The federal government recently announced plans to help Canadians achieve homeownership amidst soaring home prices and housing affordability issues.
Among the initiatives being taken is support for innovative rent-to-own programs, which are designed to help make homeownership more financially attainable for Canadians who otherwise would be priced out of the current real estate market.
Let’s go into a little more detail about the support the Canadian government is lending to rent-to-own projects through its 2022 budget.
What Is The Government Doing To Support Rent-To-Own Projects In Canada?
Many Canadians rent because they can’t afford the down payment needed to secure a mortgage to buy a home. And with home prices rising upward over recent years, the goal of homeownership is becoming increasingly unattainable for many renters who strive to buy a home one day.
Rent-to-own programs can help remove the barrier between renting and owning. These arrangements allow Canadians to live in their homes, with a portion of their rent going towards the down payment that can be used to eventually buy the home at a specific date in the future.
While rent-to-own programs are nothing new, the Canadian government is taking steps to expand these projects across the country. The 2022 Federal Budget proposes to dedicate $200 million of financial support under the current Affordable Housing Innovation Fund. Of that, $100 million will go towards supporting non-profits, developers, co-ops, and rent-to-own companies to construct rent-to-own properties.
This will help increase housing inventory, make housing more affordable, and open up opportunities for Canadians to become homeowners.
What Is The Affordable Housing Innovation Fund?
The Affordable Housing Innovation Fund is designed to help develop new housing in Canada. It consists of $200 million in funds that will go towards this construction, as well as to generate funding models and modern construction techniques in the affordable housing sector.
More specifically, the Affordable Housing Innovation Fund will:
- Create accessible communities for Canadians
- Help reduce homelessness
- Support the development of affordable housing strategies
Eligible Housing Programs For Government Support
Examples of eligible rent-to-own projects could include any of the following:
- Repairing housing to be used for rent-to-own programs
- Innovative financing models that make homeownership more financially feasible for Canadians
- Programming that helps prepare rent-to-own participants to buy a home
New Rent-To-Own Program
The Liberal Government has also promised to introduce a new rent-to-own program if they are re-elected. The new rent-to-own program is based on three principles to make it easier for Canadians who rent to prepare for homeownership while they’re renting:
- Landlords must charge renters lower-than-market rental rates to help them save up for a down payment
- Landlords must commit to ownership of up to a 5-year term
- Precautions must be put in place to protect future homeowners
In a traditional rental arrangement, every dollar paid in rent goes towards paying the property owner’s mortgage. Tenants contribute nothing towards their own equity when they pay rent. But with rent-to-own programs, Canadians can put a portion of their rent towards saving up for a down payment.
Rent-to-own programs can be a great way for renters to finally buy a home in the future. But these projects are not always readily available. The federal government promises to expand these types of programs through its budget to make it easier for Canadians to get into the housing market.