BUYING REAL ESTATE ON PEI
Hello, my name is Brett Poirier, and I have been buying and selling real estate in PEI and other Maritime provinces since 2016. Like many who dip their toes into investing, I started with the purchase of a small rental property in Charlottetown. After some early success - and definitely a lot of luck - I continued buying other properties to grow my portfolio as quick as I possibly could.
I am a licensed REALTOR® in Prince Edward Island with a focus on investment properties. I use experience gained from running Red Sands and my personal portfolio to guide clients and investors with their investment decisions. If you're interested in buying or selling, I welcome you to reach out to have a discussion on what best suits your needs. You can contact me directly by clicking here or calling 1-902-439-8748 and pressing 1.
On this page I've outlined what I believe are some of the most important things to know when buying real estate here on PEI. I hope you find this information useful.
Prince Edward Island is no doubt a booming market. Around the year 2015 islanders started noticing a new trend in the real estate market. Homes that would often sit on the market for several months began getting sold signs installed much sooner. The prices started to creep up; at first - not as noticeable - but eventually, you couldn't deny it. Value was climbing, sometimes as much as 20% year-over-year. In 2015, the average home price in Prince Edward Island was $165,693, The average price of homes sold in July 2021 was a record $369,838, according to the PEI Real Estate Association. This market boom has been spurred by several factors, most notably the province's aggressive immigration program and the COVID-19 pandemic motivating urban workers in cities such as Toronto and Vancouver to look for more affordable housing options on the east coast. To this day, the trend continues.
When offering on property it's important to work alongside your real estate agent to learn as much about the deal up front so you can be prepared to make a competitive offer. In the cities (Charlottetown and Summerside) it's quite common to see multiple offers on a property, and with that usually comes offers over asking price. There are three main conditions attached to PEI property offers, they are: the home inspection, financing condition, and insurance condition. If you're in a competitive situation and you're in a position to waive all (or any) of those conditions that could give your offer an upper hand.
Property Tax is determined based on the assessed value of the property. The PEI government collects property tax at a rate of one per cent of assessed value of a residential property. Or, as you'll see it printed on your tax bill, $1 per $100 value in assessment. If you live in a municipality, the municipality also collects at their own rate — and those rates vary across the Island. In Charlottetown, it's another $0.67 per $100 in value, for a total of $1.67. If your property's taxable value assessment is $100,000, that puts your property taxes at $1,670 for the year, payable in three instalments. Non-residents pay a premium of 0.5x more property tax annually. PEI defines a resident, for property tax purposes, as someone who resides in the province for 183 consecutive days or more in each taxation year.
Renting your property on PEI can be very lucrative but it's important you follow all of the rules and guidelines, as set out by the Island Regulatory and Appeals Commission (IRAC), when doing so. The island's vacancy rate has been low since 2016, when it dropped to 2.1%. It has been low ever since, and in 2020 the island had a 2.6% vacancy rate on residential units. The average rent for an apartment on PEI was $916 in 2020, but in Charlottetown, Summerside, Stratford and Cornwall the market rent is much higher.
Purchasing limits do exist on the island and buyers should be aware of them before writing an offer. Individuals are limited to purchase a maximum of 1,000 acres, and corporations up to 3,000 acres. In addition, approval is required on any non-resident purchases of five acres or more, and land with more than 165 feet of shore frontage.
Closing costs exists in all markets and the island is no exception. When purchasing real estate on PEI you can expect to see an automatic charge for 1% of the property's sale price, which is known as the Land Transfer Tax. When your lawyer registers a mortgage and a deed with the province you'll also see charge of roughly $460 (x2) for each of those items. Legal fees can vary, but an average home purchase without any significant hurdle or additional billable hours should run around $1,500. If you opt to get title insurance you can expect to pay several hundred, depending on the type of property.
There is no HST on the purchase of used residential real estate in the province. HST is in addition to the price whenever there is new construction or a commercial element (Airbnb, operated as a small business). Land deals can also be subject to additional HST.