What is "Rent-to-Own"?

Rent-to-Own is becoming a popular way for selling a property, especially in areas where the market is slow. We are seeing more and more companies advertising that they have a house or condo for sale, and offer to do Rent-to-Own. But not a lot is known about exactly how it works, and to whose benefit.
Rent-To-Own is very similar to a car lease.
With a car lease you put down a deposit and make payments for a specified period of time at the end of the lease you have the option (not the obligation) to purchase the car for a predetermined price.

Rent-to-Own works in much the same way. A buyer puts down a “purchase option” deposit, usually less than the traditional 5% required by the bank and makes a monthly payment. And a portion of the rent is credited towards the future down payment.  The end purchase price is predetermined at the time of signing.

The Rent-To-Own agreement involves two contracts, one contract will be a regular lease contract, and the other will deal with the purchasing part of the agreement. This contract will be for a period of time that is agreeable to both the seller and the buyer, usually anywhere from one year to three years. The buyer will have to pay the regular amount of rent, and in addition they will have to pay a monthly installment that will be credited towards the down payment.

There are usually clauses in the contract that state if the buyer is late or misses any payment, the contract is null and void. As well, the buyer may be responsible for repairs and maintenance; however sometimes the seller will accept responsibility for major maintenance issues.

What are the benefits of Rent-to-Own?
A Rent-to-Own agreement can be an excellent option for people who want–but are not financially ready–to become homeowners. A Rent-to-Own agreement gives them the chance to get their finances in order (by improving their credit score and saving money for a down payment, for example) while “locking in” the house they’d like to own. If the option money or a percentage of the rent goes toward the purchase price, they also get to start building some equity.

One thing to keep in mind is that house prices are always changing. The calculations are based on today’s prices, and it can be next to impossible to calculate what the house may be worth in the future. Sometimes this is addressed by agreeing to a certain percentage increase for each year of the term, and sometimes sellers will ask you to agree to pay the appraised value of the house at the end of the term. In this case, you may have to pay a little extra at the end of your term to meet the 5% down payment.)

A Rent-to-Own agreement allows potential buyers to move into a house while getting their finances in order to purchase the home in the future. It’s not without risks, since they could end up losing money if they don’t (or cannot) buy the property when the lease expires. You must be confident that this particular real estate deal is of benefit to you, and that you can afford to take the risk of not being able to follow through with the contract. If there’s a good chance you won’t be able to qualify for a mortgage or secure other financing by the time the lease expires, you should instead continue renting (with a “normal” lease), building credit and saving for a down payment. Then, when you’re ready, you can choose from any home on the market in your price range.

Not every seller will structure the Rent-to-Own in the same way, but as in any real estate deal, you can always try to negotiate the terms that are not satisfactory to you. It is very important that you get independent legal advice for any contract that you sign.

Ontario's Fair Housing Plan

 

Ontario's Fair Housing Plan introduces a comprehensive package of measures to help more people find affordable homes, increase supply, protect buyers and renters and bring stability to the real estate market. The plan includes:
Actions to Address Demand for Housing:

1. Introducing legislation that would, if passed, implement a new 15-per-cent Non-Resident Speculation Tax (NRST) on the price of homes in the Greater Golden Horseshoe (GGH) purchased by individuals who are not citizens or permanent residents of Canada or by foreign corporations. Ontario's economy benefits enormously from newcomers who decide to make the province home. The NRST would help to address unsustainable demand in this region and make housing more available and affordable, while ensuring Ontario continues to be a place that welcomes all new residents. The proposed tax would apply to transfers of land that contain at least one and not more than six single family residences. "Single family residences" include, for example, detached and semi-detached homes, townhomes and condominiums. The NRST would not apply to transfers of other types of land including multi-residential rental apartment buildings, agricultural land or commercial/industrial land. The NRST would be effective as of April 21, 2017, upon the enactment of the amending legislation.
   Refugees and nominees under the Ontario Immigrant Nominee Program would not be subject to the NRST. Subject to eligibility requirements, a rebate would be available for those who subsequently attain citizenship or permanent resident status as a well as foreign nationals working in Ontario and international students. See technical bulletin for further information.

