Owner Builder or Licensed Builder?

Making the Right Choice for Your New Home in BC

Owner Builder vs. Licensed Builder in BC

If you're planning to build a new home in British Columbia—whether it's a single-family house, duplex, laneway or coach house, or any other type of residential construction—there's a critical legal step you must take before your building permit can be issued. Every new build, regardless of size or style, is subject to provincial requirements that protect homeowners and ensure quality construction. Before you can break ground, you must satisfy the requirements of the Homeowner Protection Act. This provincial law, enforced by BC Housing, applies to all new residential construction and is designed to ensure homes are built to a high standard and that owners are protected from costly defects. This guide explains what the law means for your project, the choices you must make, and how to navigate the process—whether you hire a Licensed Builder or pursue the Owner Builder path yourself.

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Date Published: July 21, 2025

Why This Decision is Mandatory

If you're building a new home in British Columbia—including a laneway or coach house—you cannot get a building permit without first satisfying the requirements of the Homeowner Protection Act. This provincial law, enforced by BC Housing, requires you to either:

  1. Hire a Licensed Residential Builder, or
  2. Become an Owner Builder through a formal authorization process.

Municipalities like the City of Surrey will hold your permit application until you provide proof of one of these two options. Let's break down what each path entails.

Option 1: Hiring a Licensed Residential Builder

This is the most common, secure, and recommended path. A Licensed Residential Builder (LRB) is a professional contractor licensed by BC Housing to build homes and provide mandatory third-party home warranty insurance.

Key Benefits and Inclusions:

  • Mandatory 2-5-10 Home Warranty Insurance: This is the cornerstone of consumer protection. Your builder must provide this policy, which covers:
    • 2 Years: Labour and materials (e.g., flooring, fixtures).
    • 5 Years: The building envelope, including defects that result in water penetration (e.g., roof, walls, windows).
    • 10 Years: The structure of the home (e.g., foundation, load-bearing walls).
  • Professional Management: The builder handles all construction logistics, including hiring qualified trades, managing schedules, and ensuring full compliance with the BC Building Code.
  • Simplified Permit Process: The builder handles the home registration through the New Homes Registry, giving you the documentation needed for your permit.
  • Accountability: If defects arise, there is a clear chain of responsibility from the builder to the warranty provider.

Option 2: Becoming an Owner Builder

This path allows you to act as your own general contractor. However, it requires you to pass an exam and assume all legal and financial risks of the project. You must apply for authorization through BC Housing's Owner Builder portal.

The Application and Exam Process:

To be approved, you must pass the Owner Builder Exam. This online, multiple-choice test assesses your competency in:

  • Construction fundamentals and management.
  • The BC Building Code.
  • Your legal duties and responsibilities under the Homeowner Protection Act.

You must study materials like the Residential Construction Performance Guide to prepare. The process takes time, so you must start well before you hope to get your permit.

The Immense Responsibilities You Assume:

  • You ARE the Warranty: You are exempt from providing third-party warranty insurance, but you are personally liable for any construction defects for 10 years. If you sell the home in year seven and the foundation cracks in year eight, the new owner can pursue you directly for the full cost of repairs.
  • Mandatory Disclosure: If you sell the home within 10 years, you must provide an "Owner Builder Disclosure Notice" to any potential buyer, informing them the home was not built by a licensed professional and is not covered by a third-party warranty.
  • Occupancy Restriction: You are legally required to live in the home for at least one year after it's built. You cannot build it to immediately sell or rent.

Critical Considerations Before You Decide

Financing Challenges

Many banks and credit unions are hesitant to provide construction mortgages to Owner Builders. They view the project as higher risk without the oversight of a licensed professional and a warranty policy. Securing financing can be a major hurdle.

The Myth of "Lower Cost"

While you save on a builder's fee, Owner Builders often pay more for materials and sub-trades because they don't have the volume discounts that established builders do. Furthermore, any mistakes made due to inexperience can lead to costly rework, quickly erasing any potential savings.

Comparison: Licensed Builder vs. Owner Builder

Criteria Licensed Builder Owner Builder
Warranty Mandatory 2-5-10 third-party insurance. You are personally liable for 10 years.
Liability Held by builder and warranty insurer. Held entirely by you.
Financing Standard process. Difficult to secure.
Expertise Relies on licensed professional. Requires you to have extensive knowledge.

Conclusion: Which Path is Right for You?

The Licensed Builder path is designed for the vast majority of homeowners. It provides a structured, protected, and reliable process for building a new home.

The Owner Builder path should only be attempted by those with deep, hands-on construction experience and a full understanding of the immense legal and financial risks they are undertaking.

Need help with your project? Whether it's creating permit-ready drawings or recommending a trusted, licensed builder, we're here to guide you. Contact us to discuss your project today.

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