Money123: Backschool meets inflation, your rights in pre-build cancellations

Back-to-school shopping woes

Kids are just a few short weeks away from having to load up their backpacks again for another year in the classroom, leaving parents staring down the cost of another year of back-to-school shopping.

This year will see Canadian parents pare back their spending as much as possible as inflation continues to bite, according to a recent survey from Deloitte Consulting.

The firm expects consumers to spend just under $600 on school supplies — about $100 less than last year’s figures — in the face of the rising cost of living.

Those forces have led to a surge in business for at least one store in Toronto selling gently-used school items.

“I would certainly say we’re up in sales this year because I think people are realizing they don’t have as much money to spend. Everything is costing so much,” Kate Young, marketing director at a Toronto-based Once Upon a Child store, told Global News.

Read more about the costs facing down parents and teachers alike heading into a new school year.

Pre-build cancelled? Know what you may be entitled to

The era of rising interest rates is hampering builder confidence, leading a number of developers to cancel projects outright in recent months.

For homebuyers who had been waiting on the completion of a pre-sale build, last-minute cancellations can leave them out in the cold.

But what recourse or compensation is available to those waiting on keys that may never come?

Real estate lawyers in some of Canada’s busiest housing markets who spoke to Global News say you might not get much more than you put into a pre-build, depending on what your contract says.

“When you’re buying a pre-sale, you’re really speculating on what the market’s going to be like three, four or five years down the road, maybe more,” says B.C. real estate lawyer Aman Bindra.

“You might make a lot of money, but you take a lot of risk. And sometimes things don’t go your way, as we’re seeing right now with developers cancelling projects.”

Read more about what you can expect to get back if a developer decides to cancel your project.

Inflation rose last month. Will the Bank of Canada react?

This past week came with a bit of bad news on the inflation front: the consumer price index accelerated to 3.3 per cent in July, up half a percentage point from the month before.

Gas prices were mainly blamed for the jump, Statistics Canada said, and while there was some easing in prices at the grocery store, food inflation continues to outpace overall price pressures.

There were, meanwhile, some signs of modest easing in the core inflation metrics that the Bank of Canada watches closely in charting the path for interest rates.

But with headline inflation back up above three per cent, the central bank will have cause for concern, according to economists weighing in on the latest economic release.

Dawn Desjardins, chief economist at Deloitte Canada, told Global News on Tuesday that progress in the core inflation measures but a rebound in the headline figure puts the Bank of Canada in a “quandary.”

Read more about what the Bank of Canada is considering ahead of its next rate decision on Sept. 6.

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– THE QUESTION –

“I am a co-owner on my son’s property (due to his low income at the time of the purchase). The mortgage will come up for renewal next year and since he qualifies for the mortgage on his own now, I want my name removed from the mortgage. I realize that there will be legal costs involved. The housing price is now lower than the original purchase price, so will there be any taxes to CRA? I also own my own home; his home is not my principal residence. “

— A Money123 reader 

“To remove the mother’s name from the mortgage, the son can either do:

Release of Covenant: This can be done at any time and would involve the son having to requalify. The current rate, remaining term and remaining amortization would apply, and he would stay with the current lender. No penalty would apply. Typically, there are lower legal fees doing it this way versus a refinance, and the son would still have the ability to negotiate a new rate/lender at renewal time.

Refinance: A refinance can also be done at any time and would involve requalifying. The son would have the ability to renegotiate his rate, change lenders, and can access equity. If done prior to the mortgage renewal date, a penalty would apply. If done at renewal time, no penalty would apply.

There are no CRA implications that would be applicable because the home value has decreased.

Depending on how the mortgage was originally registered (joint tenants vs tenants in common), land transfer taxes may apply. It would be important to check with your real estate lawyer to determine how the original mortgage was registered.”

–  Bryan Freeman, chief operating officer, Ratehub.ca

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