Actions to Protect Renters

2. Expanding rent control to all private rental units in Ontario, including those built after 1991. This will ensure increases in rental costs can only rise at the rate posted in the annual provincial rent increase guideline. Over the past ten years, the annual rent increase guideline has averaged two per cent. The increase is capped at a maximum of 2.5 per cent. Under these changes, landlords would still be able to apply vacancy decontrol and seek above guideline increases where permitted. Legislation will be introduced that, if passed, will enact this change effective April 20.‎
3. The government will introduce legislation that would, if passed, strengthen the Residential Tenancies Act to further protect tenants and ensure predictability for landlords. This will include developing a standard lease with explanatory information available in multiple languages, tightening provisions for "landlord's own use" evictions, and ensuring that tenants are adequately compensated if asked to vacate under this rule; prohibiting above-guideline increases where elevator work orders have not been completed; and making technical changes at the Landlord-Tenant Board to make the process fairer and easier for renters and landlords. These changes would apply to the entire province.

Actions to Increase Housing Supply

4. Establishing a program to leverage the value of surplus provincial land assets across the province to develop a mix of market housing and new, permanent, sustainable and affordable housing supply. Potential sites under consideration for a pilot project include the West Don Lands, 27 Grosvenor/26 Grenville Streets in Toronto, and other sites in the province. This builds on an agreement reached previously with the City of Toronto to ensure a minimum of 20 per cent of residential units within the West Don Lands are available for affordable rental, with an additional 5 per cent of units for affordable ownership.
5. Introducing legislation that would, if passed, empower the City of Toronto, and potentially other interested municipalities, to introduce a vacant homes property tax to encourage property owners to sell unoccupied units or rent them out, to address concerns about residential units potentially being left vacant by speculators.
6. Ensuring that property tax for new multi-residential apartment buildings is charged at a similar rate as other residential properties. This will encourage developers to build more new purpose-built rental housing and will apply to the entire province.
7. Introducing a targeted $125-million, five-year program to further encourage the construction of new rental apartment buildings by rebating a portion of development charges. Working with municipalities, the government would target projects in those communities that are most in need of new purpose-built rental housing.
8. Providing municipalities with the flexibility to use property tax tools to help unlock development opportunities. For example, municipalities could be permitted to impose a higher tax on vacant land that has been approved for new housing.
9. Creating a new Housing Supply Team with dedicated provincial employees to identify barriers to specific housing development projects and work with developers and municipalities to find solutions. As well, a multi-ministry working group will be established to work with the development industry and municipalities to identify opportunities to streamline the development approvals process.

Other Actions to Protect Homebuyers and Increase Information Sharing

10. The province will work to understand and tackle practices that may be contributing to tax avoidance and excessive speculation in the housing market such as "paper flipping," a practice that includes entering into a contractual agreement to buy a residential unit and assigning it to another person prior to closing.
11. Working with the real estate profession and consumers, the province is committing to review the rules real estate agents are required to follow to ensure that consumers are fairly represented in real estate transactions. This includes practices such as double ending. The government will modernize its rules, strengthen professionalism and improve the home-buying experience with a goal to make Ontario a leader in real estate standards.
12. Establishing a housing advisory group which will meet quarterly to provide the government with ongoing advice about the state of the housing market and discuss the impact of the measures in the Fair Housing Plan and any additional steps that are needed. The group will have a diverse range of expertise, including economists, academics, developers, community groups and the real estate sector.
13. Educating consumers on their rights, particularly on the issue of one real estate professional representing more than one party in a real estate transaction.
14. Partnering with the Canada Revenue Agency to explore more comprehensive reporting requirements so that correct federal and provincial taxes, including income and sales taxes, are paid on purchases and sales of real estate in Ontario.
15. Making elevators in Ontario buildings more reliable by establishing timelines for elevator repair in consultation with the sector and the Technical Standards & Safety Authority (TSSA).
16. Working with municipalities to better reflect the needs of a growing Greater Golden Horseshoe through an updated Growth Plan. New provisions will include requiring that municipalities  consider the appropriate range of unit sizes in higher density residential buildings to accommodate a diverse range of household sizes and incomes. This will help support the goals of creating complete communities that are vibrant, transit-supportive and economically competitive, while doing more to address climate change, protect the region's natural heritage and prevent the loss of irreplaceable farmland. As part of the implementation of the Growth Plan for the Greater Golden Horseshoe, 2006, enough land was set aside in municipal official plans to accommodate forecasted growth to at least 2031. Based on discussions with municipalities across the region, the government is confident that there is enough serviced land to meet the Provincial Policy Statement requirement for a three year supply of residential units. The Greenbelt provides important protection of natural heritage and farmland, and neither the area of the Greenbelt or the rules about what can occur inside of it will be weakened. The upcoming Growth Plan will promote intensification around existing and planned transit stations and will promote higher densities in the suburbs to support transit.

