Vernon Clement Jones
Other
Investors are facing a new kind of competition from condo developers offering rent-to-own programs for young Canadians who’d rather own than lease, despite tighter mortgage rules.
The Toronto’s Cinema Towers is the latest development hawking that alternative, allowing homebuyers/renters to sign purchase agreements for units of their choosing. When they move into those downtown condos, still under construction, a portion of their monthly rent, “along with the total amount accumulated through” the developer’s deposit payment plan “will be credited toward (a) 5 per cent down payment.”
After one year, it falls to the tenant to come up with the remainder of any funds needed to make up that down payment.
The offer is largely seen as a way for developers to shift new units even as first-time buyers find themselves shut out of the market by more stringent mortgage rules, introduced last summer. It also helps developers compensate for what some analysts are calling a “shrink-back” in investor demand.
Still, condo investors with units of their own to lease will increasingly have to contend with this kind of direct competition from builders, say analysts. If that rent-to-own strategy catches on, it could slacken demand for rental units even in the GTA, helping stabilize rents, says consumer advocates.
But investors remain the great uncertainty, say economists, trying to gauge their long-term commitment to the market and what if effect any pull-out might have on property values.