Rent-to-Own Boom: Northern Ontario Renters Seize Homeownership Now

URGENT UPDATE: Renters in Sault Ste. Marie, Ontario, are turning to the innovative rent-to-own model to secure homes amid a challenging housing market. This trend is gaining momentum as individuals seek alternatives to traditional mortgage routes.

Genevieve Saint Hilaire, alongside her husband, recently chose this unconventional path, opting to rent a home with the eventual goal of ownership. After initially dismissing ads from Requity Homes, Saint Hilaire decided to investigate further, discovering a viable solution to the barriers many face in homeownership. “This way we were also able to live in the house that we were going to be owning while we were saving up for it,” she explained.

The process is straightforward: renters provide a 2% deposit on their chosen home, while Requity purchases the property on their behalf. Monthly rent payments are supplemented by an additional fee that contributes to the down payment. After just one year, Saint Hilaire’s family saved enough to apply for a mortgage, allowing them to purchase the home outright.

This trend is reflective of a larger shift in Canada as the rent-to-own model gains traction among first-time buyers. Amy Ding, founder and CEO of Requity Homes, shared her motivation for starting the company, driven by her own struggles as a newcomer to Canada. “I had an excellent job, great credit, no debt, a 20% down payment, and the banks required me to have over 35% down,” Ding revealed.

The rent-to-own model is not merely a means to save for a down payment; it provides flexibility for those lacking a robust credit history or stable employment. Potential buyers enter agreements that typically allow up to three years to purchase the home, with an annual increase of 5% in the purchase price to align with market trends. For instance, a home valued at $500,000 could rise to $578,813 by the end of the agreement.

However, not all experiences have been positive. David Daily of Sudbury shared his regret over his rent-to-own arrangement, which he entered during the peak of rising prices. He now faces a potential buyout cost of $500,000 for a home he initially purchased for $430,000. “If I back out, I’ll lose my $20,000 deposit plus an additional $18,000 in payments,” Daily lamented.

Authorities warn that while the rent-to-own model can be beneficial, it is essential for buyers to thoroughly assess their financial situations before committing. John Cockburn, a financial empowerment coordinator, suggests utilizing tax-free savings accounts for down payments. He emphasizes that rent-to-own can help those who struggle with savings discipline, effectively incorporating future ownership costs into monthly rent.

As the housing market evolves, the rent-to-own model may offer a lifeline for many. With the potential to navigate financial barriers, this approach is emerging as a new avenue for homeownership in northern Ontario.

Stay tuned for more updates as the situation develops. The future of homeownership in Canada continues to unfold, and the rent-to-own movement is one to watch closely.