Actions to Date
The government has taken a number of actions over recent months and years in order to support homebuyers, increase supply of affordable and rental housing and promote fairness. These include:

• Helping more people purchase their first home by doubling the maximum Land Transfer Tax refund for eligible first-time homebuyers to $4,000. This means eligible homebuyers in Ontario pay no Land Transfer Tax on the first $368,000 of the cost of their first home.
• Modernizing the Land Transfer Tax to reflect the current real estate market, including increasing rates on one or two single-family residence over $2 million. Revenue generated from the increased rates is being used to fund the enhancements to the First-Time Homebuyers Refund.
• Making it easier for not-for-profit affordable housing providers to buy surplus government lands.
• Introducing an inclusionary zoning framework for municipalities that will enable affordable housing units as part of residential developments.
• Amending the Planning Act and the Development Charges Act to support second units, allowing homeowners to create rental units in their primary residence and creating additional supply.
• Freezing the municipal property tax burden for  multi-residential apartment buildings in communities where these taxes are high.
• Collecting information about Ontario's real estate market to support evidence-based policy development

Appendix: Data and Trends on the Real Estate Market
Ontario's housing market has seen very dynamic growth in recent years, with prices in the Greater Toronto Area and the Greater Golden Horseshoe rising significantly. This has been supported by economic fundamentals, including a growing population, rising employment, higher incomes and very low borrowing costs.

House prices have been rising at a robust pace in the Greater Toronto Area since the end of the 2008-09 recession.

After two consecutive years of double-digit gains, average house prices in the Toronto region reached $916,567 in March 2017, up 33.2 per cent from a year earlier.

The Greater Toronto Area showed the sharpest rise in home prices in Ontario over the past two years.
While the growth rate of prices of homes in the Greater Vancouver Area have been slowing since August 2016 after the introduction of B.C.'s foreign-buyers tax, home prices have been climbing steadily in the Greater Toronto Area.

According to Urbanation, the average rent per square foot for new leases in the Greater Toronto Area condo market rose 11 per cent in the last quarter of 2016 compared to a year earlier, the fastest pace of growth since at least 2011.


The number of owners with more than one residential property has been rising steadily since 2000.

What's Open and Closed on Easter Weekend - 2017

 

 

Here's a list of what is open and closed on Good Friday, Easter Sunday and Monday in Waterloo Region:

•Regional administrative offices, Kitchener, Cambridge and Waterloo city halls will be closed on Good Friday and Monday.

•Curbside waste pickup will carry on as scheduled on Good Friday and Monday. ...

•Waterloo, Kitchener and regional libraries are closed Good Friday, Easter Sunday and Monday.

•Cambridge libraries are closed Good Friday and Easter Sunday.

•Grand River Transit buses will operate on a Sunday schedule on Good Friday.

•Canada Post will not deliver or pick up mail on Good Friday or Monday.

•Grocery stores are closed Good Friday and Easter Sunday.

•Fairview Park mall, Conestoga Mall and Cambridge Centre are closed on Good Friday and Easter Sunday.

•The Village of St. Jacobs and St. Jacobs Outlet mall are open. The Southworks mall in Cambridge is also open.

MOMENTOUS HOME SALES IN MARCH in Waterloo Region

KITCHENER‐WATERLOO, ON (April 4, 2017) ––Residential sales through the Multiple Listing System (MLS® System) of the Kitchener‐Waterloo Association of REALTORS® (KWAR) continued their monthly ascent in March with 729 properties sold in Kitchener‐Waterloo and area. This represents a 24.2 percent increase compared to the same month last year, and is the highest March on record.

“This is the first time we’ve seen residential sales come anywhere close to the 700 unit mark so early in the year,” says James Craig, President of the KWAR. “These are exceptionally strong numbers, in fact’ we’ve only surpassed 700 units in a single month three other times: May 2007, and then not again until May and June of last year.”

During the first quarter of 2017, there were 1,532 home sales, 13.4 percent above last year’s result for the same period and 30 percent above the previous 5‐year quarterly average.  On a monthly basis, home sales were 41 percent above the previous 5‐year average for the month of March.

Residential sales in March included 444 detached homes (up 15.0 percent compared to March 2016), 164 condominium units (up 49.1 percent) which include any property regardless of style (i.e. semis, townhomes, apartment, detached etc.). Sales also included 67 semi‐detached homes (up 76.3 percent) and 48 freehold townhouses (up 14.3 percent).

The average sale price of all residential sales increased 32.3 percent to $493,226 compared to March 2016. Detached homes sold for an average price of $583,144 an increase of 35.6 percent, while the average sale price for an apartment style condominium was $265,524, an increase of 25.4 percent. Townhomes and semis sold for an average of $368,554 (up 29.9 percent) and $412,226 (up 49.1 percent) respectively.

