Lallbahadoor, 28, told CBC Montreal's Daybreak that she's frustrated by the law.

"I'm not really someone that needs to be controlled," she said. "I can manage my own money."

She's now looking at properties in Rosemont, which is further from her job in Mile End than she anticipated and considering putting her plans on hold all together.

"I don't want to rush myself," said Lalbahadoor.

Regulations hurt millennials

Thierry Lindor, Lallbahadoor's real estate agent, called the regulations "dangerous" for the housing market, and rough for millennials in particular.

He said that 90 per cent of the clients who put their projects on hold or dropped out of the market at his real estate agency, Remax l'Espace Griffintown, are millennials.

Lindor adds the new rules will put pressure on the market, making it harder to sell properties — something he says is a bigger problem in Quebec.

"We're already a bit behind [the rest of Canada] in terms of home ownership," he said. "To put such a stress test on our market when we know that these are measures that were taken for Toronto and Vancouver — it's like if your car has a flat and you decide to change your car."

"They decided to pass this law for all of Canada and we're feeling the impact on the sales as well."

He's also concerned that the regulations had clients rushing into important decisions.

"Some of my brokers had clients rushing to purchase," said Lindor. "You don't rush into a $500,000 investment."