How to Buy Land in BC?

WOWA Simply Know Your Options

Are you looking to buy the perfect piece of land to build your dream home on? Or maybe you’re a real estate investor looking to invest in some undeveloped BC land? Whether you are going to develop the land as an end-user or as an investor, there are some unique quirks to consider that makes buying BC land different from simply buying a finished home. This page will take a look at different land types in British Columbia, how to find land for sale, how to buy land, and how to finance your land purchase.

Just like other provinces in Canada, most land in British Columbia is provincial Crown land. In fact, 94% of BC is made up of provincial Crown land, the second highest percentage in Canada! British Columbia is a vast province, but private land ownership is concentrated in certain regions. 67% of Crown land in BC is forest, while only less than 1% has agriculture or rangeland. 14.2% of BC's land are parks and protected areas.

Provincial Crown Land in Canada by Province

Source: BC 2010 Crown Land Report

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Did you know that less than 5% of the land base in BC is privately owned? Private land is owned by individuals or corporations, and it can be used and traded freely within the applicable legislations and tax codes. The West Coast region, including Victoria and Nanaimo, has the highest proportion of private land ownership in the province at 9.4%. Kootenay has the second highest private land ownership rate at 8.7%, followed by Thompson-Okanagan at 7.9%. A large portion of private land on Vancouver Island, Kootenay, and the Okanagan were given as railway grants to companies for railroad construction. The South Coast, which includes Vancouver, Richmond, Burnaby, Surrey, and Whistler, has a 7.2% private land ownership rate.

Private Land Ownership Rates in British Columbia by Region

There is a range of uses and cover types for private land. Private land in BC is used the most for Agriculture and Rangeland (33%). Forests, shrubs and wetlands cover 22%, 18% and 17%, respectively. Urban areas take up 8% of all private land in BC. The other 2% is distributed among Barrens, Glaciers, Alpine, Freshwater, Mining and Recreation.

Private land can take two forms: raw land and vacant land. Raw land has never been developed, which means that it lacks infrastructure for services or utilities, such as water or electricity. It might also not have road access or be accessible only by plane or boat. Raw land can include forests, shrubs, and wetlands.

Vacant land has been partially developed by previous owners, and it may have access to services or utilities. Vacant land is not as remote or challenging to develop as raw land, which means that vacant land is generally more expensive than raw land. Vacant land can include plots of land in existing urban areas, or agriculture and rangeland with road access.

Vacant land can be classified into services and unserviced. Serviced vacant land is the most expensive type because it is connected to local utilities, which means the lot has active access to water and electricity. Unserviced vacant land is cheaper because even though it has some built infrastructure on the land, it is not connected to the municipality, which means it does not have active access to utilities.

Comparison of Different Types of Land in British Columbia

You can buy privately owned land directly from their owners. Landowners might work with a real estate agent and have their land listing posted on Multiple Listing Service (MLS). You can also search for land listings online or on various marketplaces or contact current owners to see if they’re willing to sell. Some owners might be selling their land on their own, called For Sale By Owner (FSBO). You might be able to find these listings advertised online or even by driving around and seeing FSBO signs. Working with a real estate agent yourself can help you find land for sale more easily.

Buying land involves a few extra steps that you should take beforehand to make sure that your land purchase is in line with your plans. Here are some things to consider when buying land in BC:

• Zoning

  The local government that has authority over your land, whether it be a municipal or regional district government, will have zoning bylaws that regulate the use of the land and what can be built. You'll need to request zoning bylaw amendments, which might involve public hearings or permit applications, if you want to change the zoning of your specific plot of land. For example, this would be needed if you're buying land that is zoned for agriculture but you want to develop it as residential land,

• Utilities

  Access to utilities is important if you want to build a home, and lack of access can mean additional costs. Besides water and electricity, you'll also need to think about sewage, gas, and telecommunication services, such as phone lines, cell phone service, internet service, and cable. While land in rural areas can be cheaper, the cost of utilities and services are often higher.

• Surveys

  Topography surveys and site surveys should be done so that you know exactly what you are buying. This includes the property lines and boundaries, along with the geography of your plot of land. This can affect your home's foundation in cases of loose soil, slopes, or floodplains.

• Property Taxes

  You’ll need to pay BC property tax on land, even if you don’t build a home on it or develop the land. Property tax will need to be paid even if you are renting provincial Crown land. Knowing how much tax you'll need to pay every year can help you decide if buying the land is worth it. Checking the property's tax records and doing a title search is also a way for you to make sure that there aren't any liens or encumbrances on the land.

Financing a land purchase is possible, but it is more difficult than getting a mortgage on a house. Land purchase is more risky for lenders than buying a property, so they require a large downpayment and often higher interest rates on the loan. You may be able to avoid getting a specialized land loan, but the alternatives are still limited in their funding.

The ways to finance the land can include land loans, construction mortgages, or using a personal line of credit, personal loan, or HELOC. You may even get financing from the seller of the land.

• Land Loans: These are specialized loans to buy land. Land loans lenders usually require a large down payment of up to 50% of the purchase purchase for raw land and up to 35% for vacant land. Their interest rates are high compared to residential mortgages, but they are the best compared to other ways to finance land.
• Construction Mortgage: If you’re planning to build a home on the land, a construction mortgage allows you to receive financing for both the purchase of the land and the construction of a home. A unique feature of this loan is that it is given out periodically in draws, which allows the borrower to save on interest initially because the interest is charged only on the outstanding amount.
• Line of Credit, HELOC or Personal Loan: These loan options are all-purpose, which means they do not require extensive documentation about the land to support your loan. You won’t need to make a minimum down payment if you rely on these options only, but they will need to be enough to cover the entire cost of the land. They usually have very limited funding, with HELOC funding largely depending on the equity you have in your home.
• Seller Financing: Sellers might be willing to finance your land purchase. This is also called vendor financing, or vendor take back mortgages. This is the most versatile financing option available because it depends on what terms you can negotiate with the seller. You’ll make payments to the seller of the land over the agreed period of time.

Crown land can be used for residential purposes, but it requires an application which includes a site plan and management plan. Applications also have advertising requirements to inform the public of your application to use Crown land or the disposition of Crown land. Crown land can be purchased at market value.

If you choose to lease Crown land for residential purposes, you will need to pay rent. The length of your lease depends on the purpose of your lease, with it being up to 30 years if you're planning on building a permanent home.

Lease Lengths for BC Crown Land

The rent paid will depend on the assessed value of the Crown land, with the minimum annual rent being $500 per year.

Annual Rent for BC Crown Land

Source: Government of British Columbia