Once again in their latest monthly news release, the Canadian Real Estate Association called the disparity between limited housing supply and robust demand in Ontario’s Greater Golden Horseshoe “without precedent”. In Kitchener‐Waterloo, the number of months of inventory has stood at or below one month for eight consecutive months.

Despite the low inventory, Craig notes that people were listing their homes in large numbers last month. “We had 844 new listings processed through our MLS® System in March which is above the previous 5‐year average of 807 for the month of March.” However, due to extraordinary demand, the number of active residential listings still on the market at the end of March was well below normal with only 434 residential properties for sale, way below the previous 5‐year March average of 1,508.
The average days on market in March were significantly shorter than a year ago: 14 days, compared to 35 days. On a month to month basis, it took four fewer days to sell a home in March compared to the month before.

“In the past several months there has been plenty of conversation in the media, in the pubs, and at all levels of government surrounding housing affordability, and it’s a concern I share,” says, Craig.  “Earlier this month the Ontario Real Estate Association alongside the Ontario Home Builders’ Association called on the province to create a taskforce to address home affordability. While homeownership is an investment that has served most Canadians extremely well, it’s also becoming very difficult for those first‐time buyers who are trying to share in that dream and get into the market.”

Should You Purchase New or Resale?

When trying to decide whether to buy an older home or a newly constructed one, many questions come to mind. Start by educating yourself and knowing the pros and cons of each.

Real estate agents don't like to call a house a "used" house. It makes it sound too much like a used car, doesn't it? But when you're buying a home you only have two choices: new or used. Real estate agents prefer to call a used home an "existing home" which sounds a lot nicer.

If you're deciding between buying a new home and buying one that someone else has owned, you need to consider several issues. In most cases, existing homes have a touch of character with their own charm and details. They are usually located in more established neighbourhoods with mature trees and desirable landscaping, and may be closer to city services such as schools, libraries, hospitals, shopping centres and public transportation.

Older homes may have better quality materials and workmanship that are too costly for newer homes, and may come with window coverings and appliances which are often included with the home. If you are lucky, you may still get an updated kitchen and bathrooms if the home has been renovated.
However, existing homes are generally less energy efficient and are typically more costly to heat and cool. They may need updating and require expensive repairs, and sometimes it may be difficult to find or match older building materials.

Newer homes usually have bigger rooms, more built in wardrobes and closets, and more bathrooms. If you are building a new home you can also influence the layout and the finishes within the home as part of the negotiations with the builder or developer.

Whereas with an existing home you will inherit what the previous owner built or remodelled over time. Very rarely will an existing home be built and finished exactly to your liking. Think about how much renovating you'll need to do to an existing home. If you can buy an existing home that's been totally renovated in a great neighbourhood within a good school district this might be a better choice than moving into a newer neighbourhood with an unestablished school district.

On the other side, buying a newly-built home tends to cost more than an existing home, unless you buy outside of the city, where land is cheaper. Of course, you will have to consider the price of gas to get to your job.

And it isn't just about getting to your job. You'll also want to think about how long it will take to get to a grocery store, dry cleaners, your kids' school, your house of worship and other places you get to by car.

While new homes are more expensive, they might also increase in value faster than an existing home. That said, it may be challenging to buy a new home in your neighbourhood of choice, unless you buy a lot, hire a developer and build your own home, which can get quite costly.

However, with new homes you get warranties and guarantees on appliances that come with the new home. Dangerous building materials, such as lead and asbestos, will likely not be a problem. A new home will meet modern safety and building codes and usually use building materials that offer improved insulation, thereby reducing your heating bill.

You may be able to upgrade or customize such features as floor coverings or paint colours and sometimes even the floor plan. New homes often have more closet and storage space and most importantly don't require as much maintenance.

New homes though have their own disadvantages. Higher taxes could be required to bring water, gas or electrical services to a still under-populated area. Resale could be difficult if the entire neighbourhood is not yet estabished, and you may have to cope with construction noise, dust and mud. New neighbourhoods frequently lack the relaxing appearance of mature trees, and your new subdivision may require costly landscaping.

You can make the case for and against buying either a new hom
e or a "used" home. It's great to live in a brand new home, but there's nothing like the feel of an established neighbourhood. The bottom line is price: it depends on what you want to spend, where you want to live, and what kinds of amenities you want to have.

Contact me today for a Free Home Value Report or for answers to all your real estate questions at www.kimlouie.net!